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Introduction

The Budget Statement for Budget 2024 was presented on February 16, 2024. Against the backdrop of a modest 1.1% economic growth in Singapore for 2023, anticipated resilience in the growth of major economies, and looming geopolitical risks, Budget 2024 aims to support Singaporeans in realizing their full potential, navigating uncertainties, and collectively shaping a shared future. Notable measures in the budget include:

1	Introduction of a corporate income tax rebate.
2	Implementation of a refundable investment tax credit.
3	Top-up of the Goods and Services Tax (“GST”) voucher fund.
4	Introduction of a personal income tax rebate.
5	Enhancement of retirement support schemes.
6	Introduction of an overseas emergency humanitarian assistance tax deduction scheme.
7	Adjustment to Annual Value Bands for owner-occupier residential property tax rates.
8	Introduction of a property tax instalment plan.
9	Introduction of Additional Buyer’s Stamp Duty (“ABSD”) refunds for single Singaporeans aged 55 and above.
10	Adjustment of ABSD clawbacks for housing developers.
11	Introduction of an income inclusion rule.
12	Introduction of a domestic top-up tax.

The tax measures and adjustments outlined in Budget 2024 are classified into the following categories:

• Tax Implications for Corporations
• Tax Implications for Individuals
• Promotion of Humanitarian Assistance
• Modification of Annual Value Bands for Property Tax
• Additional Buyer’s Stamp Duty (ABSD) Refund Concessions
• Base Erosion and Profit Shifting (BEPS) 2.0 Pillar 2

We will delve into the significant tax measures, modifications, improvements, and extensions, along with refinements in the existing Singapore tax framework below.

Tax Implications for Corporations

Corporate Income Tax Rebate

Given the escalating operational expenses for businesses, including elements like wages, rent, and utilities, the government has introduced the Enterprise Support Package, offering a total support of S$1.3 billion to companies. Notably, companies will be entitled to a 50% Corporate Income Tax Rebate, with a cap at S$40,000 in the Year of Assessment (“YA”) 2024. Recognizing that not all companies may be profitable and able to maximize the rebate, all companies with at least one local employee in 2023 are assured a minimum benefit of S$2,000 in cash payouts.

Refundable Investment Credit

In response to the intensifying global competition among governments seeking to attract investments, Singapore is set to introduce a novel initiative known as the Refundable Investment Credit (RIC). This innovative tax credit, featuring a refundable cash component, is strategically designed to bolster Singapore’s investment promotion toolkit. The RIC targets the facilitation of high-value and substantial economic activities, encompassing:

• The establishment or expansion of manufacturing facilities.
• Initiatives involving new innovation and research and development (R&D).
• Activities dedicated to supporting the green transition.

Foreseen to fall within the purview of a Qualified Refundable Tax Credit scheme under the BEPS 2.0 Pillar 2 rules, the RIC is anticipated to offset the implications of BEPS 2.0 Pillar 2, especially following the implementation of a global minimum effective tax rate of 15% for large Multinational Enterprise (MNE) groups. This strategic measure holds paramount significance, as it contributes to sustaining Singapore’s competitiveness and attracting investments from global companies possessing the requisite expertise.

Tax Implications for Individuals

Top-Up of GST Voucher Fund

The government has unveiled plans to inject an additional S$6 billion into the GST Voucher Fund. This underscores the government’s unwavering commitment to permanently alleviate expenses for lower- and middle-income households through the GST Voucher Scheme.

Personal Income Tax Rebate

In response to the escalating costs of living and wage levels, the government has introduced a 50% personal income tax rebate for the Year of Assessment (YA) 2024. Tailored to benefit middle-income workers, the rebate will be capped at S$200. Concurrently, the annual income threshold for dependant-related reliefs will see an increase from S$4,000 to S$8,000, effective from YA 2025.

Retirement Support Schemes

Presently, the government extends tax relief to incentivize Singaporeans to bolster their Central Provident Fund (CPF). Budget 2024 introduces the Matched Retirement Savings Scheme, allowing Singaporeans aged 55 to 70 making voluntary CPF contributions to receive matching grants from the government. With the matching grant already being a substantial benefit, the tax relief for cash top-ups eligible for the matching grant will be discontinued from 2025.

The Enhanced Retirement Sum (ERS) is set to increase from three times the Basic Retirement Sum to four times starting in 2025. The ERS represents the maximum amount senior workers can contribute to their CPF Retirement Accounts to receive payouts. This increase will empower more Singaporeans aged 55 and above to fully utilize their accumulated CPF savings for enhanced CPF payouts if they choose to do so.

In response to inflation, the qualifying per capita household income threshold for the Silver Support Scheme (SSS) will see an elevation from S$1,800 to S$2,300, along with a 20% increase in quarterly payments. The SSS provides quarterly payments to seniors with low incomes during their working years and limited family support.

