Singapore 2008 Budget - Tax Cuts & Reliefs

February 15, 2008
Finance Minister Tharman Shanmugaratnam during his 2008-2009 budget speech, unveiled a series of personal and corporate tax benefits designed to help both the working class as well as corporate business community in Singapore.

Key Corporate Tax Reliefs - At A Glance

• The qualifying conditions on the existing tax exemption of $100,000 on normal chargeable income for each of its first three consecutive tax filing years have been relaxed. According to the new policy, tax exemption is allowed as long as there is at least one individual shareholder that holds at least 10% of the shares. The rest of the shareholding can be owned by corporate entities.
• All Singapore companies that earned income from countries that don’t have double tax agreement with Singapore, will be allowed a tax credit on their foreign-sourced income from those countries.
• Allowed tax deductions for R&D done in Singapore increased from 100% to 150%. For example, with every S$100,000 of local R&D spending, a company will be able to deduct S$150,000 from its taxable income. The restriction of R&D done must be related to a company’s existing business has been removed. In addition, to help offset future local R&D spending expenses, companies will be given a R&D tax allowance of up to 50% of the first 300,000 of their taxable income.
• Singapore companies will be allowed to write down the cost of fixtures and fittings over a period of three years up to a maximum of S$150,000. They can do this every three years.
• Licensed insurance companies to enjoy a concessionary tax rate of 10% on the income they derive from offering insurance broking and advisory services to offshore clients.
• Shipping companies to enjoy a concessionary tax rate of 5-10% on income from container leasing activities.
• Family owned investment holding companies to enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced income.

Key Personal Tax Reliefs - At A Glance

• Estate duty abolished for locals as well as foreigners. Singapore to become world’s new wealth accumulation centre.
• One-time income tax rebate of 20% (capped at $2000) for all resident taxpayers for Year of Assessment 2008.
• Government to top up the Medisave accounts of all Singaporeans aged 51 and above by up to S$450 this year.
• All Singaporeans to receive a Growth Dividend from government ranging from S$100 to S$450 depending on their income level.
• Full-time students pursuing higher education to receive scholarships ranging from S$800 to S$1600 per annum.
• Government to subsidize part-time studies of Singaporeans for up-to 40%.