Upgrading and Restructing the Economy: Key Initiatives

Become a Knowledge Hub

• Set up R&D Trust Fund under the National Research Foundation. [$500 million initially; $5 billion over five years]
• Extend writing down allowances for acquisition of intellectual property to economic (not just legal) owners of intellectual property.
• Accelerate writing down period given for qualifying capital expenditure incurred on R&D cost-sharing arrangements from five years to one year.
• Develop a new national broadband network.

Build on our Strengths in Manufacturing and Services
Promote Manufacturing Sector

• Zero-rate GST for supply of tools used in the manufacture of goods for export.

Promote Asset and Wealth Management Industries

• Enhance Designated Unit Trust (DUT) scheme to allow more funds to qualify for DUT status.
• Grant tax exemption on locally-sourced investment income and foreign-sourced income of qualifying domestic trusts and their underlying holding companies.
• Expand the scope of settlors and beneficiaries of the trusts qualifying under the Approved Trustee Company scheme and tax exemption scheme for foreign trusts.
• Introduce new incentive scheme to exempt resident funds with foreign investors from tax.

Promote Capital and Treasury Markets

• Grant tax exemption on remittances of foreign-sourced interest and trust distributions received by REITS listed on SGX (“S-REITS”).
• Allow recovery of GST incurred by S-REITS on the setting up of special purpose companies (SPCs) and the acquisition and holding of overseas non-residential properties by SPCs.
• Enhance Qualifying Debt Securities (QDS) scheme to cover discount debt securities with tenure of more than one year.
• Enhance scope of activities qualifying for the Finance & Treasury Centre incentive to include trading and arranging of derivative products.
• Grant 5% concessionary tax rate on clearing income for qualifying clearing members of Singapore Over-the-Counter (OTC) derivatives clearing facilities for five years.

Promote Islamic Financing Activities

• Harmonise tax treatment of four Shariah-compliant financial products with that of conventional financing products.

Promote Insurance Industry

• Grant tax exemption for approved captive insurance companies for 10 years.

Promote Maritime and Logistics Industries

• Introduce new Maritime Finance Incentive offering tax exemption for qualifying income of ship investment vehicles and a 10% concessionary tax rate for qualifying income of ship investment managers.
• Allow shipping companies to renew their Approved International Shipping incentive for a third period of 10 years, lengthening the maximum period of incentive from 20 years to 30 years.
• Remove the need for traders under the Global Trader Programme to show that their derivative trades are incidental to the physical trades before such income can be treated as qualifying income.
• Give automatic GST suspension for goods removed from Zero GST (ZG) warehouses by all persons registered under the Major Exporter Scheme (MES) and the Approved Third Party Logistics (3PL) Company Scheme.

Promote New Services

• Include industrial design, interactive and digital media as new fields for tax concession on royalties earned by creative individuals.

Support Entrepreneurship and Enterprise

• Reduce record-keeping period in 17 statutes.

Grow our Human Capital

• Introduce new applied subjects such as electronics and digital media as electives in selected secondary schools through partnerships with polytechnics.
• Allow students to gain direct admission to the polytechnics based on their talents and abilities, similar to the junior colleges and secondary schools.
• Allocate additional $2 billion to university sector over the next five years.

Maintain a Competitive Tax Environment

• Allow foreign-sourced income that is currently disqualified from the foreign- sourced income tax exemption (FSIE) regime to enjoy tax exemption where remittances are made under specific scenarios or circumstances.
• Grant tax deductions to companies that incurred actual outlay for the employee stock options and other share-based compensations.
• Exempt from tax the gains by approved holding companies on the disposal of shares in subsidiaries.
• Provide guidance on transfer pricing issues.
• Rationalise conditions for businesses to claim Industrial Building Allowances.
• Extend tax incentives to partnerships on a scheme by scheme basis.
• Allow general insurers to claim GST on:

  -	tax fraction of cash indemnities paid to non-GST registered policyholders under contracts that are subject to GST.
  -	expenses incurred on their policyholders' passenger cars.

Other Tax Changes

• Remove Property Tax surcharge.
• Change basis of slot machine tax from 30% of deemed turnover to 12% of actual turnover.