• Service: Tax, Global Indirect Tax, International Tax
  • Type: Regulatory update
  • Date: 2/21/2014

Singapore - Initial reactions to tax proposals in 2014 budget 

February 21: Singapore’s 2014 budget statement was presented today. An initial review of tax measures included in the budget statement reveals there are provisions that would:
  • Allow qualifying funds that hold their investment through multi-tier structures to claim “tax remission” for the goods and services tax (GST) incurred on the setting-up costs of their various tiers of special purpose vehicles (SPVs)
    • This would consolidate Singapore’s position as a funds management hub in that the changes would ease the administrative burden on the part of the qualifying funds in identifying and excluding the expenses attributable to their SPVs.
    • This concession already exists for S-REITs, and extending it to qualifying funds would signal to the business community that the government fully intends to support Singapore’s growth as a regional funds management and REITs hub.
  • Extend the research and development (R&D) incentive—an additional 50% tax deduction—for another 10 years
  • Provide a tax incentive—the “PIC+ scheme”—for businesses and specifically designed for SMEs, to encourage investment and innovation
    • The PIC+ scheme would increase the expenditure cap for SMEs (effective YA2016 to YA2018) from $400,000 to $600,000* per year of assessment—for a total combined cap of R&D expenditure of $1.8 million over three years, from YA2016 to YA2018.

The budget would increase the “duties” or taxes on tobacco, liquor, and gambling.

Also, there would be a change to the rules for calculating the stamp duty, by using a percentage of the consideration (be it rent or purchase price) in an effort to simplify the computation.

The 2014 budget did not:

  • Address the foreign income exemption incentive for REITs (due to expire 31 March 2015)
  • Propose any change in the GST rate—however, a proposed GST voucher program could possibly pave the way for future increases in that it would address the regressivity of the GST

*$ = Singapore dollar

Read a February 2014 report prepared by the KPMG member firm in Singapore: Reactions to the Singapore Budget 2014 Statement

Read a budget analysis prepared by the KPMG member firm in Singapore.

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