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MOF seeks feedback on proposed changes to Income Tax Act
THE Ministry of Finance (MOF) is seeking feedback on the proposed changes to the Income Tax Act from June 19 to July 10.
The draft Income Tax (Amendment) Bill 2017 was announced earlier this year in the 2017 Budget statement.
A key change suggested was to enhance and extend the corporate income tax rebate for year of assessment 2017 and 2018. This is meant to help companies cope with the economic uncertainty and continue restructuring.
For year of assessment 2017, the corporate income tax rebate cap has been raised from S$20,000 to S$25,000, and it will be extended to 2018, but at a reduced rate of 20 per cent of tax payable, capped at S$10,000.
Another proposal was for every individual tax resident to receive a 20 per cent personal income tax rebate capped at S$500 for year of assessment 2017.
Tax deduction for payments under cost sharing agreements for research and development (R&D) projects was also liberalised.
MOF on Monday says the 75 per cent safe harbour rule announced in Budget 2017 will be enhanced. Taxpayers will be able to claim tax deduction for the full cost sharing agreements payments without having to provide a breakdown of the expenditure covered by the cost sharing agreements payments.
The proposed Bill includes an amendment to strengthen the transfer pricing regime and introduce a mandatory transfer pricing documentation (TPD) requirement.
To ease compliance burden for smaller businesses, the mandatory TPD requirement will only apply to companies with turnover of more than S$10 million and significant related party transactions, MOF says.
It adds that the majority of companies will not be affected as the change will only be relevant to less than 5 per cent of all companies, many of which have already been maintaining TPD.
Besides these key changes, the Income Tax (Amendment) Bill 2017 also sets out 25 other refinements to existing tax policies and tax administration, including amendments relating to third-party voluntary contributions to the Medisave accounts of private sector employees and self-employed persons.
MOF says the public can access the detailed consultation documents for the draft Bill on its website (www.mof.gov.sg) and the Reach consultation portal (www.reach.gov.sg).
Written comments can be sent to MOF's Tax Policy Directorate (100 High Street #10-01, The Treasury, Singapore 179464) or preferably via email to firstname.lastname@example.org.