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FAQ – GST change 2023

The amount relating to the option money paid before 1 Jan 2023 is subject to the GST rate of 7%.

The remaining payment will be subject to the GST rate of 8% as the property is only made available on/ after 1 Jan 2023.

If you receive full payment for the banquet before 1 Jan 2023, you should only charge 7% GST to your customer even if the banquet is to be held on/ after 1 Jan 2023.

If you only receive a deposit before 1 Jan 2023 and will receive the balance on/ after 1 Jan 2023, the deposit is subject to 7% GST while the remaining payment is subject to 8% GST.

You should also make clear to your customer that the portion of the banquet price paid before 1 Jan 2023 is inclusive of 7% GST while the balance to be paid on/ after 1 Jan 2023 is inclusive of 8% GST.

The letter of claim is not a bill for payment (i.e. invoice) for GST purposes.

On the understanding that you would only issue the invoice to the developer upon the certification of the work done in 2023 and collect payment from the developer thereafter, the time of supply would be on/ after 1 Jan 2023. Hence, the supply of your construction services would be subject to 8% GST.

However, you can choose to charge GST at 7% as you have completed the construction works before 1 Jan 2023.

As you would only issue the invoice and collect the retention sum from the developer in Nov 2023, the time of supply would be on/ after 1 Jan 2023. Hence, the retention sum would be subject to 8% GST.

However, you can choose to charge GST at 7% on the retention sum as you have completed the construction works before 1 Jan 2023.

You are not allowed to reflect GST at 8% before the rate change effective date of 1 Jan 2023.

The advance invoice pertaining to the services from 1 Oct 2022 to 31 Mar 2023 should reflect GST at 7%.

If you do not receive full payment before 1 Jan 2023, you are required to issue a credit note for the lower of remaining payment or the remaining value of service to be performed on/ after 1 Jan 2023. Thereafter, you are required to issue a new tax invoice in respect of the amount credited out to charge GST at 8%.

Alternatively, you may issue a credit note to cancel out the original invoice and at the same time, reissue new tax invoice(s) for the value of supply subject to GST at 7% and value of supply subject to GST at 8% .

No. You are not allowed to issue a tax invoice with GST at 8% before the rate change effective date.

If you issue a tax invoice before 1 Jan 2023, you should reflect 7% GST on the tax invoice. If the payment is not received before 1 Jan 2023, you will need to issue credit note to cancel the original tax invoice and to issue a new tax invoice for the goods delivered after the rate change, showing 8% as the GST rate.

When you issue the tax invoice to your customer before 1 Jan 2023, you are advised to inform your customer on the potential GST adjustment under the rate change transitional rules to avoid dispute on the GST rate and GST amount payable on the supply.

You are not allowed to reflect GST at 8% before the rate change effective date of 1 Jan 2023. Hence, your invoice that is issued in Dec 2022 should reflect GST of 7% on the rental for the period 5 Dec 2022 to 4 Jan 2023.

Subsequently, assuming payment has not been received before 1 Jan 2023, you should issue a credit note by 15 Jan 2023 to cancel the portion of the rental for the period 1 Jan 2023 to 4 Jan 2023 billed at 7%, and to issue a new tax invoice at 8% for the same period.
The rental can be apportioned based on the number of days as follows:

Portion of rental that is subject to the GST of 7%
= Monthly rental x 27/ 31 days
Portion of rental that is subject to the GST of 8%
= Monthly rental x 4/ 31 days

When you issue the tax invoice to your customer before 1 Jan 2023, you are advised to inform your customers on the potential GST adjustment under the rate change transitional rules to avoid dispute on the GST rate and GST amount payable on the supply.

If you provide rebates to your customer that represent a discount for a past sale, you should calculate the GST on the rebate using the rate that is originally charged on the sale.

On the other hand, if the rebate is used to offset against the value of your next sale to your customer which takes place on or after 1 Jan 2023, you should charge GST at 8% on the net value of the sale.

For returned goods, you should adjust the GST using the rate that is originally charged on your supply of goods and maintain documentary evidence to show whether the goods returned were supplied before or on/after 1 Jan 2023.

Source: IRAS – FAQ

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Changes to Singapore GST in 2023

In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:

(i) 7% to 8% with effect from 1 Jan 2023; and

(ii) 8% to 9% with effect from 1 Jan 2024.

