SINGAPORE BUDGET 2018 - Together, A Better Future - UHY LSC
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SINGAPORE BUDGET 2018 Together, A Better Future “Your Trusted Partner for Excellence”
CONTENTS
FOREWORD ............................................................................................................................................. 2
BUSINESS TAX.......................................................................................................................................... 4
PERSONAL INCOME TAX ........................................................................................................................ 12
GOOD AND SERVICES TAX...................................................................................................................... 13
STAMP DUTY ......................................................................................................................................... 15
FOREIGN WORKER LEVY ........................................................................................................................ 16
OTHERS ................................................................................................................................................. 18
GLOSSARY ............................................................................................................................................. 22
CONTACTS ............................................................................................................................................. 24
1
FOREWORD
Minister for Finance Mr Heng Swee Keat delivered the Singapore’s Budget Statement for the Financial
Year 2018 in Parliament on 19 February 2018.
Mr Heng announced that Singapore’s Gross Domestic Products expanded by 3.6% in 2017. Coming as a
surprise, he announced a budget surplus of S$9.6 billion, far exceeded the expected surplus of S$1.9
billion.
The Budget comes amidst a backdrop of the three broad shifts, namely, the shift in global economic
weight towards Asia, the emergence of new technologies and an ageing population in Singapore. Budget
2018 will address these shifts through four strategies:
1. Developing a more vibrant and innovative economy.
2. Building a smart, green and liveable city.
3. Fostering a caring and cohesive society
4. Preserving a fiscally sustainable and secure future.
2
Budget 2018 anchors and strengthens the foundation for Singapore’s development into the next decade.
It serves as a strategic and integrated financial plan to position Singapore for the future.
The government expects increase in spending needs, such as on healthcare, infrastructure, security and
education, there is a need to have sustainable revenue streams to fund these expenditures. As widely
expected, Mr Heng confirmed that the GST rate will be increased by two percentage points from 7% to
9% to be implemented sometime in the period from 2021 to 2025. Offset packages will be implemented to
help Singaporeans to adjust to the increase. From 01 Jan 2020, digital services imported from overseas
will be subjected to GST. Other measures to boost revenues include the raising of tobacco excise duty by
10 per cent, the introduction of carbon tax, the increase in top marginal buyer’s stamp duty from 3% to 4%
on value of residential property in excess of S$1 million.
The Government will support businesses to innovate and build capabilities through grants and help firms
grow and internationalize. The Pioneer Generation Office (PGO) will be renamed to Silver Generation
Office (SGO) to reflect its enhanced role. Singaporean citizens aged 21 years and above will be able to
share the fruits of Singapore’s prosperity through an SG Bonus of between $100 and $300 depending on
income.
Mr Heng also outlined several measures to build a caring and cohesive society. There will be an increase
in the annual Edusave Contributions by the Government and more support for financial planning for
citizens. The government will strengthen the partnership between the government and the community to
support our seniors and those in need. Measures will be taken to upgrade the skills of workforce.
Capability Transfer Programme will support the transfer of skills from foreign specialists to Singaporean
workers. The Wage Credit Scheme will be extended for three more years to help local companies cope
with near term cost pressures.
We now summarise below the tax changes and some of the new initiatives unveiled in the Budget
Statement.
3
BUSINESS TAX
BUSINESS TAX Effective
Enhancing and extending the YAs 2018 & 2019
Corporate Income Tax (“CIT”) Rebate The CIT rate remains at 17%.
The CIT rebate for YA2018 will be enhanced
and the rebate will be extended to YA2019 as
follow:
YA2018 – CIT rebate rate will be enhanced to
40% of tax payable with an enhanced cap of
$15,000.
YA2019 – CIT rebate rate of 20% of tax payable,
capped at $10,000.
4
Adjustment to the Start-Up Tax YA2020
Exemption (“SUTE”) scheme The scheme will be adjusted as follows:
Tax exemption
First $100,000 of normal 75%
chargeable income
Next $100,000 of normal 50%
chargeable income
This change will take effect in or after
YA2020.
