[Tax Incentives for Businesses] Budget 2019 in 3 Minutes

All of Budget 2019’s tax changes for businesses explained in this nifty guide.

Through attractive start-up grants and tax exemptions and incentives, Singapore has edged forward as a choice investment destination for investors and entrepreneurs. On 18 February 2019, the Government unveiled plans to further enhance the progressivity and resilience of Singapore’s tax system. While some tax schemes were allowed to lapse, some were extended to help more businesses grow and scale. Stay up-to-date on the latest tax incentives and changes in this all-in-one guide.

• Intellectual Property and Innovation

  To ensure Singapore’s business competitiveness, the Government will be extending and strengthening several tax incentives. For instance, the writing down allowances for approved (IPRs) Intellectual Property Rights will be extended until December 2024. This maintains the city-state’s attractiveness as an innovation hub and aids the deepening of Singapore’s IP capabilities.

• Productivity

  To help more companies automate, drive productivity and scale up, the 100 percent Investment Allowance under Enterprise Singapore’s Automation Support Package will also be extended for an additional two years until 31 March 2021. First introduced in 2016, this scheme encourages companies to embark on large-scale automation projects by providing grants, tax concessions and loans to help companies defray costs.

• Real Estate Investment Trusts

  To continue promoting the listing of Singapore-listed Real Estate Investment Trusts (REITs) in Singapore and to strengthen Singapore’s position as a REITs hub in Asia, tax transparency treatments for S-REITs will soon be extended to ETFs (Exchange Traded Funds) invested in these REITs.

The existing tax concessions for S-REITs and S-REITS ETFs, including a tax exemption on S-REIT distributions received by individuals, will be extended till 31 December 2025.

Also, GST remission (i.e., the claiming of GST incurred on expenses at a fixed recovery rate) will be extended to S-REITs and RBTs (Registered Business Trusts) in target industries such as infrastructure, ship leasing, and aircraft leasing.

• Asset Management

  Currently, funds managed by Singapore-based fund managers are granted tax concessions such as a tax exemption on some sources of income. To continue growing Singapore’s asset management industry, these tax concessions will be extended to 31 December 2024. GST remission for selected funds will also be extended till 31 December 2024.

• Unit Trusts

  Unit trusts participating in the Designated Unit Trust (DUT) scheme are currently not taxed for some of its income at the trustee level. Instead, the pay is instead taxed in the hands of investors. With effect from 31 March 2019, the DUT scheme will lapse.

  Furthermore, before Budget 2019, most of the gains of trustees under the Approved Unit Trust (AUT) scheme were taxed upon distribution to unitholders. The AUT scheme has lapsed with effect from 18 February 2019. The Monetary Authority of Singapore (MAS) will be providing further details of the changes by May 2019. In the meantime, funds in the form of unit trusts may apply for other tax incentives instead.

• Property Tax

  With effect from 18 February 2019, the Property Tax (Tourist Projects) Order has lapsed. The Property Tax (Tourist Projects) Order was introduced on 1 January 1987 to promote tourism by allowing approved tourist projects to compute their Annual Value based on 6% of the preceding year’s gross receipts for five years. However, as the tax incentive did not apply to hotels, the removal of this concession should not affect the hotel industry.

Read more to learn about other newly-launched schemes your company can benefit from in Singapore.

At Corporate Services Singapore, we help entrepreneurs build their dream companies. Whether you are looking for assistance on company incorporation or taxation, give us a call at 6602 8286 or email us at info@corporateservicessingapore.com to get started today.

Download the full Budget speech.
Watch the Budget video.

Budget 2019: Summary of Tax Changes

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¹“Singapore persons” is defined in the Income Tax (Exemption of Income of Prescribed Persons Arising from Funds Managed by Fund Manager in Singapore) Regulations. It includes persons who are Singapore citizens, residents of Singapore or permanent establishments in Singapore.

²A managed account is a dedicated investment account where an investor places funds directly with a fund manager without using a separate fund vehicle.

³Applicable from YA 2020 instead of on and after 19 February 2019, to avoid subjecting existing funds to two different set of conditions in the same basis period.

⁴Unless such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession.