• 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

    The UK: uncertain waves rule Britannia

    he UK’s accountancy profession is currently in a period of much uncertainty. The Competition and Markets Authority (CMA) has released its review into the listed audit market which could cause the biggest shake-up the profession has seen in years, the Kingman Review has described the Financial Reporting Council (FRC) as not being fit for purpose and called for it to be replaced. All the while the country remains in a deadlock on Brexit negotiations.

    read more

    Views from the Eurozone

    With Brexit looming, populist governments gaining footholds in a number of countries and movements such as the Yellow Jacket protests in France, 2018 was anything but a quite year for the eurozone. Here leaders report to the IAB on their markets.

    read more

    Eastern promise and how to find it

    With China rising as a global power, Jonathan Minter spoke with ShineWing’s Zhang Ke and Marco Carlei at the World Congress of Accountants 2018 in Sydney, to discuss the cultural challenges that occur when Chinese networks look beyond their border, and the dividends available for those who overcome them.

    read more

    Spain: looking to widen demand

    As Spanish accounting professionals prepare for new audit regulations, the Paul Golden asks what they need to do individually and at firm level to maintain and increase demand for their services.

    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.