• Register
Return to: Home > News > Tax > Singapore broadens tax base to increase revenue, yet corporation taxes will fall

Singapore broadens tax base to increase revenue, yet corporation taxes will fall

Less than two weeks since the Committee on the Future Economy (CFE) recommended the need to move toward a progressive tax system, Singapore’s minister for finance, Heng Swee Keat, announced new tax plans at his Budget 2017 round-up speech. He stated that besides spending cautiously and effectively, Singapore’s government needed to grow the country's revenue via new taxes or increasing taxes over time.

Swee Keat noted that this challenge is not only faced by Singapore alone. "If you look at many other countries, the need for more revenue to meet spending needs is a common theme that cuts across different systems. For example, Hong Kong has announced in its recent budget that it would be setting up a tax policy unit to comprehensively review its tax system. One of its objectives would be, and I quote, to “explore broadening the tax base and increasing revenue, so as to ensure that adequate resources are available' to support sustainable development.”

He continued: “What this means is that those who are better off must contribute more. In recent Budgets, we have continued to make our personal income tax and property tax rates more progressive, even as we introduced or enhanced permanent schemes such as Silver Support and Workfare to provide more support to lower-income groups.”

Despite the intention towards a more progressive tax base, Singapore budget in 2017 is set to deliver a modest fiscal push to an economy whose poor trade outlook seems to have just begun to rebound.

Since China’s economy is recovering, it is highly likely that the trade sector will improve as a result; this will mean that the immediate burden on Swee Keat to provide a large fiscal stimulus package will be taken off. Last year, Singapore reported the lowest level of fixed-asset investment since 2007, as the booming growth of the petrochemical industry deteriorated following the decline of oil prices.

The tax system should appreciate both individuals and corporates’ efforts to ensure that Singapore is yet an attractive hub for work and business. “In more recent years, more countries have lowered or announced their intention to lower corporate income tax rates. The UK has lowered its corporate tax rate from 30% to 20% over the last ten years, and plans to further lower it to 17% by 2020. The new administration in the USA has also indicated plans to cut corporate tax rates,” Swee Keat said.

In order to support companies to deal with economic uncertainty and continue restructuring, the Corporate Income Tax (CIT) will be enhanced and extended. Based on the estimates from Inland Revenue Authority of Singapore; “The CIT rebate cap will be raised from S$20,000 to S$25,000 for Year of Assessment (YA) 2017 (with the rebate rate unchanged at 50% of corporate tax payable). The CIT rebate will be extended for another year to YA 2018, at a reduced rate of 20% of tax payable and capped at S$10,000.”

Chia Seng Chye, partner in tax services, EY Solutions said: “The enhancement of the corporate tax rebate with a S$25,000 cap for YA2017 is indeed welcomed news and the extension of the rebate to YA 2018 with a cap of S$10,000 is a bonus to businesses.”

The Singapore budget over the past three decades has increasingly been in favour of corporates and businesses. Available statistics reveal that the CIT rate was reduced from 30% to 27% in 1994, 20% in 2005, and 18% and 17% in 2008 and 2010 respectively.

Top Content

    Time pressure: Facing up to mental health

    In an ‘always on’ culture, it is becoming increasingly difficult to manage a healthy work-life balance. While companies are beginning to address this problem by introducing different support systems, Joe Pickard finds more could be done to ensure the wellbeing of the professions workforce.

    read more

    Venezuela: the race for the dollar

    With a new currency following hyperinflation, large sections of the population emigrating to neighbouring countries, an economy on the brink of collapse and no apparent solution coming from the government, Jonathan Minter finds a profession struggling to stay afloat in Venezuela.

    read more

    Brazil: transparency and control

    Brazilian accountants have an optimistic view of the impact of more-regular reporting and the implications of audit controversies for the profession. Paul Golden reports.

    read more

    Argentina: looking for a clearer view

    The Argentine accounting profession continues to grapple with the impacts of a weak economy and a culture of financial corruption. Paul Golden takes a closer look.

    read more

    Blockchain: adapting to disruptive tech

    In the relatively few years since digital currencies first began using blockchain technology, the array of potential applications has grown significantly – and continues to expand. Dan Balla, Matthew Schell and Dave Uhryniak from Crowe look at how it impacts accountancy.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.