The revenue from the increase in GST will go towards supporting our healthcare expenditure, and to take care of our seniors

Rules for Supplies that span the change of GST rate

A supply spans the change of GST rate where one or two of the following events takes place wholly or partially on or after 1 Jan 2023: 

  • the issuance of invoice;
  • the receipt of payment (or the making of payment in respect of a reverse charge supply);
  • the delivery of goods or performance of services.

Invoice issued on or after 1 Jan 2023​

Full payment received before 1 Jan 2023 Goods delivered after 1 Jan 2023

If you issue an invoice for your supply on or after 1 Jan 2023 but you receive full payment before 1 Jan 2023, the supply is subject to 7% GST. 

Full payment received after 1 Jan 2023 Goods delivered before 1 Jan 2023

If you issue an invoice for your supply on or after 1 Jan 2023 but you have delivered all the goods or performed all the services before 1 Jan 2023, the entire value of the supply is subject to 7% GST. 

Invoice is issued before 1 Jan 2023

Full payment received or Goods delivered before 1 Jan 2023

If you have received full payment before 1 Jan 2023, or if you have delivered all the goods or performed all the services before 1 Jan 2023, the entire value of the supply is subject to 7% GST. 

Partial payment received or partial goods delivered before 1 Jan 2023​

If you do not receive full payment before 1 Jan 2023 and you have delivered or performed a part or all of the goods or services before 1 Jan 2023, you can elect to charge 7% GST on the higher of:

(a) The payment received is before 1 Jan 2023; or 

(b) The value of goods delivered or services performed is before 1 Jan 2023. 

The remaining value of the supply will be subjected to 8% GST.

Supply involving invoice issued before 1 Jan 2023 – full payment received after 1 Jan 2023​

On 22 Dec 2022, you issue a tax invoice for your supply of services (value of $1,000) and you receive the full payment on 5 Jan 2023. You perform part of the services (value of $200) before 1 Jan 2023 and the remaining part of the services (value of $800) after 1 Jan 2023.

You must charge and account for GST at 7% ($70) for the tax invoice issued to your customer on 22 Dec 2022. As you do not receive any payment and only perform part of the services before 1 Jan 2023, under the transitional rules, you are required to issue the following to your customer by 15 Jan 2023, for that part of the services performed after 1 Jan 2023:

  • a credit note for $856 ($800 plus 7% GST of $56); and
  • a new tax invoice for $864 ($800 plus 8% GST of $64).

Supply involving invoice issued before 1 Jan 2023 – payments straddle 1 Jan 2023

On 21 Dec 2022, you issue a tax invoice for your supply of services (value of $1,000). Before 1 Jan 2023, you delivered part of the goods (value of $400) and received a payment of $200. After 1 Jan 2023, you receive the remaining payment of $800 and perform delivered the other part of the goods (value of $600).

Under the transitional rules, you are required to issue the following by 15 Jan 2023, for that part of the goods delivered after 1 Jan 2023:

  • a credit note for $642 ($600 plus 7% GST of $42); and
  • a new tax invoice for $648 ($600 plus 8% GST of $48)
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FAQs on Rental Relief and Property Tax Rebate for SMEs

Rental Relief

The rental relief framework, comprising the Rental Relief and the Additional Rental Relief, applies to eligible tenant-occupiers of prescribed properties in qualifying leases or licences that are in writing, or evidenced in writing, which are:

a) (i) Entered into before 25 March 2020; or (ii) entered into before 25 March 2020 but expired and renewed either automatically or in exercise of a right of renewal in the contract; and

b) In force at any time between 1 April and 31 July 2020 for qualifying commercial properties, and between 1 April and 31 May 2020 for other non-residential (e.g. industrial/office) properties.

Rental Relief

Tenant-occupiers must fall in the following category to be eligible for Rental Relief:

a) Small and Medium Enterprises (SMEs) with not more than S$100 million in annual revenue for the Financial Year 2018 or a later appropriate period where applicable, at the individual or entity level

  • If the tenant-occupier has not carried on business for 12 months or longer as at the last day of its financial year ending on a date in the year 2018, but has carried on business for 12 months or longer as at last day of its financial year ending on a date in the year 2019, the reference period will be FY2019 instead. Id the foregoing does not apply, but the tenant-occupier has carried on business for 12 months or longer as at the last day of its financial year ending on a date in the year 2020, where the date is on or before March 2020, the reference period will be FY 2020. For any other case, the tenant-occupier’s average monthly revenue from the time the tenant-occupier commenced business until 31 March 2020 (both dates inclusive) will be extrapolated for comparison against the $100 million annual revenue threshold.

