SINGAPORE - The Ministry of Finance (MOF) is seeking public feedback on a series of proposed changes to the Income Tax Act, including a few that were announced in the Budget earlier this year.
One proposal, that was announced in the Budget, will enhance and extend the corporate income tax rebate for Years of Assessment (YA) 2017 and 2018 to help companies cope with the economic uncertainty and continue restructuring.
For YA 2017, the rebate cap has been raised from $20,000 to $25,000. The rebate will be extended to YA 2018, but at reduced rate of 20 per cent of tax payable, capped at $10,000.
Another proposal that was unveiled in the Budget would give every individual tax resident a 20 per cent personal income tax rebate capped at $500.
The third Budget proposal was to liberalise tax deduction for payments under cost-sharing agreements for research and development projects.
The draft Income Tax (Amendment) Bill also includes an amendment to strengthen the transfer pricing regime and introduce a mandatory transfer pricing documentation ("TPD") requirement.
Transfer pricing refers to a situation in which a company belonging to a larger group of companies makes a transaction with a related company within the same group.
To limit the compliance burden for smaller businesses, the mandatory TPD requirement will only apply to businesses with turnover exceeding $10 million and significant related party transactions.
The majority of companies will not be affected, as this change will only be relevant to fewer than 5 per cent of all companies, many of which have already been maintaining TPD, the MOF noted.
The draft bill also includes 25 other refinements to existing tax policies and tax administration, arising from periodic review of Singapore's income tax system.
The public can access the detailed consultation documents for the draft Income Tax (Amendment) Bill 2017 on the Ministry of Finance's website(www.mof.gov.sg) and the REACH consultation portal (www.reach.gov.sg).
The consultation period ends on July 10.