ISCA Budget 2015 Update and its Tax Implications: Impact ...download.isca.org.sg/event/TAX2015.pdf©...

© 2015 ISCA

ISCA Budget 2015 Update and its

Tax Implications:

Impact on Corporate Firms and Individuals

11 March 2015, Wednesday

8.30 a.m. – 12.30 p.m.

© 2015 ISCA

2015 Budget Highlights

Prof. Sum Yee Loong Professor of Accounting (Practice),

School of Accountancy, SMU

© 2015 ISCA

Singapore’s Growth

In The Last 50 Years

3

© 2015 ISCA

1963 – 1980

Industrialisation

Average annual growth 10%

4

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1980 – 1997

Move towards greater value-added

Emphasis on services sector

Average annual growth 8%

5

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1998 – 2009

Greater value-added activities

Higher skills activities (R&D)

Average annual growth 4.5%

6

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Corporate Tax

7

© 2015 ISCA

Corporate Tax Rate

Remains @ 17%

8

© 2015 ISCA

Corporate Tax Comparisons

Ireland

12.5

16.5 1720 21

25 25.5

30

35

0

10

20

30

40

Ireland Hong Kong Singapore

Taiwan

Thailand UK China

Malaysia

Indonesia

Japan India

Australia

Philippines

US

9

© 2015 ISCA

30% Tax Rebate

YA 2013 – YA 2015

Max $30,000 per YA

10

© 2015 ISCA

C.I. $

Rate* %

300,000 5.8

500,000 8.3

740,735 9.5

1,000,000 11.4

* After partial exemption of $152,500 & rebate

YA 2013 – YA 2015

11

© 2015 ISCA

30% Tax Rebate

YA 2016 – 2017

Max $20,000 per YA

12

© 2015 ISCA

C.I. $

Rate* %

300,000 5.8

500,000 8.3

544,659 8.6

1,000,000 12.41

* After partial exemption of $152,500 & rebate

YA 2016

13

© 2015 ISCA

Introduced in 2010 Budget and enhanced in 2011, 2012, 2013 & 2014 400% of up to $400k of qualifying expenditures on: • R&D • Acquisition & Licensing of IP • Registration of IP • Investments in design • Investments in automation • Training for employees

PIC

14

© 2015 ISCA

PIC

PIC Bonus not extended

15

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PIC

Cash Conversion

Up to $60,000

(on first $100,000 expenditure)

Effective conversion rate of 15%

From YA 2013

16

© 2015 ISCA

NO

$

Profit 800,000

PIC (400,000)

C.I. 400,000

PTE (152,500)

247,500

Tax @ 17% Rebate

42,075 (12,622)

Cash conversion -

29,453

Cash Conversion

YES

$

800,000

-

800,000

(152,500)

647,500 110,075 (20,000)

(60,000)

20,075

($9,378)

YA 2015

17

© 2015 ISCA

PIC

Reconciliation

$59,265 @ 17% 10,075

$340,732 @ 11.9% 40,547

Cash payout (60,000)

(9,378)

18

© 2015 ISCA

NO

$

Profit 500,000

PIC (400,000)

C.I. 100,000

PTE (52,500)

47,500

Tax @ 17% Rebate

8,075 (2,422)

Cash conversion -

5,653

Cash Conversion

YES

$

500,000

-

500,000

(152,500)

347,500

59,075 (17,722)

(60,000)

(18,647)

($24,300)

YA 2015

19

© 2015 ISCA

PIC

Reconciliation

$200,000 @ 11.9% 23,800

$200,000 @ 5.95% 11,900

35,700


(24,300)

20

© 2015 ISCA

NO

$

Profit 800,000

PIC (400,000)

C.I. 400,000

PTE (152,500)

247,500 Tax @ 17% Rebate

42,075 (12,622)

Cash conversion -

29,453

Cash Conversion

YES

$

800,000

-

800,000

(152,500)

647,500 110,075 (20,000)

(60,000)

30,075

$622

YA 2016

21

© 2015 ISCA

PIC

Reconciliation

$255,341 @ 17% 43,408

$144,659 @ 11.9% 17,214


622

22

© 2015 ISCA

NO

$

Profit 500,000

PIC (400,000)

C.I. 100,000

PTE (52,500)

47,500 Tax @ 17% Rebate

8,075 (2,422)

Cash conversion -

5,653

Cash Conversion

YES

$

500,000

-

500,000

(152,500)

347,500 59,075

(17,722)

(60,000)

(18,647)

$24,300

YA 2016

23

© 2015 ISCA

PIC

Reconciliation

$200,000 @ 11.9% 23,800

$200,000 @ 5.95% 11,900

35,700


(24,300)

24

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M & A Scheme

M & A Allowance increased

from 5%

to 25%

Cap at $20 mil

Previous cap $100 mil

25

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M & A Scheme

Stamp Duty Relief on transfer of

shares

Cap at $20 mil

Previously $100 mil

26

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M & A Scheme

200% tax deduction for transaction

costs

(Max expenditure cap $100k p.a.)

