Proposed Singapore will implement the IIR and a DTT under Pillar Two of the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) 2.0 Initiative, which will impose a minimum effective tax rate of 15% on businesses’ profits from financial years starting on or after 1 January 2025. This will apply to relevant multinational enterprise (MNE) groups with annual group revenue of 750 million Euros or more in at least 2 of the 4 preceding financial years (referred to as “in-scope MNE groups”), in line with the Pillar Two Global Anti-Base Erosion (GloBE) Model Rules.
The IIR will apply to in-scope MNE groups that are parented in Singapore, in respect of the profits of their group entities that are operating outside Singapore.
The DTT will apply to in-scope MNE groups in respect of the profits of their group entities that are operating in Singapore.
Proposed A CIT Rebate of 50% of tax payable will be granted to companies for YA 2024 to manage rising costs.
Companies that have employed at least one local employee in 2023 (referred to as “local employee condition”) will receive a minimum benefit of $2,000 in the form of a cash payout (referred to as “CIT Rebate Cash Grant”).
Companies that have met the local employee condition will automatically receive the CIT Rebate Cash Grant by the third quarter of 2024. The CIT Rebate, less any CIT Rebate Cash Grant received, will be automatically incorporated in companies’ tax assessments raised after they file their CIT returns for YA 2024.
The maximum total benefits of CIT Rebate and CIT Rebate Cash Grant that a company may receive is $40,000.
A company is considered to have met the local employee condition if it has made Central Provident Fund (CPF) contributions to at least one local (i.e. Singapore Citizen or Permanent Resident) employee, excluding shareholders who are also directors of the company, in the calendar year 2023.
Proposed The RIC scheme seeks to enhance Singapore’s attractiveness for investments by encouraging companies to make sizeable investments that bring substantive economic activities to Singapore in key economic sectors and new growth areas.
The RIC scheme will support high-value and substantive economic activities such as:
The RIC will be awarded on an approval basis through Economic Development Board (EDB) and EnterpriseSG on qualifying expenditures incurred by the company in respect of a qualifying project during the qualifying period. Each RIC award will have a qualifying period of up to 10 years.
The RIC will support up to 50% of qualifying expenditures. The credits are to be offset against CIT payable. Any unutilised credits will be refunded to the company in cash within 4 years from when the company satisfies the conditions for receiving the credits. The scheme is consistent with the OECD’s GloBE Rules for Qualified Refundable Tax Credits.
The quantum of RIC that a company can receive will depend on the support rates predetermined for the company’s different qualifying expenditure categories. Support rates will be commensurate with the economic outcomes (or decarbonisation outcomes for decarbonisation projects) that the project is expected to bring.
Depending on project type, qualifying expenditure categories may include:
Companies can receive up to 50% of support on each qualifying expenditure category. The total quantum of RIC that a company is eligible for will be determined by EDB or EnterpriseSG. EDB and EnterpriseSG will provide further details by the third quarter of 2024.
Current Under section 14N of the Income Tax Act 1947 (ITA), businesses that incur qualifying R&R expenditure may claim a tax deduction on such expenditure over 3 consecutive YAs on a straight-line basis, starting from the YA relating to the basis period in which the R&R expenditure was incurred. A deduction cap of $300,000 on qualifying R&R expenditure applies every 3 years, starting from the YA in which businesses make their first claim.
Proposed To ease businesses’ compliance burden and improve the relevance of the scheme, the following enhancements will apply from YA 2025:
Inland Revenue Authority of Singapore (IRAS) will provide further details by the third quarter of 2024.
Current Under the FTC incentive, approved companies are eligible for a CTR of 8% on qualifying income.
Proposed An additional CTR tier of 10% will be introduced under the FTC incentive with effect from 17 February 2024.
EDB will provide further details by the second quarter of 2024.
Current Under the ALS, approved aircraft lessors are eligible for a CTR of 8% on qualifying income.
Proposed An additional CTR tier of 10% will be introduced under the ALS for approved aircraft lessors with effect from 17 February 2024.
EDB will provide further details by the second quarter of 2024.
Current Under the DEI, approved companies are eligible for CTRs of 5% or 10% on qualifying income.
Proposed An additional CTR tier of 15% will be introduced under the DEI with effect from 17 February 2024.
EDB will provide further details by the second quarter of 2024.
Current Under the IDI, approved companies are eligible for CTRs of 5% or 10% on qualifying income.
Proposed An additional CTR tier of 15% will be introduced under the IDI with effect from 17 February 2024.
EDB will provide further details by the second quarter of 2024.
Current Under the GTP, approved companies are eligible for CTRs of 5% or 10% on qualifying income.
Proposed An additional CTR tier of 15% will be introduced under the GTP with effect from 17 February 2024.
EnterpriseSG will provide further details by the second quarter of 2024.
Current Under sections 13D, 13O and 13U of the ITA, Qualifying Funds are granted the following tax concessions, subject to conditions:
The schemes are scheduled to lapse after 31 December 2024.
Proposed To continue to grow Singapore’s asset and wealth management industry, the schemes will be extended till 31 December 2029.
In addition, the following key changes will be made:
These key changes will take effect from 1 January 2025. Monetary Authority of Singapore (MAS) will provide further details by the third quarter of 2024.
Current Qualifying income are exempted from tax under the following MSI sub-schemes:
Proposed To better align Singapore’s tax regime for shipping entities with common international practices, an alternative basis of tax where the qualifying income of qualifying shipping entities is taxed by reference to the net tonnage of their ships will be available under the MSI-SRS, MSI-AIS, and MSI-ML(Ship) from YA 2024. The alternative basis of tax will apply to all qualifying ships of MSI entities that are subjected to it.
The current tax treatment under the relevant MSI sub-schemes will continue to apply to MSI entities that are not under the alternative net tonnage basis of tax.
Maritime and Port Authority of Singapore (MPA) will provide further details by the third quarter of 2024.
Grants, Funding and Other Support
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Tax Experts
Sivakumar Saravan Senior Partner & Head of Tax [email protected]
Liew Kin Meng Director, Tax [email protected]
Goh Wai Gang Associate Director, Tax [email protected]
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