Overview to Budget 2021 (2) Business and Corporate tax

by | Feb 17, 2021 | Company Law, Tech News

Extend the Year of Assessment (“YA”) 2020 enhancements to the carry-back relief scheme

  • The enhancements to the carry-back relief scheme for YA2020 will be extended to apply to qualifying deductions for YA2021, with the same parameters. With this extension, the unabsorbed capital allowances and trade losses for YA 2021, subject to conditions, may be carried back up to 3 immediate preceding Years of Assessments.
  • Businesses will be allowed to carry back an estimated amount of qualifying deductions available for YA 2021 before the actual filing of their income tax returns. This should translate into immediate cash savings for businesses that have been profitable in the past but went into the red in financial year (FY) 2020. The amount of carry-back allowed remains capped at $100,000.

Extend the option to accelerate the write-off of the cost of acquiring plant and machinery (“P&M”)

  • The option to accelerate the write-off of the cost of acquiring plant and machinery (P&M) will be extended to capital expenditure incurred on the acquisition of P&M in the basis period for YA2022 (i.e. FY2021), with the same parameters.

Extend the option to accelerate the deduction of expenses incurred on renovation and refurbishment (“R&R”)

  • The option to accelerate the deduction of expenses incurred on renovation and refurbishment (R&R) in one YA (i.e. accelerated R&R deduction) will be extended to qualifying expenditure incurred on R&R in the basis period for YA2022 (i.e. FY2021), with the same parameters.

Enhance the Double Tax Deduction for Internationalisation (“DTDi”) scheme

  • The scope of the DTDi scheme will be enhanced to cover specified expenses incurred to participate in approved virtual trade fairs:
    1. Package fees charged by event organisers for virtual exhibition hall and booth access, collateral creation, business meeting/match sessions,pitches/product launches/speaking slots, webinar/conference, and post event analytics;
    2. Third-party costs for design and production of digital collaterals and promotion materials for virtual fairs; and
    3. Logistics costs incurred to send materials/samples overseas to potential clients met at virtual trade fairs.
  • The list of qualifying expenses for overseas investment study trips will also be expanded to include logistics costs to transport materials/ samples used during the investment trips.
  • The scope of qualifying activities which do not require prior approval from Enterprise Singapore or STB will be enhanced to cover the following additional activities, up to the current annual expense cap of $150,000:
    1. Product/service certification (primarily to increase buyer’s acceptance in overseas markets) approved by Enterprise Singapore;
    2. Overseas advertising and promotional campaign;
    3. Design of packaging for overseas markets;
    4. Advertising in approved local trade publication; and
    5. Participation in virtual trade fairs approved by Enterprise Singapore.

Extend and refine the double tax deduction (“DTD”) for qualifying upfront cost attributable to retail bonds issued under MAS’ Seasoning Framework and Exempt Bond Issuer Framework

  • To promote rated retail bond issuances, the double tax deduction (DTD) scheme for qualifying upfront cost attributable to rated retail bonds (instead of all retail bonds) issued under the Monetary Authority of Singapore’s (MAS’) Seasoning Framework and Exempt Bond Issuer Framework will be extended for qualifying upfront cost incurred on or after 19 May 2021 that is attributable to rated retail bonds (instead of all retail bonds) issued during the period from 19 May 2021 to 31 December 2026 (both dates inclusive).
  • The refinement of the DTD scheme seeks to provide investors with access to rated retail bonds. Credit rating improves market transparency by providing timely and independent assessments of the creditworthiness of bond issuers.
  • All other conditions of the DTD scheme remain the same. MAS will provide further details of the changes by 31 May 2021. 

Extend the Business and IPC Partnership Scheme (“BIPS”)

  • The above enhancements will take effect for qualifying expenses incurred on or after 17 February 2021. Enterprise Singapore will provide further details of the changes by 28 February 2021.
  • The Business and Institutions of a Public Character Partnership Scheme (BIPS) will be extended for another 2 years for qualifying expenditure incurred for services or corporate volunteering till 31 December 2023, with all other conditions of the scheme remain the same.
  • Under the BIPS, businesses enjoy a 250% tax deduction on wages and qualifying expenses when their staff volunteer or provide services to institutions of a public character (IPCs), which includes secondments.
  • Volunteering projects have to be mutually agreed between the business and the IPC. These projects can include general activities and skills-based activities. Qualifying expenditure is subject to a cap of $250,000 per business per YA and a cap of $50,000 per IPC per calendar year.

Source: IRAS, 17 February 2021