Adjustment to the Partial Tax YA2020
Exemption (“PTE”) scheme The scheme will be adjusted as follows:
Tax exemption
First $10,000 of normal 75%
chargeable income
Nest $190,000 of normal 50%
chargeable income
This change will take effect in or after
YA2020 for all companies (excluding those
that qualify for SUTE scheme) and bodies of
persons.
Enhance the tax deduction for YA2019 to YA2025
qualifying expenditure on qualifying Tax deduction for staff costs and
Research and Development (“R&D”) consumables incurred on qualifying R&D
projects performed in Singapore projects performed in Singapore will be
increased from 150% to 250%.
This change will take effect from YA2019 to
YA2025.
Enhance the tax deduction for costs YA2019 to YA2025
on protecting Intellectual Property The scheme will be extended till YA2025;
(“IP”) Enhance the deduction to 200% for the first
$100,000 of qualifying IP registration costs
incurred for each YA.
The change will take effect from YA2019 to
YA2025.
Enhance the tax deduction for costs YA2019 to YA2025
on IP in-licensing The tax deduction for the first $100,000 of
qualifying IP in-licensing costs incurred for
each YA will be enhanced from 100% to
200%.
Qualifying IP in-licensing costs exclude
related party licensing payments, or
payments for IP where any allowance was
previously made to that person.
5
Enhance the Double Tax Deduction On or after YA2019
for Internationalisation (“DTDi”) The $100,000 expenditure cap for claims
scheme without prior approval from IE Singapore or
STB will be raised to $150,000 per YA
incurred on the following activities:
o Overseas business development
trips/missions;
o Overseas investment study
trips/missions;
o Participation in overseas trade fairs; and
o Participation in approved local trade fairs.
Businesses can continue to apply to IE
Singapore or STB on qualifying expenses
exceeding $150,000 or expenses incurred on
other qualifying activities.
This change will apply to qualifying expenses
incurred in or after YA2019.
IE and STB will release further details by
April 2018.
Extend the 250% Tax Deduction for Extended to 31.12.2021
Qualifying Donations The 250% tax deduction for qualifying
donations will be extended for donations
made on or before 31.12.2021.
Extend the Business and IPC Extended to 31.12.2021
Partnership Scheme (“BIPS”) The Scheme was originally for qualifying
expenditure incurred from 01.07.2016-
31.12.2018.
It will be extended to 31.12.2021.
The Scheme allowed a total of 250% tax
deduction to a qualifying person on qualifying
expenditure, such as wages incurred in
respect of:
o The provision of services by his qualifying
employee to an IPC; or
o The secondment of his qualifying
employee to an IPC.
The qualifying expenditure is subject to a cap
of S$250,000 per business per YA and
S$50,000 per IPC per calendar year.
MOF and IRAS will review the administrative
process.
Details of changes will be announced in the
second half of 2018.
6Introduce a tax framework for A tax framework will be introduced:
Singapore Variable Capital a. A S-VACC will be treated as a
Companies (“S-VACCs”) company and a single entity for tax
purpose;
b. Tax exemption under Sections 13R
and 13X of the ITA will be extended to
S-VACCs;
c. 10% concessionary tax rate under the
FSI-FM scheme will be extended to
approved fund managers managing
an incentivised S-VACC; and
d. The existing GST remission for funds
will be extended to incentivise S-
VACCs.
MAS will release further details of the tax
framework for S-VACCs by October 2018.
Extend the Enhanced-Tier Fund Wef 20.02.2018
Scheme under Section 13X of the ITA The enhanced-Tier Fund Scheme will be
to all fund vehicles extended to all fund vehicles constituted in all
forms.
Besides companies, trusts and limited
partnerships, all fund vehicles will be able to
qualify for the scheme.
The change will take effect for new awards
approved on or after 20.02.2018.
MAS will release further details by May 2018.
Extend the tax transparency On or after 01.04.2018
treatment for Singapore-listed Real The following tax treatments will be accorded
Estate Investment Trusts (“S-REITS”) to REITs ETFs:
to Singapore-listed Real Estate a. Tax transparency treatment on the
Investment Trusts Exchange-Traded distribution received by REITs ETFs from
Funds (“REITs ETFs”) S-REITs which are made out of the
latter’s specified income;
b. Tax exemption on such REITs ETFs
distributions received by individuals,
excluding individuals who derive any
distribution:
i. through a partnership in Singapore; or
ii. from the carrying on of a trade,
business or profession; and
c. 10% concessionary tax rate on such
REITs ETFs distribution received by
qualifying non-resident non-individuals.
