Second Reading Speech by Senior Minister of State for Finance, Mr Chee Hong Tat on The Income Tax (Amendment) Bill 202203 Oct 2022
Mr. Speaker, on behalf of the Deputy Prime Minister and Minister for Finance, I beg to move, "That the Bill be now read a second time."
2. We sought views from the public on the draft Bill earlier this year and have taken into account the feedback received. We thank the respondents for their inputs.
A – Tax changes announced in Budget 2022
3. Let me start with the amendments that give effect to tax measures from Budget 2022.
4. First, the top marginal personal income tax, or PIT, rate of tax-resident individuals will be increased from the Year of Assessment 2024. The portion of chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24%; both up from 22% today.
5. This move would further enhance the progressivity of our PIT system, where individuals who earn more will contribute more. We estimate that this could raise around $170 million of additional tax revenue per year.
6. The PIT rates for certain income by non-tax-resident individuals that are pegged to the top marginal tax rate of tax-resident individuals will also be revised to 24%.
7. Clauses 22, 42 and 44 of the Bill provide for these amendments.
8. Second, to support data-driven policymaking, operations, and integrated service delivery, we propose two amendments to the Income Tax Act and Goods and Services Tax Act to facilitate the disclosure of information by IRAS for official duties.
9. The first change relates to the scenario where taxpayers such as individuals and companies have provided consent for their information to be shared.
a. Today, IRAS can disclose such information to public sector agencies or an authorised person who is engaged by the Government or a statutory board, if the disclosure is for the sole purpose of administering a written law or public scheme.
b. For example, to determine what level of subsidy a patient can receive, healthcare personnel in hospitals designated to administer public healthcare schemes may obtain such information with consent, to provide the appropriate subsidies to patients efficiently and conveniently.
10. However, the current approach has some limitations where the official duties of public officers go beyond administering written law or a public scheme – such as for policy making or providing public services in an integrated manner.
11. For example, Enterprise Singapore needs to regularly review its internationalisation schemes that support local companies expanding into overseas markets. Even if the companies have given consent for their information to be shared with Enterprise Singapore, IRAS is currently unable to do so, because such a review does not fall under “administration of a written law or public scheme”.
12. Where taxpayers have provided consent for IRAS to disclose their information to a public officer, or an authorised person outside the public sector who is engaged by the Government or a statutory board, the proposed amendment in the Bill will enable such disclosure by IRAS for the performance of official duties.
13. Sir, the second change relates to the scenario where taxpayers have not explicitly provided consent for the data disclosure. This will apply only to company-related information, and does not include data of individuals.
14. To enable public sector agencies to carry out their official duties more effectively, the proposed amendment enables IRAS to disclose a prescribed list of identifiable company-related information to other public sector agencies, for the performance of official duties, without requiring the taxpayer’s consent. This list of company-related information will be prescribed in the Income Tax Act and Goods and Services Tax Act.
15. Let me provide an example of how this approach benefits our companies. With access to the data on specific companies, a public sector agency will be able to identify which are the companies that could benefit from certain enterprise development schemes, and proactively share with them information on the relevant schemes.
16. Without the data sharing, we are faced with a chicken-and-egg problem. These companies may miss out on the benefits as they do not know that they are eligible, and they may not apply for the schemes.
17. We recognise that this approach can be sensitive, and we need to strike a balance between improving service efficiency and convenience, versus protecting data confidentiality. Sir, there will be two safeguards:
a. First, information in the prescribed list will be provided in a less granular form. For instance, the company’s sales revenue will be shared in ranges, rather than the exact value.
b.Such information will also not be disclosed to any person outside the public sector, even if the person is engaged by the Government or a statutory board. It will only be disclosed to public officers.
18. Clauses 3, 41, 43, 46 and 49 of the Bill provide for these amendments.
19. The information on taxpayers will continue to be safeguarded under existing tax legislation, the Official Secrets Act and the Public Sector (Governance) Act, as well as data governance policies set out in the Government’s Instruction Manuals.
20. Collectively, these data protections set out when data can be shared across agencies, limit the access to data to only authorised persons, and ensure accountability for access and use of data through penalties for unauthorised disclosure and improper use of data.
21. All persons with access to such information on taxpayers are bounded by secrecy provisions under the applicable tax legislation – Income Tax Act or Goods and Services Tax Act – and the Official Secrets Act, where any unauthorised disclosure of such data is an offence.
22. Where personal data is involved, non-Government Entities acting on behalf of the government will also be subject to the Personal Data Protection Act.
B - Non-Budget 2022 amendments arising from the periodic review of the income tax regime
23. Mr Speaker, the Ministry of Finance regularly reviews our income tax regime. Let me now elaborate on two of the proposed amendments arising from the review.
24. First, we will update the definition of local employee for the Mergers and Acquisitions Scheme, to recognise individuals hired under central hiring and secondment arrangements as employees of the acquiring company.
a. Currently, only individuals that are directly hired by the acquiring company are taken into account for assessing whether the three local employee condition is met.
b. As businesses may have different hiring practices, the change allows us greater flexibility to recognize an equivalent material outcome of local workers being hired, be it through direct hiring, central hiring, or secondment arrangements. Clause 21 of the Bill provides for this amendment.
25. Second, we will amend the provisions relating to the Board of Review, also known as the “BOR”, which is a tribunal set up under the Income Tax Act to hear and adjudicate tax disputes between the Comptroller and taxpayers.
26. The BOR provisions will be updated and streamlined by:
a. Removing outdated references such as the requirement for lodgement of the notice of appeal in “duplicate” and the petition of appeal in “quadruplicate”, which are no longer relevant where documents are sent digitally,
b. Clarifying the Minister’s regulation-making powers regarding tax appeals, as well as the case management powers of the BOR and Chairperson, and
c. Moving BOR provisions on procedures to subsidiary legislation.
27. In addition, we propose to allow the Chairperson to have the option to convene a one-member coram where appropriate. Currently, each hearing committee comprises at least three BOR members. In deciding whether or not to convene a one-member coram, the Chairperson will consider the parties’ submissions, as well as the facts and circumstances of the case.
28. Taken together, these changes will allow greater flexibility and ensure that BOR cases are resolved in a more timely and efficient manner.
29. Related amendments will also be made to the BOR provisions in the Goods and Services Tax Act.
30. Clauses 34, 35, 36, 37, 38 and 46 of the Bill provide for these amendments.
31. Mr. Speaker, I beg to move.