16 February 2024 – Off the back of the Singapore Budget announcement by Finance Minister Mr Lawrence Wong, experts from Grant Thornton Singapore share their insights.
On the Personal Income Tax rebate: Adrian SHAM, Tax and Private Clients Partner, Grant Thornton Singapore (沈建華, 税务合伙人，致同新加坡)
“To provide some assistance to individuals deal with the rising cost-of-living, a PIT Rebate of up to $200 was one of the measures announced. It would have been nice to see an increase in the income tax rate bands to deal with wage inflation as the bands have not changed in many years. This leads to a “stealth tax” where even if individuals’ wages only increase with the level of inflation, they pay more taxes due to the stagnant income tax brackets.”
On the raising dependent’s or caregiver’s income threshold: Adrian SHAM, Tax and Private Clients Partner, Grant Thornton Singapore (沈建華, 税务合伙人，致同新加坡)
"Being able to retain these reliefs whilst giving the dependent family more flexibility in seeking some work is a welcomed move especially since the income threshold has not moved in many years."
On the refundable investment credit: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“The qualifying refundable investment credits appear to be structured as a qualifying refundable tax credit as defined in the OECD Pillar 2 Tax Rules and commentary. This is good news for Multi-National Groups with entities in Singapore that could have an overall effective tax rate below 15% under the Pillar 2 rules. The new credits may eliminate or reduce the amount of future top up taxes whether these are payable in Singapore or overseas.
“Interestingly, the Annexes to the Budget statement suggest that this system is being introduced “to enhance Singapore’s attractiveness for investments”. We believe this overstates the case. Rather we see this as a defence mechanism to prevent the flight of existing investments and as a means of levelling the playing field in the region where other jurisdictions will inevitably be contemplating the same mechanisms. Singapore will stay ahead because of its other economic and political stability charms.”
On the implementation of the Income Inclusion Rule and Domestic Top-up Tax for MNE groups affected by BEPS: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“It would have been helpful if there could have been some clarity around the fate of existing tax incentive regimes for companies not affected by BEPS. The inference is that they will not be affected, but there may be many companies sitting on the edge of their seats waiting for some sort of confirmation. Having said that, the extensions and modifications to existing tax incentives regimes (to introduce additional concessionary tax rates) strongly suggest traditional incentives are set to survive for non-BEPS candidates. This will result in a two-speed tax economy in Singapore.”
On the additional concessionary tax rates (Numbers 7-11 in ‘Maintaining a Fair and Competitive Tax System’): Eng Min LOR, Tax Partner, Grant Thornton Singapore (盧英敏, 税务合伙人, 致同新加坡)
“It appears that the Singapore’s tax incentives regime will remain relevant and competitive with the introduction of the new additional tier of 15% for schemes such as the Development and Expansion Incentive and the Global Trader Program and 10% for schemes such as the Finance and Treasury Centre incentive and the Aircraft Leasing Scheme.”
On nuclear power: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“It is refreshing to hear that the government is beginning to consider nuclear power as an effective clean alternative to other intermittent power initiatives in the attempt at net zero, rather than a blinkered “green agenda” approach. Hopefully, this will enable the new Refundable Investment Credit scheme to be put to good use in developing the strength of Singapore’s “defences” which include defending energy security.”
On the Overseas Humanitarian Assistance Tax Deduction: Eng Min LOR, Tax Partner, Grant Thornton Singapore (盧英敏, 税务合伙人, 致同新加坡)
“The introduction of the Overseas Humanitarian Assistance Tax Deduction scheme is a good initial move to encourage individuals and companies to contribute to worthy causes outside Singapore and to show the world that the little red dot cares!”
SG Budget
Reactionary comments on the Singapore Budget 2024 from Grant Thornton
16 Feb 2024
16 February 2024 – Off the back of the Singapore Budget announcement by Finance Minister Mr Lawrence Wong, experts from Grant Thornton Singapore share their insights.
On the Personal Income Tax rebate: Adrian SHAM, Tax and Private Clients Partner, Grant Thornton Singapore (沈建華, 税务合伙人，致同新加坡)
“To provide some assistance to individuals deal with the rising cost-of-living, a PIT Rebate of up to $200 was one of the measures announced. It would have been nice to see an increase in the income tax rate bands to deal with wage inflation as the bands have not changed in many years. This leads to a “stealth tax” where even if individuals’ wages only increase with the level of inflation, they pay more taxes due to the stagnant income tax brackets.”
On the raising dependent’s or caregiver’s income threshold: Adrian SHAM, Tax and Private Clients Partner, Grant Thornton Singapore (沈建華, 税务合伙人，致同新加坡)
"Being able to retain these reliefs whilst giving the dependent family more flexibility in seeking some work is a welcomed move especially since the income threshold has not moved in many years."
On the refundable investment credit: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“The qualifying refundable investment credits appear to be structured as a qualifying refundable tax credit as defined in the OECD Pillar 2 Tax Rules and commentary. This is good news for Multi-National Groups with entities in Singapore that could have an overall effective tax rate below 15% under the Pillar 2 rules. The new credits may eliminate or reduce the amount of future top up taxes whether these are payable in Singapore or overseas.
“Interestingly, the Annexes to the Budget statement suggest that this system is being introduced “to enhance Singapore’s attractiveness for investments”. We believe this overstates the case. Rather we see this as a defence mechanism to prevent the flight of existing investments and as a means of levelling the playing field in the region where other jurisdictions will inevitably be contemplating the same mechanisms. Singapore will stay ahead because of its other economic and political stability charms.”
On the implementation of the Income Inclusion Rule and Domestic Top-up Tax for MNE groups affected by BEPS: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“It would have been helpful if there could have been some clarity around the fate of existing tax incentive regimes for companies not affected by BEPS. The inference is that they will not be affected, but there may be many companies sitting on the edge of their seats waiting for some sort of confirmation. Having said that, the extensions and modifications to existing tax incentives regimes (to introduce additional concessionary tax rates) strongly suggest traditional incentives are set to survive for non-BEPS candidates. This will result in a two-speed tax economy in Singapore.”
On the additional concessionary tax rates (Numbers 7-11 in ‘Maintaining a Fair and Competitive Tax System’): Eng Min LOR, Tax Partner, Grant Thornton Singapore (盧英敏, 税务合伙人, 致同新加坡)
“It appears that the Singapore’s tax incentives regime will remain relevant and competitive with the introduction of the new additional tier of 15% for schemes such as the Development and Expansion Incentive and the Global Trader Program and 10% for schemes such as the Finance and Treasury Centre incentive and the Aircraft Leasing Scheme.”
On nuclear power: David SANDISON, Head of Tax and Singapore Practice Leader, Grant Thornton Singapore
“It is refreshing to hear that the government is beginning to consider nuclear power as an effective clean alternative to other intermittent power initiatives in the attempt at net zero, rather than a blinkered “green agenda” approach. Hopefully, this will enable the new Refundable Investment Credit scheme to be put to good use in developing the strength of Singapore’s “defences” which include defending energy security.”
On the Overseas Humanitarian Assistance Tax Deduction: Eng Min LOR, Tax Partner, Grant Thornton Singapore (盧英敏, 税务合伙人, 致同新加坡)
“The introduction of the Overseas Humanitarian Assistance Tax Deduction scheme is a good initial move to encourage individuals and companies to contribute to worthy causes outside Singapore and to show the world that the little red dot cares!”