Encouraging Humanitarian Assistance

Overseas Emergency Humanitarian Assistance Tax Deduction Scheme

To foster support for international humanitarian causes, the government will introduce the Overseas Humanitarian Assistance Tax Deduction Scheme (OHAS). Effective from January 1, 2025, to December 31, 2028, individuals making cash donations towards overseas emergency humanitarian assistance through designated charities will receive a 100% tax deduction. However, the combined tax deductions under OHAS and the Philanthropy Tax Incentive Scheme for Family Offices will be capped at 40% of the donor’s statutory income. Unused deductions under OHAS cannot be carried forward.

Adjustment to Annual Value Bands for Property Tax

Rate Adjustment

Initially planned in Budget 2022, a two-step increase in Property Tax rates for residential properties was announced. However, due to a significant rise in market rents from 2022 onwards, driven by robust market demand and COVID-related supply constraints, the Property Tax rates affected 13% of owner-occupied properties, exceeding the intended 7%. Commencing January 1, 2025, the government will revise the Annual Value (AV) bands for owner-occupier residential Property Tax rates. Currently, only properties with an AV exceeding S$8,000 are taxed, with those over S$100,000 taxed at the maximum rate. Post-January 1, 2025, only properties with an AV surpassing S$12,000 will be taxed, and those with an AV exceeding S$140,000 will face the maximum rate. Corresponding adjustments will be made for AV bands in between.

Instalment Plan for Retirees

Retirees residing in higher-end homes experiencing cash flow challenges can utilize a 24-month interest-free instalment plan from IRAS to pay their Property Tax. To qualify, individuals must meet specific criteria:

• They must be residing in the property, taxed at owner-occupier rates.
• Their assessable income should not exceed $34,000 in YA 2023.
• All property owners, including themselves, must be aged 65 or above in 2024.
• There should be outstanding property tax payable for the property.

Rebates

If necessary, a rebate may be introduced in 2025 to mitigate the impact of the Property Tax changes.

ABSD Refund Concession

Senior Citizens

Effective from February 16, 2024, the ABSD refund on replacement private properties will be expanded to include single Singapore citizens aged 55 and above. Previously, this rebate was exclusively available to married couples. Under this initiative, Singapore citizens aged 55 and above can seek a refund of ABSD paid on their replacement private property if they sell their initial property within six months after acquiring a lower-value replacement private property.

Housing Developers

Presently, housing developers must adhere to a stipulated sale timeline for all units in their developments to qualify for ABSD remissions. ABSD clawbacks come into effect if the sale timeline is not met. To alleviate challenges in meeting this timeline, a reduced ABSD clawback rate will be applicable if housing developers successfully sell at least 90% of each development within the specified sale timeline.

BEPS Pillar 2.0 Implementation in Singapore

Commencing January 1, 2025, Singapore will enact the two components of BEPS 2.0 Pillar 2, aimed at establishing a global minimum effective tax rate of 15% for large Multinational Enterprise (MNE) groups. Applicable to MNE groups with annual global revenues surpassing €750 million in at least 2 of the 4 preceding financial years, these measures ensure a fair and consistent taxation framework.

First Component: Income Inclusion Rule (IIR)

The initial component, the Income Inclusion Rule (IIR), mandates that the overseas profits of MNE groups headquartered in Singapore, irrespective of their operational locations, are subject to a minimum effective tax rate of 15%. This ensures that income generated globally by these groups is included in the calculation of the minimum tax.

Second Component: Domestic Top-Up Tax (DTT)

The second element, the Domestic Top-Up Tax (DTT), is designed to elevate the effective tax rate on the profits earned in Singapore by MNE groups to the 15% global minimum. This mechanism ensures that the tax is collected within Singapore rather than in the parent jurisdictions of the MNE groups, contributing to a more equitable and uniform tax landscape.

Future Plans

A third component, tentatively named the Undertaxed Profits Rule (“UPR”), is under consideration for future implementation. The UPR empowers Singapore to collect a portion of the top-up tax levied on Multinational Enterprises (MNEs) with operations in Singapore.

The introduction of the Refundable Investment Credit (RIC) is poised to receive a positive reception from potential investors and existing MNE groups. This is primarily attributed to its potential alignment with the criteria for a Qualified Refundable Tax Credit scheme under the BEPS 2.0 Pillar 2 rules.

The timeline for the implementation of BEPS 2.0 Pillar 1 remains undecided and will be announced at a later date.

 

https://www.lexology.com/library/detail.aspx?g=f62bcab7-0f0a-46aa-8182-495dd8745739

https://www.mof.gov.sg/singaporebudget/budget-2024/budget-speech

https://www.pwc.com/sg/en/publications/assets/page/key-budget-2024-changes-for-businesses.pdf