Additional Rental Relief

The Additional Rental Relief will apply to tenant-occupiers who qualify for Rental Relief, have carried on business at the rented property before 25 March 2020 and meet the following additional criteria:

(a) The tenant-occupier is a company/entity incorporated in Singapore, and if it is a member of a Singapore group of entities during the period 1 Apr 2020 to 31 May 2020, the aggregate revenue for such a group is not more than S$100 million for the Financial Year 2018 or a later appropriate period where applicable; and

(b) The tenant-occupier suffered at least a 35% drop in average monthly gross income at the outlet level from 1 Apr to 31 May 2019, or alternative period if the tenant-occupier was not operational as of 1 Apr 2019.

Note: If the tenant-occupier commenced business after 1 Apr 2019, comparison will be against the period from the date of commencement of business to 24 Mar 2020 (both dates inclusive) to ascertain the decrease of 35% or more. 

a) Rental Relief for eligible SME tenants (supported by Government assistance):

Eligible tenant-occupiers in qualifying commercial properties and other non-residential properties will receive the rental relief through a waiver of rent from their landlords. Property owners will receive support through the: (a) Property Tax Rebate for Year 2020 announced in the Unity and Resilience Budgets; and (b) Government cash grant announced in the Fortitude Budget.

Eligible SMEs in qualifying commercial properties will receive up to 2 months’ waiver of their rent, and eligible SMEs in other non-residential properties (e.g. industrial and office properties) will receive up to 1 months’ waiver of their rent.

b) Additional Rental Relief for SME tenants (supported by landlords/ property owners):

Eligible SME tenant-occupiers who have seen a 35% or more drop in their average monthly gross income due to COVID-19 will receive up to an additional 2 months’ waiver of rent for qualifying commercial properties, and up to an additional 1 month’s waiver of rent for other non-residential properties (e.g. industrial and office properties).

For more details on the definitions of property in each category, please refer to this.

*The value of the rent to be waived is based on the contractual rent of the tenant, excluding any maintenance fee and charges for the provision of services such as cleaning and security.

An intermediary landlord will be required to provide a full waiver to their tenant according to the applicable rental relief period.

  • In such a case, the tenant-occupier should provide its unaudited balance-sheet, profit and loss statement and cash flow statement for the period from the date of commencement of the business (at the prescribed property or any other place) to 31 March 2020 (both dates inclusive), supported by a statutory declaration by the tenant or (if the tenant is an entity) a relevant officer of the tenant.
  • If however, the above is also not available, the tenant should provide a statutory declaration by the tenant or (if the tenant is an entity) a relevant officer of the tenant stating that the revenue of the tenant, calculated using the formula 12xA is not more than $100 million, where A is the average monthly revenue from the business for the period from the date of commencement of the tenant’s business to 31 March 2020 (both dates inclusive).
  • A statutory declaration made in Singapore must be in the form set out in the First Schedule of the Oaths and Declarations Act (Cap. 211) and be made before a Commissioner for Oaths.

The Act provides for a moratorium on enforcement actions against eligible tenant-occupiers for non-payment of rent. Among other things, landlords are prohibited from taking the following actions on the tenant-occupier or the tenant-occupier’s guarantor/surety in relation to the non-payment of rent:

a) Terminating the lease or licence agreement;

b) Exercising the landlord’s right of re-entry or forfeiture under the lease or licence agreement; and

c) Starting or continuing court or insolvency proceedings.

This moratorium does not apply to tenants that are not tenant-occupiers, i.e. they are not operating on the property. It also does not apply to tenant-occupiers that do not meet the criteria for the rental relief, i.e. they are not a SME as defined. The moratorium also does not suspend interest due under lease agreements or license agreement. The moratorium ends when IRAS issues the notice of cash grant to the property owner, or on 31 December 2020 if no such notice is received before then.