27

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M & A Scheme

Shareholding required reduced

from > 50%

to at least 20%

(wef 1 April 2015)

28

© 2015 ISCA

Internationalisation Scheme

Overseas investment development

expenditure

Currently max $100k p.a.

29

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Internationalisation Scheme

To cover manpower costs

Maximum $1 mil p.a.

(1 July 2015 – 31 March 2020)

30

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International Growth Scheme (IGS)

Companies embarking on

internationalisation activities

Incentive rate of 10%

(1 April 2015 – 31 March 2020)

31

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Angel Investors Tax Deduction (AITD)

Currently AITD must be:

Invested at individual level

In qualifying start-ups

Hold investment for at least 2 years

32

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Deduction

50% of qualifying investment

Max $500k p.a.

33

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Extended 5 years to 31 March 2020

34

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To include investments co-funded by

SPRING Start-up Enterprise

Development Scheme (SEEDS) and

Business Angel Scheme (BAS)

35

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Fund Management

Withdrawal of Pioneer Service

Incentive

Incentive rate of 5% available

(wef 1 April 2015)

36

© 2015 ISCA

UHNW

> US$ 30 mil

(Excluding own residence)

37

© 2015 ISCA

UHNW

Increase of 15 UHNW per day in 2015

(5,475 p.a.)

38

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UHNW

Singapore ranked no. 3

(Knight Frank’s Wealth Report 2015)

39

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Investment Allowance

Investment allowance for

Energy Efficiency Scheme

Extended to 31 March 2021

40

© 2015 ISCA

International Legal Services

Development & Expansion Incentive


41

© 2015 ISCA

Approved Foreign Loan

Minimum increased

from $200k

to $20 mil

(wef 24 February 2015)

(Reviewed on 31 December 2023)

42

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Approved Royalties Incentive

Reviewed on 31 December 2023

43

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REITs

Tax concessions extended to

31 March 2020

44

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REITs

Stamp Duty remission to expire on

31 March 2015

45

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Offshore Leasing

Incentive under S43I

Ceases on 31 December 2015

46

© 2015 ISCA

Currently:

Tax exemption for income from operations of Singapore

and foreign ships

Tax exemption for leasing of ships

10% tax for managing of container investment enterprise

10% tax for shipping related support services

W/H tax exemption on qualifying loans

Exemptions and concession extended to 31 May 2021

Maritime Sector Incentive (MSI)

47

© 2015 ISCA

OHQ

OHQ Incentive

Ceases on 30 September 2015

48

© 2015 ISCA

Approved Donations

2015

300%

2016 – 2018

250%

49

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GST

Credit for pre-registration GST

Incurred within 6 months of GST

registration

Registration from 1 July 2015

50

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Personal Tax

51

© 2015 ISCA

2025

38

64

100

0

20

40

60

80

100

120

Japan Hong Kong Singapore Taiwan South Korea

Median Individual Pre-Tax Wages

1975

52

© 2015 ISCA

52

7780

93100

0

20

40

60

80

100

120

Japan Singapore Hong Kong South Korea Taiwan

Median Individual Pre-Tax Wages

2013

53

© 2015 ISCA

Personal Tax

YA 2015

Salary 60,000

Bonus 20,900

80,900

EIR 1,000

NSmen 3,000

CPF 16,180 (20,180)

C.I. 60,720

Tax on $40k 550

$20,720 @ 7% 1450

2000

Rebate @ 50% (1000)

Net tax payable 1000

Effective tax rate 1.24%

56

© 2015 ISCA

Comparative personal effective tax rates

Year of Assessment 2015

Employee married with 2 children

Gross annual remuneration of $200k

28.6%

7.9%10.5%

21.0% 21.8% 22.6%

26.1%

29.2%

0%

5%

10%

15%

20%

25%

30%

35%

Singapore Hong

Kong

USA Japan Malaysia China India UK

% Tax Rate

*8.7% (with HK$20k rebate)

*

57

© 2015 ISCA

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

C.I.

Tax

$320,000

$42,350

$320,000

$44,550

0

2 3.5

7

11.5

15

17

18

0

3.5

7

11.5

15

18

19.5

2

19

20

YA 2015

%

YA 2017

%

$ ‘000

Tax Rate

59

© 2015 ISCA

Personal Tax

C.I

YA 2015 YA 2017

$500k 78,350 84,150

Increase 5,800

$1,000k 178,350 194,150

Increase 15,800

60

© 2015 ISCA

CPF

CPF for older workers

Current Proposed

% %

50 – 55

Employer 16 17

Employee 19 20

55 – 60

Employer 12 13

Employee 13 13

60 – 65

Employer 8.5 9

Employee 7.5 7.5


69

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