Subject to conditions, the tax concessions for
REITs ETFs will take effect on or after
01.07.2018.
7 Review date is on 31.03.2020.
Application for the tax transparency treatment
can be submitted to IRAS on or after
01.04.2018.
MAS and IRAS will release further details by
March 2018.
Extend and enhance the Financial On or after 01.01.2019
Sector Incentive (“FSI”) scheme The FSI scheme will be extended till
31.12.2023.
The scope of trading in loans and their
related collaterals is expanded to include
collaterals that are prescribed infrastructure
assets or projects.
The change will apply to income derived on
or after 01.01.2019 in respect of new and
renewal awards approved on or after
01.06.2017.
MAS will release further details by May 2018.
Extend the Insurance Business The IBD-IBB scheme will be extended till
Development – Insurance Broking 31.12.2023.
Business (“IBD-IBB”) scheme The IBD_SIBB scheme will be allowed to
lapse after 31.03.2018.
Allow the Insurance Business Specialty insurance broking and advisory
Development-Specialised Insurance services will be incentivised under the IBD-
Broking Business (“IBD-SIBB”) IBB scheme at a concessionary tax rate of
scheme to lapse 10%.
MAS will release further details by May2018.
Extend the tax deduction for banks Extended to YA2024 and 2025
(including merchant banks) and The tax deduction under Section 14I of the
qualifying finance companies for ITA will be extended till:
impairment and loss allowances YA2024- for banks and qualifying finance
made in respect of non-credit- companies with December FYE; or
impaired financial instruments. YA2025 – for banks and qualifying finance
companies with non-December FYE.
MAS will release further details by May 2018.
8Rationalize the withholding tax Review date – 31.12.2022
(“WHT”) exemptions for the financial A review date of 31.12.2022 will be
sector introduced for WHT exemptions for the
following payments:
i. Payments made under cross currency
swap transactions made by Singapore
swap counterparties to issuers of
Singapore dollar debt securities;
ii. Payments made under interest rate or
currency swap transactions by financial
institutions;
iii. Payments made under interest rate or
currency swap transactions by MAS; and
iv. Specified payments made under
securities lending or repurchase
agreements by specified institutions;
The following WHT exemptions will be
legislated, along with a review date of
31.12.2022:
i. Interest on margin deposits paid by
members of approved exchanges for
transactions in futures; and
ii. Interest on margin deposits paid by
members of approved exchanges for spot
foreign exchange transactions (other than
those involving Singapore dollar).
The change will take effect for payments
under agreements entered into on or after
20.02.2018.
The WHT exemptions for the following
payments will be withdrawn:
i. Interest from approved Asian Dollar
Bonds; and
ii. Payments made under over-the-counter
financial derivative transactions by
companies with FSI-Derivatives market
awards that were approved on or before
19.05.2007.
The change will take effect for payments
under agreements entered into on or after
01.01.2019.
MAS will release further details by May 2018.
9Extend the tax incentive scheme for Extended to 31.12.2023
Approved Special Purpose Vehicle The ASPV scheme will be extended till
(“ASPV”) engaged in asset 31.12.2023, with the exception of stamp duty
securitization transactions (“ASPV remission on the instrument relating to
Scheme”) transfer of assets to the ASPV for approved
asset securitization transactions. The stamp
duty remission will be allowed to lapse after
31.12.2018.
MAS will release further details by May 2018.
Extend the Qualifying Debt Securities Extended to 31.12.2023
(“QDS”) incentive scheme The QDS scheme will be extended till
31.12.2023.
Allow the Qualifying Debt Securities The QDS+ scheme will be allowed to lapse
Plus (“QDS+”) incentive scheme to after 31.12.2018.
lapse Debt securities with tenure beyond 10 years
and Islamic debt securities that are issued:
a. After 31.12.2018 can enjoy tax
concessions under the QDS scheme if
the conditions of the QDS scheme are
satisfied;
b. On or before 31.12.2018 can continue to
enjoy the tax concessions under the
QDS+ scheme if the conditions of the
QDS+ scheme are satisfied.
