The Ministry of Finance is conducting a public consultation on the draft Income Tax (Amendment) (No. 3) Bill 2016 from 8 Jul to 29 Jul 2016 to invite interested parties to provide feedback on the Bill.

Proposed Amendments

The proposed amendments to the Income Tax Act (“ITA”) include changes announced in the 2016 Budget Statement. The key changes include:

1. Enhance the Corporate Income Tax (“CIT”) rebate for Years of Assessment (“YAs”) 2016 and 2017 from 30% to 50% of corporate tax payable, with a cap of $20,000 rebate per YA, to help SMEs especially.
2. Enhance the Merger & Acquisition (“M&A”) scheme by granting the M&A allowance for the first $40 million (up from $20 million currently) of the consideration paid for qualifying M&As deals per YA till 31 Mar 2020. This is to support more M&As.
3. Extend the Double Tax Deduction for Internationalisation scheme for four years till 31 March 2020 to support businesses in their internationalisation efforts.
4. Extend the upfront certainty of non-taxation of companies’ gains from disposal of equity investments till 31 May 2022 to provide certainty to companies for their corporate restructuring.
5. Pilot the Business and Institute of a Public Character (“IPC”) Partnership Scheme (“BIPS”) from 1 Jul 2016 to 31 Dec 2018. Businesses that send their employees to volunteer and provide services to IPCs, including secondments, will receive a 250% tax deduction on associated cost incurred, subject to caps.
6. Cap total personal income tax relief, at $80,000 per YA, with effect from YA 2018, to maintain a progressive personal income tax system.
   

The Bill also includes an amendment to enable implementation of Country-by-Country Reporting (“CbCR”) with effect from enterprises’ financial years commencing on or after 1 Jan 2017. Singapore-headquartered[1] multinational enterprises with global revenues exceeding S$1,125 million (equivalent to €750 million) will have to submit to IRAS an annual country-by-country (“CbC”) report containing the income, taxes paid, and other indicators of level of economic activities in every tax jurisdiction where they operate. This CbC report is to be submitted within 12 months from the last day of their financial year. IRAS will exchange the CbC reports with jurisdictions with which Singapore has entered into bilateral agreements for automatic exchange of CbC reports, having established that the jurisdictions meet the following conditions: 

• First, these jurisdictions have a strong rule of law and can ensure the confidentiality of the information exchanged and prevent its unauthorised use.
• Second, there must be reciprocity in terms of the information exchanged.
  

IRAS will consult Singapore-headquartered multinational enterprises further on the implementation details of CbCR, and release these details by Sep 2016.

The Income Tax (Amendment) (No. 3) Bill 2016 also provides for 30 refinements to existing tax policies and tax administration, arising from periodic review of Singapore’s income tax system, such as to: 

1. Delink the income tax relief for CPF cash top-ups from the top-up limit from 1 Jan 2016. The CPF cash top-up limit to the Retirement Account has been raised from the Full Retirement Sum (“FRS”) to the Enhanced Retirement Sum (“ERS”), which is 1.5 times of the FRS, from 1 Jan 2016. To keep tax benefits focused on supporting basic retirement needs, the limit on tax relief for such top-ups will be maintained at the FRS.
2. Grant double tax deduction for costs attributable to issuance of retail bonds for five years with effect from 19 May 2016, to encourage the issuance of retail bonds, and broaden the range of investment options available to retail investors.
   

Consultation Details

The public can access the detailed consultation documents for the draft Income Tax (Amendment) (No. 3) Bill 2016 on the Ministry of Finance's website (http://www.mof.gov.sg) and the REACH consultation portal (http://www.reach.gov.sg). Respondents may send their comments to the Ministry of Finance directly via the website, email, fax, or post.   

 Ministry of Finance

[1] The ultimate parent entity is a tax resident of Singapore.