If a landlord and tenant-occupier are unable to reach a compromise, the property owner and/or any intermediary landlord(s) may make an application using the prescribed form here within 10 working days after receiving (a copy of) the notice of cash grant, to have a rental relief assessor ascertain whether the tenant-occupier is eligible for Rental Relief and/or Additional Rental Relief. Please refer to the section Application for Assessment for details.

Under the Act, the rent that is payable by eligible tenants to their landlord for the relevant period of rental waiver is statutorily waived once qualifying property owners with eligible tenant-occupiers receive the notice of the cash grant issued by IRAS. This means that as an eligible tenant-occupier you do not need to pay rent for those months.

 

In the case where tenants have already paid rent for those months for which rent is waived, tenants can apply the rental waivers towards the next most immediate months of rent. If there is insufficient time left in the lease, tenants can obtain a refund from the landlord.

 

In cases where landlords had earlier provided assistance to their tenants or reached an agreement to provide assistance to their tenants, in the form of monetary payments or reduction of payments due under the lease agreement, or landlords have passed on the benefit of any Property Tax Rebate for Year 2020 in respect of the property, these can be offset from the landlords’ rental waiver obligations.

The Property Tax Rebate for Year 2020 for non-residential properties and the Government cash grant are based on the Annual Value of the property. This may not be equivalent to the rental waiver to be provided by landlords, which is based on the contractual rent. Tenants will still have to pay for maintenance fee and charges for the provision of services such as cleaning and security. Nevertheless, the landlord is obliged to provide the rental waiver based on the contractual rental as defined, not based on grant by the Government. The Property Tax Rebate and Government cash grant are not intended to cover the full amount of rental waivers exactly.

The Government recognises that there are landlords who may face genuine financial hardship.Landlords who meet all the following criteria may apply to a rental relief assessor to reduce the amount of Additional Rental Relief they have to provide:

a) The applicant landlord must be an individual or a sole proprietor and is the owner of the prescribed property;

b) The aggregate of the annual value of all investment properties (including the prescribed property) owned (whether solely or jointly with another person and whether directly or through one or more investment holding companies) is not more than S$60,000 as at 13 April 2020; and

c) The rental income derived from the property in question in Year of Assessment 2019 constituted 75% or more of the landlord’s gross income.

If the landlord meets the grounds of financial hardship above, the rental relief assessor may halve the amount of Additional Rental Relief to be borne by the landlord, i.e. one month’s rental waiver for qualifying commercial properties, or half a month’s rental waiver for other non-residential properties (e.g. industrial and office properties). The remaining rent payable will be borne by the tenant.

Property Tax Rebate

*Property Tax Rebate is different from Rental Relief

Property TypeComponentTax Rebate
HotelHotel Rooms100%
Function Rooms100%
Shops, restaurants, gym, tenements such as space for vending machine, base station and tour desk100%
Offices that are not used in connection with the operation of the hotel such as serviced offices30%
Retail MallShops and restaurants100%
Offices30%
Office BuildingOffices30%
Shops and restaurants100%
In-house gym that are used exclusively by the occupants of the office building
30%

Owners of qualifying properties are required to unconditionally and fully pass on to their tenant(s) the rebate for the property tax account that is attributable to the rented property based on the period it was rented out, by either reducing or offsetting current or future rentals or  through a payment to their tenant(s), within the prescribed timeframe.

Failure to properly pass on the rebate, or to keep the records (e.g. information on the amount, manner and time of pass on) until 31 Dec 2023, without reasonable excuse, is an offence. Those guilty of such an offence shall be liable on conviction to a fine not exceeding $5,000.

The property owners are to continue to pass on the rebate to their tenants despite any outstanding objections lodged for the year 2020. 

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China’s Income Tax Policy in Relation to Overseas Income

On 17 January 2020, China’s Ministry of Finance and State Taxation Administration jointly issued the “Announcement on Individual Income Tax Policy in relation to Overseas Income” (Ministry of Finance and State Taxation Administration Announcement 3 of 2020). This announcement applies from the 2019 tax year. This means that income earned overseas by China tax residents will be taxed. 

Announcement 3 sets out the relevant policies regarding this new income tax policy. The key contents include:

  • Classification of overseas income
  • Calculation of taxable income
  • Foreign tax credit (“FTC”)

Residence rules

An individual is domiciled in China if:

(a) They habitually reside in China by reason of permanent registered address, family ties, or economic interests; or

(b) holds a Chinese passport or a hukou (household registration).

