Singapore Announces Budget 2014

SUNNYVALE, Calif. - March 4, 2014 - PRLog -- Singapore recently presented the 2014 budget, which highlights provisions related to introduction of Productivity and Innovation Credit (PIC) Scheme for Small and Medium Enterprises (SMEs), PIC benefits on training employees, Extension of Writing Down Allowance (WDA) Scheme, increasing Parent/ Handicapped Parent Reliefs, reports Nair & Co.’s International Tax Team.

Singapore Budget 2014: Key Highlights for Companies

Productivity and Innovation Credit (PIC) Scheme:

>Introduction of PIC+ for Small and Medium Enterprises (SMEs):

* The limit on qualifying expenditure per qualifying activity will increase to SGD 600,000 per Year of Assessment (YA) (Currently SGD 400,000).

* PIC+ will be available for expenditure between YA 2015 to 2018, and the combined limit will be as follows:

.YA 2015 – up to SGD 1.4 million

.YA 2016 to 2018 – up to SGD 1.8 million

>Training Individuals:

* From YA 2014, companies will be allowed to claim PIC benefits on the cost incurred while training employees which are hired under the centralized hiring arrangement.

> Extension of the PIC Scheme:

* The scheme will be extended till YA 2018 (currently it is available till YA 2015).

* The SGD $ 400,000 limit of qualifying expenditure per activity per YA will be clubbed across YA 2016 to YA 2018 (i.e. $1.2m per qualifying activity).

> Tax Deferral Option under the PIC scheme:

* Effective from YA 2015, the tax deferral option will end.

> Cash Payouts:

* Effective from YA 2016, in order to claim PIC cash payouts, companies must meet three-local-employee requirements for a successive period of at least three months.

Writing Down Allowance (WDA) Scheme:

* The scheme will be extended to YA 2020 (another 5 years) under section 19B of the Income Tax Act.

* The scheme will be extended to YA 2018 (another 3 years) for accelerated WDA for media and digital entertainment entities.

Research and Development (R&D) Tax Deduction Measures:

* Under the Section 14DA(1) of the Income Tax Act (ITA):

. Extension of additional 50% tax deduction - The same will be available on qualifying expenditure obtained on certainactivities.

. These measures will be extended until YA 2025.

Relinquishment of Withholding Tax:

* It will be no longer essential for payersto withhold tax on interest and royalty payments made to Permanent Establishments (PE) beingSingapore branches of non-resident companies.

* This changeis effective from 21 February 2014.

Singapore Budget 2013: Key Highlights for Individuals

Qualifying Deductions and Deficits between Spouses

* From YA 2016, spouses will no longer be eligible to transfer qualifying deductions and deficits among each other. Same will also be applicable for the loss carry-back scheme.

* Qualifying deductions and deficits incurred by spousesin and before YA 2015 will be considered as midway concession and permitted for inter-spousal transfers up to YA 2017.

* Taxpayers can carry forward unabsorbed trade losses or capital allowances and set-off future income until the amount is completely used.

* Taxpayers can carry forward unused donations for a maximum period of 5 years.

Parent/Handicapped Parent Reliefs:

* Individuals staying with a Dependant:

 Parent relief– SGD 9,000

 Handicapped Parent relief – SGD 14,000

* Individuals not staying with a Dependant:

 Parent relief–SGD 5,500

 Handicapped Parent relief– SGD 10,000

* Other Handicapped Dependant Reliefs:

 Handicapped Spouse relief –SGD 5,500 (Currently SGD 3,500)

 Handicapped Sibling relief – SGD 5,500 (Currently SGD 3,500)

 Handicapped Child relief – SGD 7,500 (Currently SGD 5,500)

* Non-resident Relief:

 Effective from YA 2016, this relief which falls under section 40 will be abolished.

The amendments outlined in the 2014 budget are expected to improve the country’s economic position. The government has tried to provide added incentives to companies undertaking value creation activities. Nair & Co. advises companies operating in Singapore to monitor progress of the 2014 budget and carry out a comprehensive analysis of the final regulations to assess actual impact.

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