MAS will release further details b May 2018
Extend the tax exemption on income Extended till 31.12.2023
derived by primary dealers from The tax exemption on income derived by
trading in Singapore Government primary dealers from trading in SGS will be
Securities (“SGS”) extended till 31.12.2023.
MAS will release further details by May 2018.
Extend the Investment Allowance 20.02.2018 – 31.12.2023
(“IA”) scheme to include qualifying The qualifying expenditure will be extended
investment in submarine cable to capital expenditure incurred on newly-
systems landing in Singapore constructed strategic submarine cables
systems landing in Singapore, subject to
qualifying conditions.
All other conditions of the IA scheme apply
except for the following which will be
permitted:
a. The submarine cable system can be used
outside Singapore; and
b. The submarine cable systems, on which
IA has been granted, can be leased out
under the indefeasible rights of use
arrangements.
This change will take effect for capital
expenditure incurred between 20.02.2018
and 31.12.2023, inclusive of both dates.
10Introduce a review date for the WHT Review date – 31.12.2022
exemption on container lease A review date of 31.12.2022 will be
payments made to non-resident introduced.
lessors Unless the scheme is extended, such
payments accruing to a non-resident lessor
under any lease or agreement entered into
on or after 01.01.2023 in respect of the use
of a qualifying container for the carriage of
goods by seas will be subject to WHT.
Streamlining of different grants Enterprise Development Grant (EDG)
To combine the following grants:
a. Capability Development Grant (CDG)
b. Global Company Partnership (GCP)
The grant will provide support for up to
70% of qualifying costs from FY2018 to
FY2019.
It will be administered by Enterprise
Singapore (ESG).
Productivity Solution Grant (PSG)
The existing grant schemes that support
pre-scoped, off-the-shelf productivity
solutions will be streamlined into on PSG.
The PSG will provide funding support for
up to 70% of qualifying costs.
Partnerships for Capability Transformation
Programme (PACT)
The existing PACT (Spring and EDB)
and Collaborative Industry Projects (CIP)
will be combined into a PACT scheme.
PACT will provide support of up to 70% of
qualifying costs.
PACT will be administered by EDB and
ESG.
Spring and IE Singapore will be merged into
Enterprise Singapore in April 2018.
11PERSONAL INCOME TAX
PERSONAL INCOME TAX Effective
Personal Income Tax No change to the personal income tax
rates.
There will be no tax rebate for YA2018.
As announced in the previous Budget, the
total personal income tax reliefs will be
capped at S$80,000 wef YA2018.
12GOOD AND SERVICES TAX
GOODS AND SERVICES TAX Effective
Introduce GST on imported services On and from 01.01.2020
GST on imported services will be introduced
with effect from 01.01.2020.
Business-to-Business (B2B) imported
services will be taxed via a reverse charge
mechanism.
Only the following businesses need to apply
reverse charge:
o Businesses making exempt supply; or
o Businesses that do not make any
taxable supplies.
Business-to-Consumers (B2C) imported
services will take effect through an
Overseas Vendor Registration (OVR) mode.
This requires overseas suppliers and
electronic marketplace operators which
make significant supplies of digital services
to local customers to register with IRAS for
GST.
IRAS will release details by end Feb 2018.
13Impending GST rate increase In the period from 2021 to 2025
The Government will raise GST rate from
7% to 9% sometime in the period from 2021
to 2015.
The GST increase will be implemented in a
progressive manner and the Government
will:
o Continue to absorb GST on publicly-
subsidised education and healthcare.
o Enhance the permanent GST voucher
scheme.
o Implement an offset package for a
period.
14STAMP DUTY
STAMP DUTY Effective
Raising of Buyer’s Stamp Duty on the 20.02.2018
value of Residential Property in Excess The top marginal Buyer’s Stamp Duty rate
of S$1 million will be raised from 3% to 4%.
It applies on the value of residential
property in excess of S$1 million.