Classification of Overseas Income

The following categories of income are considered as overseas income:

Income categoriesBasis of income sourcing
(1) Income from provision of labour services outside China (including employment income and independent personal service income)The overseas location where the labour or employment activities are carried out.
(2) Authors’ remuneration paid and borne by enterprises and other organisations outside China;The overseas location of the enterprise or organisation which pays and bears the remuneration.
(3) Royalties received from the grant of concessions outside China;The overseas location where the concessions are utilised.
(4) Income from business operations and productions outside China;The overseas location where business operation or production is carried out.
(5) Interest and dividend income obtained from enterprises, other organisations and non-resident individuals outside China;The overseas location where the interest and/or dividend paying parties are based.
(6) Income from lease of overseas properties;The overseas location where the leased property is used.
(7) Capital gains from the transfer of real estate, transfer of equity stocks, stock options, or other financial assets (hereinafter referred to as financial assets) of overseas enterprises or other organisations, or from the transfer of other assets outside China;Real estate: the overseas location where the asset is located;
Financial assets: the overseas location where the invested enterprise or other organisation is based.
It is worth noting that if more than 50% of the fair value of the assets of the invested enterprise or other organisation comes directly or indirectly from real estate located in China at any time during the three years (36 consecutive months) prior to the transfer, the gains from the transfer of the assets would be deemed as China sourced.
(8) Incidental income obtained from enterprises, other organisations and non-resident individuals outside China;The overseas location where the incidental income paying parties are based.
(9) Separate rules may apply if otherwise determined by the Ministry of Finance or the State Taxation Administration.N/A

Personal Income Tax Rate

The following table shows the latest Income Tax Rate for residents in China.

Annual taxable income (CNY) Tax rate (%)Quick deduction (CNY)
0 to 36,00030
Over 36,000 to 144,000102,520
Over 144,000 to 300,0002016,920
Over 300,000 to 420,0002531,920
Over 420,000 to 660,0003052,920
Over 660,000 to 960,0003585,920
Over 960,00045181,920

How to calculate Taxable Income?

Domestic and foreign income subject to consolidated tax calculation

Comprehensive income

Annual comprehensive income = comprehensive income within China + comprehensive income from overseas

Income from business operations

Annual operating income = income from domestic operations + income from overseas operations

Losses from business operations in a particular overseas jurisdiction cannot be offset against income from operations in China or other overseas locations. However, the losses may be used to offset business operating income at the same location in future tax years, based on the relevant tax law in China.

Domestic and foreign income subject to separate tax calculation

Income derived from interest, dividends, property lease, property transfer, and incidental income cannot be consolidated with China-sourced income and shall be subject to tax calculation separately.

Foreign Tax credit ("FTC")

Announcement 3 makes it clear that where resident taxpayers receive overseas income during a tax year, FTC will be granted where foreign income tax has been paid in the overseas location in accordance with the tax law in that jurisdiction, subject to limits. The formula is as follows:

Tax / refund due for the tax year = total tax liability for the tax year – overseas tax liability allowable as credit (not exceeding the tax credit limit)

The amount of overseas tax exceeding the tax credit limit can be utilised in the following five tax years.

Overseas income not allowed for FTC

The following are the circumstances that are not allowed and shall be excluded from the FTC claim:

  1. Overseas tax paid or collected by mistake;
  2. Tax which should not be levied in the overseas jurisdiction under the Double Tax Treaty between China and the foreign country (or under the Double Tax Arrangement between Mainland China and Hong Kong and Macao);
  3. Late payment interest and/or penalties imposed by overseas tax authorities for underpayment or late payment of overseas income tax;
  4. Overseas income tax which is due for refund or compensation from the overseas tax authorities;
  5. Overseas income which is tax-exempt under the China IIT Law and Implementation Rules.

Singapore’s Tax Treaty with China

As there is an agreement between The Government of The Republic of Singapore and The Government of The People’s Republic of China, China residents receiving an income from Singapore or vice-versa, will be eligible for double tax relief if conditions are met. However, this is not an exemption of tax, but rather a reduction of tax.
According to Article 22 of the treaty, elimination of double taxation in China shall be eliminated as follows:

(a) Where a resident of China derives income from Singapore the amount of tax on that income payable in Singapore in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.

