Singapore Budget 2018 Highlights

Budget 2018 lays the foundation for Singapore’s development into the next decade. It addresses the long term challenges of the country; and serves as a strategic and integrated financial plan to position Singapore for the future. The country faces three major shifts namely, in the changing global economic weight towards Asia, the emergency of new technologies and an aging population.

A number of tax changes were announced to provide a near term support to businesses, encourage building of capabilities and harness new technologies to stay competitive in the digital economy. Partnerships with overseas counterparts will be strengthen and to anchor Singapore as a Global-Asia node of technology, innovation and enterprise.

Several tax initiatives will be implemented by phases to finance the growing expenditures such as the healthcare, infrastructure, security and education.

Some of the main highlights relevant to companies:

1. Corporate income tax rebate will be increased to 40% of tax payable, capped at S$15,000 for YA2018. It will extend the corporate tax rebate to 2019 at the rate of 20% of tax payable, capped at S$10,000.
2. There will be adjustments to lower tax exemptions on the Start-Up Tax Exemption (“SUTE”) scheme and Partial Tax Exemption (“PTE”) scheme on or after YA 2020.
3. The Wage Credit Scheme will be extended for three more years, i.e. 2018, 2019 and 2020, to support businesses embarking on transformation efforts and encourage sharing of productivity gains with workers. Government co-funding will be maintained at 20% in 2018. Subsequently, the co-funding ratio will be stepped down to 15% in 2019 and 10% in 2020.
4. Tax deduction for costs on protecting intellectual property (“IP”) will be enhanced to encourage businesses, particularly smaller ones, to register and protect their IPs. The tax deduction will be enhanced to 200% for the first $100,000 of qualifying IP registration costs incurred for each YA. This change will take effect from YA2019 to YA2025.
5. To support businesses to build their own innovations, the tax deduction for staff costs and consumables incurred on qualifying R&D projects performed in Singapore will increase from 150% to 250%. All other conditions of the scheme remain unchanged. This change will take effect from YA2019 to YA2025.
6. GST will be introduced on imported services on or after 1 January 2020.
7. A 2% GST rate hike from 7% to 9% is planned to be introduced sometime between 2021 and 2025, depending on Singapore’s economy, government spending and revenue from other taxes.
8. New and/updated grants and opportunities will be made available for corporations who seek innovation and internationalization.

For more information, you may contact Ms Su Lee Chan, General Manager of Zetland Singapore at suleec@zetland.biz