The revised rates will apply to all residential
properties acquired on or after 20.02.2018.
Tiers Rate
First $180,000 1%
Next $180,000 2%
Next $640,000 3%
Amount exceeding 4% (New)
$1,000,000 (for
residential properties
only)
If the Option to Purchase has been granted
on or before 19.02.2018 and is exercised
within three weeks of the proposed change
(i.e. on or before 12.03.2018) or the Option
validity period, whichever is the earlier,
buyer may apply to IRAS for a remission to
apply the current rate.
The Buyer’s Stamp Duty rates for non-
15residential properties remain unchanged.FOREIGN WORKER LEVY
FOREIGN WORKER LEVY Effective
Deferring foreign worker levy (“FWL”) Deferred till 30.06.2019
changes The planned increase in foreign worker levy
for the Marine Shipyard and Process
sectors will be further deferred for one more
year from 01.07.2018 to 30.06.2019.
Foreign domestic worker (FDW) levy 01.04.2019
framework Family with young children and elderly will
continue to enjoy the concessionary levy of
$60.
The qualifying age for the levy concession
under the aged person scheme will be
raised from 65 to 67 from 01.04.2019.
Households with persons aged 65 and 66,
which are enjoying or have enjoyed the
aged person concession before 01.04.2019
will continue to pay the monthly levy rate of
$60 on and after 01.04.2019
16 For employers who do not qualify for the
levy concession, the monthly levy will be
raised.
For the first and second FDW, the levy will
be raised from $265 today to $300 and
$450 respectively.
This change will take effect from
01.04.2019.
17OTHERS
OTHERS Effective
Carbon tax 2019
A carbon tax will be applied on facilities that
produce 25,000 tonnes or more of
greenhouse gas emissions a year.
The carbon tax rate will be set at S$5 per
tonne of greenhouse gas emissions from
2019 to 2023.
The tax will apply uniformly to all sectors
without exemption.
The rate will be reviewed in 2023 and may
be increased to between S$10 – S$15 per
tonne of emissions by 2030.
More details will be announced by the
Ministry of Environment and Water
Resources’ (MEWR) Committee of Supply.
18Excise Duties for Tobacco Products 19.02.2018
The excise duty will be increased by 10%
across all tobacco products.
Extension of the Wage Credit Scheme Extended to 2020
(WCS) The Scheme is extended for another three
years (2018 – 2020).
Under the scheme, the Government will co-
fund the following percentage of wage
increases of Singaporean employees
earning a gross monthly wage of up to
S$4,000, subject to a minimum gross
monthly wage increase of S$50:
Qualifying wage Percentage of
increase in co-funding
2018 20%
2019 15%
2020 10%
Only wage increase given in 2017, 2018
and 2019 and sustained in subsequent
years will be supported.
One-off SG bonus for adult Singaporeans aged 21 years and above in
Singaporean 2018 will receive a one-off “SG Bonus” this
year, ranging from $100 to $300, depending
on their income.
Assessable income in
YA2017 SG Bonus
S$ S$
28,000 and below 300
From 28,001 to 200
100,000
Above 100,000 100
Adult Singaporeans who own more than
one property are only eligible for SG Bonus
of $100.
Increased support for education Increase the annual Edusave contributions:
Primary School: From $200 to $230.
Secondary School: From $240 to $290.
This will take effect from January 2019.
Update the income eligibility criteria for the
Edusave Merit Bursary and the Independent
School Bursary.
19 Increase the support to students from lower-
income families.
Will enhance the MOE Financial Assistance
Scheme by raising the annual bursary
quantum for pre-university students, from
$750 to $900, and update the income
eligibility criteria.
Support for Financial Planning The Government will pilot a new financial
education curriculum at polytechnics and
ITE.
The Government will enhance existing
services to Singaporeans at HDB, when
they buy a flat, and at CPF Board, when
they approach retirement, to enable them to
make better-informed decisions at these
major milestones.
Review of Eldershield The ElderShield, an insurance scheme that
helps those with severe disabilities cope
with the financial demands of their daily
care, will be reviewed.