(b) Where the income derived from Singapore is a dividend paid by a company which is a resident of Singapore to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to Singapore by the company paying the dividend in respect of its income.

In Singapore, double taxation shall be avoided as follows:

(a) Where a resident of Singapore derives income from China which, in accordance with the provisions of this Agreement, may be taxed in China, Singapore shall, subject to its laws regarding the allowance as a credit against Singapore tax of tax payable in any country other than Singapore, allow the Chinese tax paid, whether directly or by deduction, as a credit against the Singapore tax payable on the income of that resident.

(b) Where such income is a dividend paid by a company which is a resident of China to a resident of Singapore which is a company owning directly or indirectly not less than 10 per cent of the share capital of the first-mentioned company, the credit shall take into account the Chinese tax paid by that company on the portion of its profits out of which the dividend is paid.

Note:

Singapore employment income is not taxed in China according to the provisions of Articles 16, 18 and 19 of the treaty, salaries, wages and other similar remuneration derived by a resident of a Singapore State in respect of an employment shall be taxable only in Singapore unless the employment is exercised in the China. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in China.

When it comes to profits earned from interest, royalties and dividend payments, special reduced rates apply, as follows:

Dividends

Dividends paid by a company which is a resident of China to a resident of Singapore may be taxed in Singapore.

However, such dividends may also be taxed in China of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of Singapore, the tax so charged shall not exceed:

(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital in the enterprise paying the dividends;

(b) in all other cases, dividend payments are taxed at a rate of 10%.

Interest

Income arising from interest issued by a bank or financial institution which is a resident of China to a resident of Singapore, may be taxed in Singapore.

However, such interest may also be taxed in China of which the bank or financial institution paying the interest is a resident and according to the laws of that State, but if the beneficial owner of the interest is a resident of Singapore, the tax so charged shall not exceed:

(a) 7 per cent of the gross amount of the interest if it is received by any bank or financial institution

(b) 10 per cent of the gross amount of the interest in all other cases.

Royalties

Royalties in this treaty means payments of any kind received as consideration for the use of, or the right to use, any copyright of literacy, artistic or scientific work including cinematograph films, or films or tapes for radio or television broadcasting, any computer software, patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

These royalties derived from China and paid to a resident of Singapore, may be taxed in Singapore, and vice-versa.

However, if the beneficial owner of the royalties is a resident of Singapore, the tax charged shall not exceed 10 per cent of the gross amount of the royalties.  

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IRAS – Extended Filing Deadline [Updated]

Due to the extended Circuit Breaker to 1 June 2020, IRAS is providing an automatic extension of deadlines for tax filing for individuals and businesses.

Tax TypeOriginal Filing DeadlineExtended Filing Deadline
[New]
Income Tax for Individuals (including sole
proprietors and partnerships)		18 Apr 202031 May 2020
Income Tax for Trusts, Clubs and
Associations		15 Apr 202030 Jun 2020
[Updated]
Estimated Chargeable Income (ECI) for
companies with Financial Year ending
Jan 2020		30 Apr 202030 Jun 2020
[Updated]
Estimated Chargeable Income (ECI) for
companies with Financial Year ending
Feb 2020		31 May 202030 Jun 2020
[Updated]
GST Returns for accounting period ending
Mar 2020		30 Apr 202011 May 2020
S45 Withholding Tax Forms due in Apr 202015 Apr 202015 May 2020
Tax Clearances for foreign employee in
Apr 2020		–30 Jun 2020
[Updated]
Tax Clearance for foreign employees
due in May 2020		–30 Jun 2020
[Updated]

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IRAS Extends Tax Filing Deadlines

As part of its support for taxpayers in light of the latest measures to manage the COVID-19 situation, the Inland Revenue Authority of Singapore (IRAS) is providing an automatic extension of deadlines for tax filing for individuals and businesses:

Tax Type Original Filing Deadline Extended Filing Deadline
Income Tax for Individuals (including sole proprietors and partnerships)18 Apr 202031 May 2020
Income Tax for Trusts, Clubs and Associations15 Apr 202031 May 2020
Estimated Chargeable Income (ECI) for companies with Financial Year ending Jan 202030 Apr 202031 May 2020
GST Returns for accounting period ending Mar 202030 Apr 202011 May 2020
S45 Withholding Tax Forms due in Apr 202015 Apr 202015 May 2020
Tax Clearances for foreign employee in Apr 2020 -1 additional month
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Singapore Budget 2020 affecting companies

Jobs Support Scheme ("JSS")

Current Treatment

Not applicable

New Treatment

Employers will receive an 8% cash grant on the gross monthly wages of each local employee (applicable to Singapore Citizens and Permanent Residents only) for the months of October 2019 to December 2019, subject to a monthly wage cap of $3,600 per employee.   

