15th Feb 2008
Mary Swire
Singapore's Minister for Finance, Tharman Shanmugaratnam, on Friday announced a number of new tax initiatives to improve the city-state's business and wealth management regimes in his Budget Statement for 2008, but left the main rates of income on hold for another year.
"With our 18% Corporate Tax rate and the enhancements we have made to our Partial Tax Exemption scheme last year, our corporate tax regime is competitive," Tharman told Parliament, going on to announce improved tax breaks for research and development, start-up companies and SMEs, and the investment sector including Islamic finance.
The main tax proposals affecting companies included:
- An increased tax deduction for expenditure incurred on research and development (R&D) done in Singapore from 100% to 150%;
- A new incentive to grant companies R&D Tax Allowance for 2009 to 2013, amounting to 50% of the first SGD300,000 of chargeable income for each year;
- An initiative to allow start-ups that have yet to make taxable profits within their first three years to convert up to SGD225,000 of the company’s losses (arising from tax deductions for R&D which the company does in Singapore) into cash grants of up to SGD20,250 from the Government;
- An allowance to all companies for expenditure incurred on fixtures, fittings and installations, except those relating to structure or expansion of building space, up to a maximum expenditure of SGD150,000 every three years;
- An extended unilateral tax credit claim for foreign income taxes incurred on all types of foreign-sourced income earned in countries with which Singapore has yet to conclude an Avoidance of Double Taxation Agreement (DTA); and
- A double tax deduction for recruitment and relocation costs of hiring top global talent, for another five years.