Enhanced Proximity Housing Grant PHG for families buying a resale flat to live
(“PHG”) with their parents or children will be
increased to $30,000.
Those buying a resale flat near their parents
or children will continue to receive a PHG of
$20,000.
PHG for singles, who are often a key source
of caregiving support within their families will
be enhanced:
a. Singles who buy a resale flat to
live with their parents will now
receive an enhanced PHG of
$15,000.
b. Those who buy a resale flat near
their parents will also now receive
a PHG of $10,000.
Simplify the criterion for determining what is
“near”. Currently, it is defined as living in the
same town or within 2km. This criterion will
be simplified to “within 4km”.
20Extension of Service and Conservancy The rebate will be extended for another
Charges Rebate year.
In year 2018, eligible HDB households will
receive 1.5 to 3.5 months of rebate on their
Service and Conservancy Charges.
21GLOSSARY
ABP Approved Building Project
ADA-EEET Accelerated Depreciation Allowance for Energy Efficient Equipment and Technology
ACRA Accounting and Corporate Regulatory Authority
AFL Approved Foreign Loan
AITD Angel Investor Tax Deduction Scheme
ALS Aircraft Leasing Scheme
ARI Approved Royalties Incentive
ASEC Additional Special Employment Credit
BEPS Base Erosion and Profit Shifting
BIPS Business and IPC Partnership Scheme
CAS Cost Sharing Agreement
CEVS Carbon Emission-Based Vehicles Scheme
CPF Central Provident Fund
DTD Double Tax Deduction
DUT Designated Unit Trust Scheme
EDB Economic Development Board
EIPIC Early Intervention Programme for Infants and Children
FIs Financial Institutions
FTC Finance and Treasury Centre
GLS Government Land Sales
GST Goods and Services Tax
GSTV GST Voucher
GTP Global Trader Programme
GVR Green Vehicle Rebate
HDB Housing and Development Board
HQ Head Quarters
IArb International Arbitration
ICT Information and Communications Technology
IEFS Industrial Exemption Factory Scheme
IE Singapore International Enterprise Singapore
IGS International Growth Scheme
IIA Integrated Investment Allowance
ITA Income Tax Act
IRU Indefeasible Right to use
LIA Land Intensification Allowance
22LTA Land Transport Authority
M&A Mergers & Acquisitions Scheme
MAS Monetary Authority of Singapore
MDE Media and Digital Entertainment
MOF Ministry of Finance
MOM Ministry of Manpower
MSI Maritime Sector Incentive
MYE Man-Year-Entitlement
PE Permanent Establishment
PIC Productivity and Innovation Credit
PTE Partial Exemption Scheme
R&D Research and Development
R&R Renovation and Refurbishment
RBTs Registered Business Trusts
REITs Real Estate Investment Trusts
S&CC Service and Conservancy Charges
SEC Special Employment Credit
SME Small and Medium Enterprise
SPRING SPRING Singapore
SUTE Start-up Tax Exemption Scheme
TEC Temporary Employment Credit
TRS Tourist Refund Scheme
WCS Wage Credit Scheme
WDA Writing Down Allowance
WHT Withholding Tax
WPHs Work Permit Holders
YA Year of Assessment
23CONTACTS
Tax Services
Lee Seng Suan
lss@uhylsc.com.sg
+65 6395 5142
Gan Hoe Kwang
hoekwang.gan@uhylsc.com.sg
+65 6395 5108
Ho Hai Cheong
haicheong.ho@uhylsc.com.sg
+ 65 6395 5140
Luo Jun
jun.luo@uhylsc.com.sg
+ 65 6395 5145
This Budget Summary is prepared for the information of clients and is intended for general reference only. No
liability can be accepted for any actions taken or for any loss caused by reliance on it without prior consultation
with an appropriate professional.
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Tel +65 6395 5100 | Fax +65 6298 6263 | www.uhylsc.com.sg
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international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY International
network. The services described herein are provided by the Firm and not by UHY or any other member firm of UHY. Neither UHY nor any
member of UHY has any liability for services provided by other members.
©2018 UHY Lee Tax Services Pte Ltd
An independent member of UHY International
“Your Trusted Partner for Excellence”
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