Employers do not need to apply for the JSS. The grant will be computed based on CPF contribution data.   

Employers can expect to receive the JSS payment from the Inland Revenue Authority of Singapore (IRAS) by 31 July 2020.

Wages paid to business owners will not be eligible for the grant. 

Enhancement to Wage Credit Scheme ("WCS")

Current Treatment

Under WCS, the Government will co-fund a part of wage increases given to Singaporean employees earning a gross monthly wage of up to $4,000.

  • 2013 to 2015: 40% cap at $4,000
  • 2016 to 2018: 20% cap at $4,000
  • 2019: 15% cap at $4,000
  • 2020: 10% cap at $4,000

Employers do not need to apply for the WCS. The grant will be computed based on CPF contribution data. 

Payouts will be given to employers by 31 Mar of the payout year.

New Treatment

The monthly wage ceiling will be raised from $4,000 to $5,000 for qualifying wage increases given in 2019 and 2020.

  • 2013 to 2015: 40% cap at $4,000
  • 2016 to 2018: 20% cap at $4,000
  • 2019: 20% cap at $5,000
  • 2020: 15% cap at $5,000

Government co-funding levels will also be raised for 2019 and 2020 qualifying wage increases by five percentage points, to 20% and 15% respectively. 

Corporate Income Tax ("CIT") Rebate 

Current treatment

YA2019: 20% of tax payable, capped at $10,000

New treatment

YA2020: 25% of tax payable, capped at $15,000

Automatic extension of interest-free instalments of 2 months for payment of CIT on Estimated Chargeable Income (“ECI”) filed within 3 months from the companies’ financial year-end (“FYE”)

Current Treatment

Tax payable on first ECI e-Filed within

  • 1 months from year end: 10 months
  • 2 months from year end: 8 months
  • 3 months from year end:  6 months
  • After 3 months from year end: No instalments allowed

New Treatment

Tax payable on first ECI e-Filed within

  • 1 months from year end: 12 months
  • 2 months from year end: 10 months
  • 3 months from year end:  8 months
  • After 3 months from year end: No instalments allowed

Increase the number of YAs for which the current year unabsorbed capital allowances (“CA”) and trade losses for a YA (collectively referred to as “qualifying deductions”) may be carried back 

Current Treatment

“Qualifying Deductions” (“QD”) can be carried back for one YA immediately preceding that YA in which the CAs are granted or the trade losses incurred capped at $100,000.

New Treatment

“Qualifying Deductions” (“QD”) for YA2020 can be carried back for three YA  (i.e YA2017) capped at $100,000.

Provide an option to accelerate the write-off of the cost of acquiring plant and machinery (“P&M”)

Current Treatment

A taxpayer who incurs capital expenditure on the acquisition of P&M in the basis period can claim Capital Allowances (CA) over

Section 19A

  • 100% Write-Off in One Year
  • Write-Off Over Three Years

Section 19

  • Write-Off Over the Prescribed Working Life of the Asset

New Treatment

A taxpayer who incurs capital expenditure on the acquisition of P&M in the basis period for YA2021 (i.e. financial year (“FY”) 2020) will have an option to accelerate the write-off of the cost of acquiring such P&M over 2 years.

The rates of accelerated CA allowed are as follows:

a) 75% of the cost incurred to be written off in the first year (i.e. YA2021); and,
b) 25% of the cost incurred to be written off in the second year (i.e. YA2022).

Provide an option to accelerate the deduction of expenses incurred on renovation and refurbishment (“R&R”)

Current Treatment

A taxpayer which incurs qualifying expenditure on R&R during the basis period for the purposes of its trade, profession or business can claim Section 14Q deduction  over three consecutive YAs starting from the year in which the R&R expenditure is incurred, i.e. 1/3 of the R&R expenditure can be claimed in each of the three YAs.

