Singapore 2018 Budget summaries

BUDGET 2018 – TOGETHER, A BETTER FUTURE

Our Finance Minister Mr Heng Swee Keat delivered his Budget 2018 speech on Monday (Feb 19) in The Parliament. Below a summary of key deliveries in his Budget 2018 speech which of relevant to businesses:

WAGE CREDIT SCHEME (WCS)

Extend the WCS for another 3 years until year 2020.

CORPORATE INCOME TAX REBATE

FOREIGN WORKER LEVY (FWL)

Defer earlier-announced increases in FWL rates for the Marine Shipyard and Process sectors for another year.

PRODUCTIVITY SOLUTIONS GRANT 

Up to 70% funding support for the adoption of pre-scoped, off-the-shelf solutions to improve productivity. Businesses can apply for the new grant through the Business Grants Portal that will provide a list of supportable equipment and technology solutions relevant for their sectors with effect from 1 April 2018.

ENTERPRISE DEVELOPMENT GRANT (EDG)

Spring Singapore’s Capability Development Grant (CDG) and International Enterprise Singapore’s Global Company Partnership (GCP) Grant will combine into the Enterprise Development Grant (EDG). Up to 70% funding support for firms /businesses to build a range of capabilities including innovations, talent development and internationalisation from FY2018 to FY2019. Businesses can apply for the EDG through the Business Grants Portal, with effect from Quarter 4 of 2018.

TAX DEDUCTIONS

Enhanced tax deductions for businesses in their use of innovations and technology as a competitive advantage

DOUBLE TAX DEDUCTION FOR INTERNATIONALISATION (DTDi)

From YA2019, expenses that can qualify for DTDi without prior approval will increase from $100,000 to $150,000 per year of assessment.

ADJUSTMENTS TO BROAD-BASED TAX SCHEMES

From YA2020, tax exemptions under the Start-up Tax Exemption (SUTE) and the Partial Tax Exemption schemes will be limited to the first $200,000 of chargeable income. Tax exemption on the first $100,000 of chargeable income under SUTE, will be reduced from 100% to 75%.

CARBON TAX

Singapore’s Carbon Tax will be at $5 a tonne for five years from 2019 to 2023, and will be review in 2023, to increase it to a rate of between $10 and $15 a tonne of emissions by 2030.

GST RATE

The GST rate will go up from 7% to 9% sometime in the period between 2021 and 2025. In his budget speech, Finance Minister Mr Heng Swee Keat said that an earlier upward adjustment in the GST rate is preferred.

GST ON IMPORTED SERVICES 

From 1 January 2020, GST will be introduced on imported services. The imported services will be categorised into types of services: business-to-business (B2B), such as marketing services, accounting services and IT Services; and business-to-consumers (B2C), including video and music streaming services, apps and online subscription fees. B2B imported services will be taxed via a reversed charge mechanism, while B2C imported services will be taxed under an overseas vendor registration model.

TOBACCO TAX

10% increase in tobacco excise duty across all tobacco products from 19 February 2018.

BUYER’S STAMP DUTY (BSD) RATES FOR RESIDENTIAL PROPERTIES

The top marginal BSD rate will be raised from 3% to 4% and applied on the value of residential property in excess of $1 million.

QUALIFYING DONATIONS TO IPC

The current tax deductions of 250% for qualifying donations to IPC will once again be extended for another 3 years until 31 December 2021.

The Business and IPC Partnership Scheme (BIPS) will also be extended to 3 more years until 31 December 2021. The BIPS allows businesses that send their staff to volunteer and provide services to IPCs such as secondments to receive a 250% tax deduction on wages and incidental expenses.