Corporate Income Tax Rebate (“CIT”)
Currently, CIT rebate is 50% of tax payable, capped at S$20,000.
For YA2017, the cap on the CIT rebate will be increased from $20,000 to $25,000. The rebate remains unchanged at 50% of tax payable.
For YA2018, the cap on CIT rebate will be reduced to S$10,000. The rebate will be granted at 20% of tax payable.
Intellectual Property Development Incentive (“IDI”)
Intellectual Property (“IP”) income will be removed from the scope of Pioneer – Services/ Headquarters Incentive and the Development and Expansion Incentive -Services/ Headquarters for new incentive awards approved on or after 1 July 2017.
Existing incentive recipients will continue to have such income covered under their existing incentive awards till 30 June 2021.
The IDI will take effect on or after 1 July 2017, and will be administered by EDB. EDB will release further details of the change by May 2017.
Writing-Down Allowances for Intellectual Property Rights
Prior to YA 2017, writing-down allowances will be granted to the transferee on a straight-line basis over a 5-year period on the capital expenditure incurred in acquiring the Intellectual Property Rights (IPRs).
For approved IPRs acquired from 22 Jan 2009 to the last day of the basis period for YA 2018, by an approved media and digital entertainment company for the purpose of its trade, writing-down allowances shall be granted over two years on the capital expenditure incurred on the acquisition of these IPRs.
After the last day of the basis period for YA 2018, MDE companies or partnerships may elect to claim WDA over a writing-down period of 5, 10 or 15 years on the capital expenditure incurred to acquire the qualifying IPRs under Section 19B of the ITA.
Computer Donation Scheme
A 250% tax deduction granted on donation of computers (including computer software and peripherals) by any company to an Institution of Public Character or prescribed educational, research or other institution in Singapore withdrawn after 20 February 2017.
Accelerated Depreciation Allowance for Energy Efficient Equipment and Technology (“ADAEEET”) scheme
The accelerated one-year 100% capital allowances granted on capital expenditure incurred for certified energy efficient and energy saving equipment will be withdrawn after 31 December 2017.
Withholding Tax Exemption for Indefeasible Rights of Use Agreements
The withholding tax exemption on payments for international telecommunications submarine cable capacity under an indefeasible rights of use (IRU) agreement will be extended from 27 February 2018 to 31 December 2023.
Deduction for Cost Sharing Agreements for Research and Development Projects
Taxpayers will have the option of claiming tax deduction under s 14D for 75% of the payments made under a Cost Sharing Agreement (CSA) incurred for qualifying Research and Development (R&D) projects in lieu of furnishing the breakdown of expenditure covered by the CSA payments.
The change will apply to CSA payments made on or after 21 February 2017.
The Inland Revenue Authority of Singapore (IRAS) will release further details by May 2017.
Withholding Tax Exemption for Structured Products Offered by Financial Institutions
The withholding tax exemption on payments made to non-resident non-individuals for structured products offered by financial institutions will be extended for contracts that take effect, are renewed or extended during the qualifying period from 1 April 2017 to 31 March 2021.
All other conditions of the scheme remain unchanged.
Specific Sector Tax
Tax Incentive Schemes for Project and Infrastructure Finance
The package of tax incentive schemes for Project and Infrastructure Finance includes:
(a) Exemption of qualifying income from qualifying project debt securities (“QPDS”);
(b) Exemption of qualifying income from qualifying infrastructure projects/assets received by approved entities listed on the Singapore Exchange (“SGX”);
(c) Concessionary tax rate of 10% on qualifying income derived by an approved Infrastructure Trustee Manager/Fund Management Company from managing qualifying SGX-listed Business Trusts/ Infrastructure funds in relation to qualifying infrastructure projects/assets; and
(d) Remission of stamp duty payable on the instrument of transfer relating to qualifying infrastructure projects/assets to qualifying entities listed, or to be listed, on the SGX.
With the exception of the stamp duty remission in (d), the existing package of tax incentive schemes for Project and Infrastructure Finance will be extended till 31 December 2022.
The stamp duty remission in (d) will be allowed to lapse after 31 March 2017. All other conditions of the schemes remain the same.
