Public Consultation on Draft Income Tax (Amendment) Bill 2017

INTRODUCTION

The Ministry of Finance is conducting a public consultation on the draft Income Tax (Amendment) Bill 2017 from 19 June to 10 July 2017, and invites the public to give feedback on the draft Bill. 

SCOPE OF THE CONSULTATION EXERCISE

2.    The draft Income Tax (Amendment) Bill 2017 incorporates 34 proposed legislative amendments to the Income Tax Act, including:

(a)    Budget 2017 changes.  These are the 8 tax changes announced by Minister for Finance, Mr Heng Swee Keat, in the 2017 Budget Statement.  The key Budget tax changes include:

i)    Enhance and extend the Corporate Income Tax rebate (“CIT rebate”) for Year of Assessment (“YA”) 2017 and YA 2018 to help companies cope with the economic uncertainty and continue restructuring. For YA 2017, the CIT rebate cap has been raised from $20,000 to $25,000. The CIT rebate will be extended to YA 2018, but at reduced rate of 20% of tax payable, capped at $10,000;

ii)    Personal Income Tax rebate for YA 2017. Every individual tax resident will receive a 20% rebate capped at $500; and

iii)    Liberalise tax deduction for payments under Cost Sharing Agreements (“CSAs”) for R&D projects. The 75% safe harbor rule which was announced in Budget 2017 will be enhanced. Taxpayers will be able to claim tax deduction for the full CSA payments without having to provide a breakdown of the expenditure covered by the CSA payments.

(b)    Amendment to introduce Mandatory Transfer Pricing Documentation Requirement 

The Bill includes an amendment to strengthen the transfer pricing regime and introduce a mandatory transfer pricing documentation (“TPD”) requirement[1]. To limit compliance burden for smaller businesses, the mandatory TPD requirement will only apply to businesses with turnover exceeding $10m and significant related party transactions. The majority of companies will not be affected, as this change will only be relevant to fewer than 5% of all companies, many of which have already been maintaining TPD. 

(c)    Other amendments  There are 25 remaining changes to tax policies and administration. The changes include: 

i)    Amendments relating to third-party voluntary contributions to the Medisave accounts of private sector employees and self-employed persons (“SEPs”). With effect from 1 January 2018, the maximum amount that an employer can contribute to his employee’s Medisave account (that is not treated as income of the employee) under the Additional Medisave Contribution Scheme will be raised from $1,500 to $2,730 per year. There will be an increase in the tax deduction allowable to the employer for these contributions from $1,500 to $2,730 per year. In addition, the maximum tax exemption that an SEP can receive on contributions to his Medisave account by an eligible company he works with will be increased from $1,500 to $2,730 per year. The maximum tax deduction allowable to an eligible company for its contributions to the SEP’s Medisave account will also be increased from $1,500 to $2,730 per year. All other conditions for granting tax benefits in respect of such voluntary contributions remain unchanged; and

ii)    Enable the Minister for Finance to implement Singapore’s obligations under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (known as the “Multilateral Instrument”), which Singapore has signed on 7 June 2017. 

3.    The summary table provides a brief description of the tax changes and explains the amendments to the Income Tax Act. Please refer to the draft Income Tax (Amendment) Bill 2017 and its accompanying Explanatory Statement for details.

GUIDELINES

4.    We would appreciate your support and participation to ensure that the consultation exercise is productive and focused. Respondents are requested to observe these guidelines:

a.    Please identify yourself as well as the organisation you represent (if any) so that we may follow up with you to clarify your comments, if necessary. 
b.    Be clear and concise in your comments. 
c.    Focus your comments on how the legislative amendments can be better written to make them clearer and to make compliance easier, or on how the non-Budget tax policy changes can be improved.
d.    Use the prescribed template provided to organise your feedback.
e.    As far as possible, please explain your points with illustrations, examples, data or alternative formulations of the amendments.

5.    This draft legislation is released only for the purpose of consultation and should therefore not be used for individual or business decisions as it does not represent the final legislation. 

6.    All comments received during the consultation exercise will be reviewed thoroughly and if accepted, will be incorporated in the Bill for introduction in Parliament.

PERIOD OF CONSULTATION

7.    The draft Income Tax (Amendment) Bill 2017 is available for public consultation from 19 June to 10 July 2017. We regret that comments received after 10 July 2017 will not be considered, as they will not be in time for incorporation in the Bill.

FEEDBACK CHANNEL

8.    We encourage all interested parties to submit your comments via our online submission form. The online submission form is the easiest and quickest way for your comments to reach us. You  can also send us your comments, using the prescribed template, through: 

a.     email to pc_itabill@mof.gov.sg; or 
b.    fax to 6337 4134; or
c.    post to:    

Ministry of Finance
100 High Street, #10-01
The Treasury
Singapore 179434
Attention: Tax Policy Directorate

SUMMARY OF RESPONSE

9.    We will publish a summary of the main comments received on the Ministry of Finance’s website, together with our responses, by the end of August 2017. The identity of respondents will not be disclosed in the summary.  

DOCUMENTS TO DOWNLOAD

10.    For reference, please click here to download the relevant documents for this public consultation exercise.


---

[1] Transfer pricing is the pricing of goods, services and intangibles between related parties. For the purpose of tax, related parties must deal with each other at arm’s length, i.e. the transfer prices between them must be equivalent to prices that unrelated parties would have charged in the same or similar circumstances. Transfer pricing documentation refers to the records kept by taxpayers to show that their related party transactions are conducted at arm’s length.

Best viewed using IE 11, Firefox 27, Chrome 22, and Safari 7 and above
Last Updated on December 04, 2017
© Government of Singapore