22 Jun 2009

The Ministry of Finance will be conducting a public consultation on the draft Income Tax (Amendment) Bill 2009. This exercise will run from 22 June to 14 July 2009.

Proposed amendments

  1. The proposed amendments to the Income Tax Act (ITA) are principally to cater for the tax changes announced in Budget 2009. The key changes include:
    • Cut in the corporate income tax rate from 18% to 17% with effect from Year of Assessment (YA) 2010
    • Resilience Package Tax Changes, which include:
      1. accelerated capital allowances for plant and machinery in the basis periods for YA 2010 and 2011
      2. enhanced loss carryback in the basis periods for YA 2009 and YA 2010, and
      3. tax exemption on all foreign-sourced income that is remitted into Singapore during the period of 22 January 2009 to 21 January 2010 (both dates inclusive)
    • New Tax framework for facilitating corporate amalgamations taking place on or after 22 January 2009
    • Enhancements to incentives for promoting fund management in Singapore, for the period of 1 April 2009 to 31 March 2014 (both dates inclusive.
  2. In addition to the tax changes announced in Budget 2009, the amendments also provide for refinements to existing tax policies and tax administration arising from on-going reviews of our tax system. These refinements include the following:
    • Provision to disregard, for tax purposes, certain gains and losses arising from disposal of real properties
    • Provision for the "arm's length principle" with regard to transactions between related parties. For the avoidance of doubt, Comptroller of Income Tax may make adjustments to taxable profits where in his opinion, a transaction between related parties has been made on terms which differ from those which would be made between independent persons
    • Removal of Commonwealth Tax Relief. This is part of our rationalization of the relief for alleviating double taxation for tax residents, following the recent extension of Unilateral Tax Credit for all foreign-sourced income in Budget 2008.

Consultation Details

  1. The consultation guidelines, draft Income Tax (Amendment) Bill 2009 and explanations for the amendments can be found in the Government’s central consultation portal ( www.reach.gov.sg) as well as the Ministry of Finance website. Respondents may send their comments to the Ministry of Finance directly via the website, email, fax or post.

MINISTRY OF FINANCE
22 June 2009