Finance and Treasury Centre (“FTC”) scheme
The FTC scheme, which grants concessionary tax rate of 8% on qualifying income derived by approved FTCs, will be for certain transactions of approved FTCs. This will help to ease the compliance burden of approved FTCs.
The change will apply to new or renewal incentive awards approved on or after 21 February 2017. EDB will release further details of the change by May 2017.
Global Trader Programme (“GTP”)
The GTP, which grants a concessionary tax rate of 5% or 10% on qualifying income derived by approved global trading companies from qualifying transactions, will be enhanced as follows:
- The requirement for qualifying transactions to be carried out with qualifying counterparties will be removed. Consequently, concessionary tax rate will be granted to approved global trading companies on income derived from qualifying transactions with any counterparty;
- Concessionary tax rate will be granted to approved global trading companies on physical trading income derived from transactions in which the commodity is purchased for the purposes of consumption in Singapore or for the supply of fuel to aircraft or vessels within Singapore;
- Concessionary tax rate will be granted to approved global trading companies on physical trading income attributable to storage in Singapore or any activity carried out in Singapore which adds value to commodity by any physical alteration, addition or improvement (including refining, blending, processing or bulkbreaking); and
- The substantive requirement to qualify for the GTP will be increased.
The enhancements in (a) to (c) will apply to qualifying income derived on or after 21 February 2017 by approved global trading companies from qualifying transactions.
The enhancement in (d) will apply to new or renewal incentive awards approved on or after 21 February 2017. IE will release further details of the change by May 2017.
International Arbitration Tax Incentive (“IArb”)
The incentive, which grants approved law practices 3 50% tax exemption on qualifying incremental income derived from the provision of legal services in connection with international arbitration for a maximum relief period of five years, will lapse after 30 June 2017.
Aircraft Leasing Scheme (“ALS”)
ALS will be extended and refined as follows:
- The ALS will be extended until 31 December 2022
- the scope of qualifying ancillary activities for approved aircraft lessors under s 43Y of the ITA will be updated to cover incidental income derived from the provision of finance in the acquisition of aircraft or aircraft engines by any lessee (applicable to income derived on or after 21 February 2017 for all incentive recipients), and
- the concessionary tax rate on income derived from leasing of aircraft or aircraft engines and qualifying ancillary activities will be streamlined from 5% and 10% to a single rate of 8% (applicable to new or renewal incentive awards approved on or after 1 April 2017).
The enhancement for (b) will apply to income derived on or after 21 February 2017 for all incentive recipients.
The refinement in (c) will apply to new or renewal incentive awards approved on or after 1 April 2017.
In addition, the automatic withholding tax exemption regime will be extended to qualifying payments made on qualifying loans entered into on or before 31 December 2022.
EDB will release further details of the change by May 2017.
Integrated Investment Allowance (“IIA”) scheme
The scheme, which grants a qualifying company an additional allowance in respect of the fixed capital expenditure incurred on qualifying productive equipment placed with an overseas company for an approved project, will be extended till 31 December 2022.
The qualifying productive equipment may be used by the overseas company primarily to manufacture products for the qualifying company under an approved project. The above liberalisation in the qualifying requirement will apply to expenditure incurred on a qualifying productive equipment for a project approved on or after 21 February 2017.
Other Taxes
Approved Building Project
Property tax exemption on land under development for a period of up to 3 years, subject to certain conditions lapse after 31 March 2017.
Carbon Tax
Carbon tax at a rate between $10 and $20 per tonne of greenhouse gas emissions will be implemented from 2019; with public consultations beginning in March 2017. The final carbon tax and exact implementation schedule will be decided after consultations and further studies. Appropriate measures will be provided to ease the transition.
Diesel Taxes
With effect on or after 20 February 2017, the diesel duty will be introduced on automotive diesel, industrial diesel and diesel component of biodiesel is $0.10/litre5 .
The annual Special Tax will be permanently reduced for diesel cars and taxis by $100 and $850 respectively.
