Speeches

      Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time."

2.   The Income Tax (Amendment) Bill 2010 comprises two categories of legislative changes. The first category puts into legal effect the income tax changes announced in the 2010 Budget Statement. The second category covers other amendments to the Income Tax Act arising from the regular review of our income tax system.

3.   The Income Tax (Amendment) Bill was released for public consultation from 28 June to 19 July this year. MOF has revised the Bill to incorporate the suggestions that had been accepted for implementation.

4.   Sir, most of the tax changes in this Bill have already been debated upon in this House following the announcement of the 2010 Budget Statement. Let me summarise some of these key changes.

First, the introduction of the Productivity and Innovation Credit ("PIC&") scheme, to support enterprise investments in productivity and innovation. Clauses 2(a), 12 to 15, 17, 18(b), 23 to 25, 29 to 32, 51, 52 and 55(e) of the Bill provide for this change;

Second, a new tax allowance to help companies restructure, upgrade and expand their operations through mergers and acquisitions. This is provided for in Clause 34;

Third, a Land Intensification Allowance to support enhanced land productivity among industrial land users. Clauses 22, 27, 54(a), (b) (c), (e), (f), (g), 55(a) to (c) provide for this change;

Fourth, the phasing out of the Industrial Building Allowance (IBA). Existing claimants can continue to claim the IBA on qualifying industrial buildings until the remaining expenditure of such buildings are written down. Clauses 19 to 22, 26, 54(a), (c), (e), (f) and 55(a) provide for this change;

Fifth, the Bill introduces a new tax incentive for angel investors to claim deductions for 50% of the cost of their investments in qualifying start-ups. Clauses 28(d) and 33 provide for this change;

Sixth, various personal income tax reliefs such as the wife relief, parent and handicapped parent reliefs, dependant-related reliefs, and course fee relief are enhanced. These changes are covered by Clauses 2(b), 35(a) to (g), 35(j) to (t) and 53.

5.   Sir, I shall now deal with the other tax changes covered in this Bill that arise from the periodic review of our income tax policies and administration. Let me highlight three of these changes.

6.   First, we will enhance the Global Trader Program by extending its current list of qualifying activities to include qualifying structured commodity financing activities. This enhancement is aimed at attracting more sophisticated financing and risk management services to be performed in Singapore and further strengthen our position as the leading trading hub in Asia. Clause 42 effects this change.

7.   Second, we will introduce a new tax incentive for sovereign funds to encourage the building up of a cluster of sovereign funds as a niche class of financial institutions that promotes the development of our financial sector. This incentive, which takes effect for five years from 1 April 2010, will grant tax exemption on prescribed income derived by sovereign funds and their investment offices. Clause 10 provides for the introduction of this tax incentive.

8.   Third, donors will be required to provide Unique Identification Numbers ("UIN") or Unique Entity Number ("UEN") for their donations to an Institution of a Public Character ("IPC"), unless the Comptroller waives such requirement. This mandatory provision is to streamline the processing of claims for tax deduction for such donations. Once the donors provide their UIN or UEN to the IPC, the donors would not need to make a separate claim in their tax returns as the donation would be automatically reflected in their tax assessment based on information from the IPC.This change will take effect from 1 January 2011. Clause 28(a) and (c) effect this change.

9.   The remaining six legislative changes arising from our periodic review of the income tax system are either technical in nature or relate to improvements in tax administration.

10.   With the above changes, the Income Tax Act will be enhanced and updated to better achieve our economic and social objectives. Mr Speaker, Sir, I beg to move.