International Tax Newsletter - Spring/Summer 2012 - Singapore
The Finance Minister delivered the 2012-13 Budget on 17 February 2012. However, unlike previous years, the Budget this year focused on social equality as opposed to fiscal competitiveness. Significant tax-related proposals are as follows:
DISPOSAL OF EQUITY INVESTMENTS: SAFE HARBOUR RULES
Gains realised post 1 June 2012 from disposal of equity investments are not taxable if the buyer holds a minimum of 20% shares for at least 24 months prior to the disposal.
GOLD TRADING HUB
The supply of investment grade gold and other precious metals will be exempt from Goods & Services Tax (GST) from 1 October 2012.
CASH GRANT FOR SMALL AND MEDIUM ENTERPRISES (SME)
Automatic one-off cash grant, pegged at 5% of the company’s revenue for fiscal year 2011, capped at S$5,000. The company must have made Central Provident Fund (CPF) contributions for at least one employee during the year.
ENHANCED PRODUCTIVITY AND INNOVATION CREDIT (PIC) SCHEME
A 400% tax deduction for up to S$400,000 expenditure on one or more of the qualifying activities:
- purchase/lease of automation equipment
- investment in research and development
- approved design
- acquisition or registration of intellectual property.
This is available till fiscal year 2014. Companies can also opt for a 60% cash payout for up to S$100,000 of the qualifying expenditure.
MERGERS AND ACQUISITIONS ALLOWANCE
In addition to the current allowance, a 200% tax allowance on up to S$100,000 of the transaction costs for each year is proposed. This allowance may be written down in a single year and is applicable to transactions between 17 February 2012 and 31 March 2015.
EXTENSION OF THE GST TEMPORARY IMPORT PERIOD
Goods (other than alcoholic beverages and tobacco) imported for approved purposes such as exhibitions, fairs, auctions, repairs, stage performances, testing, experiments and demonstrations may be imported without GST if they are re-exported within six months.
RENOVATION AND REFURBISHMENT DEDUCTION SCHEME
With effect from fiscal year 2012, the ceiling is raised to S$300,000 for costs incurred every three years.
DOUBLE TAX DEDUCTIONS: HELPING COMPANIES INTERNATIONALISE
Automatic deductions without prior approval for up to S$100,000 on the following expenditure:
- overseas business development trips
- overseas investment study trips
- overseas trade fairs and approved local trade fairs.
REVISIONS TO VEHICLE TAX REGIME
The Green Vehicle Rebate Scheme for commercial vehicles and motorcycles will be extended to 2014. Additional Transfer Fees on used vehicle transactions will also be removed. Low carbon emission vehicles will enjoy rebates of up to S$20,000 while high carbon emission vehicles are subject to a surcharge of up to S$20,000. Euro-V compliant diesel vehicles will also enjoy reduced taxes.
ENHANCED SPECIAL EMPLOYMENT CREDIT (SEC) AND REVISED CPF CONTRIBUTIONS
In the effort to encourage employers to engage older Singaporean employees above the age of 50, an SEC of up to 8% of wages will be given. Older workers will also enjoy an increase in CPF contribution rates.
More information on these developments can be provided by GOH Bun Hiong, PKF Singapore, through the EisnerAmper contacts listed at the end of this Newsletter.
International Tax Newsletter - Spring/Summer 2012 Issue