Diesel Car
Emission Standard | Special Tax Rate every six months |
Pre-Euro IV compliant | Six times the Road Tax of an equivalent petrol-driven car, less $50 |
Euro IV compliant | S$0.625 per cc, less $50, subject to a minimum payment of S$575 |
Euro V or JPN2009 compliant | S$0.20 per cc, less $50, subject to a minimum payment of S$150 |
Diesel Taxi
$2,125 every six months, or $4,250 every year
Revised Special Tax rates will take effect on or after 20 February 2017. From 20 February 2017 to end-June 2017, vehicle owners will continue to pay the Special Tax based on the existing rates.
For owners paying the Special Tax based on the existing rates until end- June 2017, and those who have already paid the Special Tax for the period beyond 20 February 2017, the excess Special Tax will be used to automatically offset the amount payable at the next road tax renewal.
Industrial Exemption Factory Scheme
The IEFS, which is a duty exemption scheme for industries that use dutiable goods as raw materials solely to manufacture non-dutiable finished goods. With effect on or after 20 February 2017, diesel will be removed from the IEFS. Industrial diesel will be subject to volumetric diesel duty of $0.10/litre.
Road Tax Rebate
Three years of road tax rebates will be provided for commercial diesel vehicles:
- 1 August 2017 – 31 July 2018: 100% Road Tax Rebate
- 1 August 2018 – 31 July 2019: 75% Road Tax Rebate
- 1 August 2019 – 31 July 2020: 25% Road Tax Rebate
In addition to the three-year Road Tax Rebate, diesel school buses will be given yearly cash rebates to ease the impact of diesel duty on school bus fees:
- 1 August 2017 – 31 July 2018: $1,400
- 1 August 2018 – 31 July 2019: $700
- 1 August 2019 – 31 July 2020: $350
The cash rebates will be disbursed by the Land Transport Authority (LTA) every six months.
In addition to the three-year Road Tax Rebate, eligible diesel private hire buses and diesel excursion buses that ferry school children will be given yearly cash rebates to ease the impact of diesel duty on school bus fees:
- 1 August 2017 – 31 July 2018: up to $1,500
- 1 August 2018 – 31 July 2019: up to $800
- 1 August 2019 – 31 July 2020: up to $450
To be eligible for the cash rebates, these buses must have a school bus contract, and ferry children continuously for at least six months. The cash rebates will be pro-rated based on the number of days these buses have ferried school children in the respective time period. The cash rebates will be disbursed by LTA when the buses’ road tax is renewed.
Additional Registration Fee (ARF)
Tiered ARF for motorcycles will be introduced to improve the progressivity of the vehicle tax system. The following tiered ARF rates will apply to all motorcycles registering with Certificates of Entitlement (COEs) obtained from the second COE bidding exercise in February 2017:
Additional Registration Fee Rates
OMV | ARF rates |
First $5,000 of the OMV | 15% |
Next $5,000 of the OMV (ie $5,001 to $10,000) | 50% |
Remaining OMV above $10,000 | 100% |
For motorcycles that do not need to bid for a COE (eg classic motorcycles), the new tiered ARF rates will apply on or after 21 February 2017.
To give potential buyers more time, the second COE bidding exercise in February, which was initially scheduled on 20 February 2017, will be held on 22 February 2017.
Certificate of Entitlement (COE) Quota
As a complementary measure, the Ministry of Transport will cease the contribution of motorcycle COE quota to the open category COE quota.
Other Changes
Foreign Worker Levy (“FWL”) for Marine and Process Sectors
The foreign worker levy (FWL) increases for the Marine and Process sectors will be deferred for one more year from 1 July 2017 to 30 June 2018.
Re-employment Age
The Government will raise the re-employment age from 65 to 67 from 1 July 2017. This will apply to workers younger than 65 on that day.
Additional Special Employment Credit
The Additional Special Employment Credit (ASEC) provides wage offsets to employers of up to 3% for hiring older Singaporean workers earning up to $4,000 a month, who are older than the re-employment age.
The Government will extend the ASEC for two and a half years from 1 July 2017 to 31 December 2019. This is on top of the Special Employment Credit (SEC) of up to 8% for eligible Singaporean workers aged 55 and above.