The 2016 Budget Statement was delivered by Finance Minister Heng Swee Keat on March 24, 2016. Proposed changes include:
- An increase in the corporate tax rebate for Years of Assessment (YAs) 2016 and 2017 (income years 2015 and 2016) from 30% to 50%. The rebate amount remains capped at 20 thousand Singapore dollars (SGD) per year.
- The introduction of a new investment allowance for automation equipment which will allow taxpayers to claim an additional 100% tax allowance for approved capital expenditure (net of grants) incurred on qualifying projects, subject to a cap of SGD 10 million per project.
- Enhancement of the existing mergers and acquisitions (M&A) scheme which allows a qualifying Singapore company to claim a deduction for 25% of the cost of acquisition, capped at SGD 20 million, for qualifying share purchases. The cap on the cost of acquisitions is increased to SGD 40 million. The cap on stamp duty relief available under the scheme for the acquisition of Singapore shares is likewise increased from SGD 20 million to SGD 40 million.
- The acquisition cost of qualifying intellectual property rights (IP) can be claimed over five years. Taxpayers will now be given the option of electing to claim the allowance over five, ten or, 15 years. An anti-avoidance rule has also been proposed which will allow the Singapore tax authority (IRAS) to substitute the open market value of the IP for the acquisition price or disposal price (as the case may be) for the purpose of computing the writing down allowance.
- A new Business and Institution of a Public Character (IPC) Partnership Scheme is introduced to allow companies a 150% deduction for specified expenses when they send their employees to volunteer and provide services to an approved charity (IPC), subject to certain caps.
- Certain incentives have been renewed and/or enhanced. Renewed incentives include the safe harbour rule on exemption of gains on divestments of ordinary shares, the double tax deduction for internationalisation, the exemption for Not-for-Profit Organisations, and the Land Intensification Allowance which was extended with minor tweaks to the qualifying conditions.
- Renewal and enhancement of the Finance and Treasury Centre incentive including reduction of the concessionary tax rate from 10% to 8%, although the business requirements to qualify for the scheme will be increased.
- The tax incentives for approved trustee companies, marine hull and liability insurance, specialised insurance business and captive insurance have been renewed and subsumed under broader umbrella incentive schemes for the financial and insurance sectors respectively. In general, the concessionary tax rates will be aligned accordingly with those provided for under the respective umbrella schemes.
- Expansion of the scope of qualifying income under the Maritime Sector Incentive and Global Trader Programme.
- In contrast, it was announced that the Productivity and Innovation Credit scheme will not be extended beyond YA 2018. The Approved Investment Company scheme and tax exemption on income derived by non-residents trading specified commodities in Singapore via consignment arrangements have also been withdrawn.
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