Singapore Budget 2023: Wolters Kluwer tax highlights

The Budget contains various tax measures to support parents, anchor quality investments in Singapore, nurture and sustain innovation, develop local enterprises, and equip and empower workers.

There will also be enhancements to the Assurance Package costing $3 billion to provide transitional support to all Singaporeans to defray the impact of the higher GST rate.

The full Budget Statement is available at mof.gov.sg/singaporebudget and the Ministry of Finance’s media release is available at mof.gov.sg/singaporebudget/media-centre/media-releases.

The Budget Statement tax highlights are set out below.

Business tax

• Businesses will enjoy tax deduction of 400% for the first $400,000 of staff costs and consumables incurred on qualifying R&D projects conducted in Singapore for each year of assessment (YA) from YA 2024 to YA 2028.
• Businesses will enjoy a 400% tax deduction for the first $400,000 of qualifying intellectual property (IP) registration costs incurred for each year of assessment (YA) from YA 2024 to YA 2028.
• Businesses will enjoy tax allowances/deductions of 400% for the first $400,000 of qualifying expenditure incurred on the acquisition and licensing of qualifying intellectual property (IP) rights for each year of assessment (YA) from YA 2024 to YA 2028. Subsequent expenditure on acquisition and licensing of qualifying IP rights will qualify for 100% tax allowances/deductions.
• Businesses can enjoy a tax deduction of 400% for the first $400,000 of qualifying training expenditure incurred for each year of assessment (YA) from YA 2024 to YA 2028.
• The government will introduce a new tax deduction where businesses can claim a 400% tax deduction for up to $50,000 of qualifying innovation expenditures incurred on qualifying innovation projects carried out with partner institutions for each year of assessment (YA) from YA 2024 to YA 2028.
• Eligible businesses can opt for a non-taxable cash payout of $20,000 per year of assessment (YA), at a cash conversion ratio of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities for each YA under the Enterprise Innovation Scheme, in lieu of tax deductions/allowances.
• The 250% tax deduction rate for donations has been extended for another 3 years until the end of 2026.
• The Business and IPC Partnership Scheme (BIPS) will be enhanced into a Corporate Volunteer Scheme and extended until 31 December 2026.
• Singapore plans to implement the Global Anti-Base Erosion (GloBE) rules and Domestic Top-up Tax (DTT) from businesses’ financial year starting on or after 1 January 2025.
• The Double Tax Deduction for Internationalisation (DTDi) Scheme will be extended to include e-commerce campaign startup expenses paid to e-commerce platform/service providers.
• Businesses that incur capital expenditure on the acquisition of plant and machinery (P&M) in the basis period for year of assessment (YA) 2024 will have an option to accelerate the write-off of the cost of acquiring such P&M over 2 years.
• Businesses that incur qualifying expenditure on renovation and refurbishment (R&R) during the basis period for year of assessment (YA) 2024 will have an option to claim R&R deduction over one YA.

Personal tax

• The Working Mother’s Child Relief (WMCR) will be changed to fixed dollar relief for Singaporean children born or adopted on or after 1 January 2024, effective year of assessment (YA) 2025.
• Effective year of assessment (YA) 2025, the Foreign Domestic Worker Levy Tax Relief (FDWLR) will lapse for all taxpayers.
• Working mothers can claim Grandparent Caregiver Relief (GCR) in respect of caregivers who carry on a trade, business, profession, vocation or/and employment income so long that the total income does not exceed $4,000 in the year preceding the year of assessment (YA) of claim.

Tax incentives

• The Investment Allowance (IA) scheme will be extended till 31 December 2028.
• The Investment Allowance-100% (IA-100%) scheme for automation projects will be extended till 31 March 2026.
• The Pioneer Certificate Incentive (PC) and Development and Expansion Incentive (DEI) will be extended till 31 December 2028.
• The IP Development Incentive (IDI) will be extended till 31 December 2028.
• The Qualifying Debt Securities (QDS) scheme will be extended till 31 December 2028 and its scope and conditions will be refined.
• The tax exemption on income derived by primary dealers from trading in Singapore Government Securities (SGS) will be extended till 31 December 2028.
• The tax incentive scheme for Approved Special Purpose Vehicle (ASPV) engaged in asset securitisation transactions (ASPV scheme) will be extended till 31 December 2028.
• The Financial Sector Incentive (FSI) scheme will be extended till 31 December 2028.
• The insurance business development – insurance broking business (IBD-IBB) scheme will be extended till 31 December 2028.
• The tax deduction under s 14G of the Income Tax Act 1947 will be extended till year of assessment (YA) 2029 and YA 2030.
• The 3 tax measures relating to submarine cable systems will be extended till 31 December 2028.
• The scheme for tax deduction for expenditure incurred on building modifications for the benefit of disabled employees will be withdrawn from 15 February 2023.
• Qualifying donors with Family Offices operating in Singapore can claim 100% tax deduction for overseas donations made through qualifying local intermediaries.

Other tax

• To enhance the progressivity of the buyer’s stamp duty (BSD) regime, higher marginal BSD rates will be introduced for higher-value residential and non-residential properties.
• Preferential Additional Registration Fee (PARF) rebates, which are provided to car and tax owners as an incentive to deregister their vehicles early, will be capped at $60,000.
• A new Additional Registration Fee (ARF) structure will apply to all new and imported used cars and goods-cum-passenger vehicles registered with Certificates of Entitlement (COEs) obtained from the second COE bidding exercise in February 2023 onwards.
• Excise duties across all tobacco products will be raised by 15% on and after 14 February 2023.