During the 2008-2009 Budget speech today, Singapore government announced a series of new tax reliefs in a move to attract foreign businesses and share wealth with people.
Singapore (PRURGENT) February 15, 2008 - Finance Minister Tharman Shanmugaratnam during his 2008-2009 budget speech today unveiled new personal and corporate tax reliefs designed to help both the working class as well as corporate business community. The government anticipates the new tax relief measures will help to attract more foreign investment, share wealth with the community, and promote further growth of the country.
According to the Finance Minister, a favorable global environment helped Singapore economy grow by 7.7% and bring unemployment down to 1.6% in 2007. Furthermore, Singapore achieved a budget surplus of $6.4 billion in Financial Year 2007. The largest boost in revenue collection came from exceptionally upbeat property market.
Finance Minister’s new budget speech provided a range of tax reliefs for both individuals as well as corporate businesses.
Business Tax Reliefs
After reducing the corporate tax rates last year to 18% from the earlier 20%, there were no new tax cut surprises in this year’s budget. However, a number of new tax incentives and relief measures were announced by the Finance Minister in the areas of innovation through R&D, liberalization of tax exemption for SMEs, allowance for cost of fixtures & fittings, tax credits on foreign sourced income, including certain sector specific tax incentives.
The existing restriction on tax-exemption scheme for new startups (all shareholders must be individuals) has been liberalized. According to the new policy, tax exemption is allowed as long as there is at least one individual shareholder that holds at least 10% of the shares. The rest of the shareholding can be owned by corporate entities.
To help SMEs with infrastructure setup costs, businesses will be allowed to write down the cost of fixtures and fittings over a period of three years up to a maximum of $150,000.
All Singapore companies that earned income from countries that don’t have double tax agreement with Singapore, will be allowed a unilateral tax credit on their foreign-sourced income from those countries.
Licensed insurance companies will enjoy a concessionary rate of 10% on the income they derive from offering insurance broking and advisory services to offshore clients.
Shipping companies will enjoy a concessionary rate of 5-10% on income from container leasing activities.
Family owned investment holding companies will now enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced income.
Personal Tax Reliefs
As perhaps the biggest tax news announced during the budget speech by Mr. Shanmugaratnam, the Estate Duty has been removed from the tax regime effective immediately. This could give a significant boost to making Singapore as a wealth accumulation destination for people worldwide.
“It [Removal of Estate Duty] will benefit our whole economy and society, not just the individuals who build up their wealth. It is not a zero sum game.” said the Finance Minister.
Although no tax cuts were introduced in the personal income tax rates by the Singapore government today, the government did announce a one-time income tax rebate of 20% (capped at $2000) for all resident taxpayers for Year of Assessment 2008.
“Our fiscal position is strong. We can therefore afford to share some of the budget surplus with all Singaporeans,” said Mr. Shanmugaratnam.
A number of other incentives aimed at helping families in the areas of educational and healthcare expenses were also announced during the budget speech by Mr. Shanmugaratnam.
“We have been growing much faster than other developed countries – faster than any other country with the same standard of living as us. Our policies are working well, the economy is restructuring, and we are delivering superior performance”, said Mr. Shanmugaratnam.
In announcing the tax cuts, Mr. Shanmugaratnam said, "We will consider further profits tax relief if our economy remains robust and our public finances stay sound."
"The budget speech of Mr. Shanmugaratnam once again demonstrates the government's pro-business vision and its resolve to make Singapore as the Global City of Asia. Companies like ours help global entrepreneurs to setup a Singapore company and take advantage of the available tax benefits and relocation programs." continued Mr. Malhotra.
Full details of the 2008-2009 Budget speech can be http://www.singaporebudget.gov.sg. A summary of Singapore 2008 tax reliefs can be found at http://www.asiabizsetup.com/singapore-tax-cuts-2008.aspx.
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