Public Consultation on Draft Income Tax (Amendment) Bill 2014

INTRODUCTION

1. The Ministry of Finance is seeking public feedback on 41 proposed legislative amendments under the draft Income Tax (Amendment) Bill 2014. We invite you to comment on the proposed two categories of amendments:

2. Your feedback will help us improve the draft legislation with regard to its clarity or efficient compliance by taxpayers.

SCOPE OF THE CONSULTATION EXERCISE

3. The draft Income Tax (Amendment) Bill 2014 incorporates 41 proposed legislative amendments to the Income Tax Act, including:

4. 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 and its accompanying Explanatory Statement for details.

GUIDELINES

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

6. 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 or regulations. 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 2014 and a draft subsidiary legislation are available for public consultation from 4 to 24 July 2014.We regret that comments received after 24 July 2014 will not be considered as they will not be in time for incorporation into the final Bill.

FEEDBACK CHANNEL

8. We encourage all interested participants 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:

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 2014. The identity of respondents will not be disclosed in the summary.

DOCUMENTS TO DOWNLOAD

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

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[1] A negative list will be drawn out for the types of information that are not eligible for WDA. This includes customer information and information relating to work processes.

[2] Additional Tier I instruments are a new type of capital instruments allowed under the Basel III global capital standards. Treating the instruments as debt (where the interest expense is tax-deductible for banks and taxable in the hands of investors) will provide tax certainty and maintain a level-playing field for Singapore-incorporated banks vis-a-vis banks in other jurisdictions which have legislated the same treatment.

[3] Currently, taxpayers can claim cash payouts once the expenditure has been incurred. This change seeks to address abusive arrangements where vendors issue invoices, or prepare the necessary paperwork such that businesses make cash payout claims for equipment which is not in use (e.g. equipment is not constructed or delivered). For cash-strapped SMEs who need the cash payout up-front to pay for the equipment, IRAS will waive the requirement for the equipment to be “in use” on a case-by-case basis, subject to certain conditions.

[4] These benefits refer to PIC enhanced tax deductions/ allowances, PIC cash payout and PIC Bonus.

[5] The OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters (“the Convention”) is a multilateral convention that promotes international tax cooperation. In early 2010, the Convention was opened up for signature by non-OECD or the Council of Europe members. Singapore signed the Convention on 29 May 2013.