The amount of R&R costs that qualify for tax deduction as a business expense is capped at $300,000 for every relevant three-year period, starting from the year in which the R&R costs are incurred.

 

New Treatment

A taxpayer which incurs qualifying expenditure on R&R during the basis period for YA2021 (i.e. FY2020) for the purposes of its trade, profession or business will have an option to claim R&R deduction in 1 YA (i.e. accelerated R&R deduction).

The amount of R&R costs that qualify for tax deduction as a business expense is capped at $300,000 for every relevant three-year period, starting from the year in which the R&R costs are incurred.

Extend the Mergers & Acquisitions (“M&A”) scheme

Current Treatment

Under the M&A scheme, an M&A allowance will be granted to a company that acquires another company during the period 1 Apr 2010 to 31 Dec 2020 (both dates inclusive). The M&A allowance will be allowed on a straight line basis over five years and the allowance cannot be deferred. Companies must meet certain conditions to remain eligible for M&A allowance for each Year of Assessment (YA) during the five-year write-down period.

  • 1 Apr 2016 to 31 Dec 2020:  The M&A allowance is 25% of the value of acquisition, , subject to a maximum amount of $10 million for all qualifying share acquisitions in the basis period for each YA. Maximum M&A allowance for each YA will be reached with an acquisition of $20 million in that YA.
  • 1 Apr 2015 to 31 Mar 2016: The M&A allowance is 25% of the value of acquisition, , subject to a maximum amount of $5 million for all qualifying share acquisitions in the basis period for each YA. Maximum M&A allowance for each YA will be reached with an acquisition of $20 million in that YA.
  • 1 Apr 2010 to 31 Mar 2015: The M&A allowance is at 5% of the value of acquisition, subject to a maximum amount of $5 million for all qualifying share acquisitions in the basis period for each YA. Maximum M&A allowance for each YA will be reached with an acquisition of $100 million in that YA.

New Treatment

The M&A scheme will be extended to cover qualifying acquisitions made on or before 31 December 2025.

The scheme will remain unchanged for acquisitions made on or after 1 April 2020, except for the following:

  1. Stamp duty relief will lapse for instruments executed on or after 1 April 2020; and
  2. No waiver will be granted for the condition that the acquiring company must be held by an ultimate holding company that is incorporated in and is a tax resident of Singapore. This will apply for acquisitions made on or after 1 April 2020.
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Singapore corporate tax exemptions caa 18 Feb 2020

Partial tax exemption for companies (from YA 2020)

Chargeable income% exempted from TaxAmount exempted from Tax
First $10,000@75%=$7,500
Next $190,000@50%=$95,000
Total $200,000 =$102,500

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or after YA 2020)

Chargeable income% exempted from TaxAmount exempted from Tax
First $100,000@75%=$75,000
Next $100,000@50%=$50,000
Total $200,000 =$125,000

Partial tax exemption for companies (YA 2010 to YA 2019)

Chargeable income% exempted from TaxAmount exempted from Tax
First $10,000@75%=$7,500
Next $290,000@50%=$145,000
Total $300,000 =$152,500

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in YA 2010 to YA 2019)

Chargeable income% exempted from TaxAmount exempted from Tax
First $100,000@100%=$100,000
Next $200,000@50%=$100,000
Total $300,000 =$200,000

YA 2020
Companies will be granted a 25% Corporate Income Tax Rebate capped at $15,000.

YA 2019
Companies will be granted a 20% Corporate Income Tax Rebate capped at $10,000.

YA 2018
Companies will be granted a 40% Corporate Income Tax Rebate capped at $15,000

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Singapore Corporate Tax Rate

When is the company taxed

For income earned in the financial year known as the “basis period”, it will be taxed in the following year.

E.g. This means that income earned in the financial year 2016 will be taxed in 2017.

Basis Period and Year of Assessment

For assessment, the term year of assessment is used. Using the same example as above, 2017 is the Year of Assessment (YA). In other words, the YA is the year in which your income is assessed to tax.

Corporate Tax Rate

With effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.

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Singapore tax rate on dividend income

As Singapore adopts a one-tier corporate tax system, there is no tax on dividend income from Singapore resident company.

If a Singapore company received foreign-sourced dividend income, it will be subjected to tax unless all of the following three conditions are met:

  1. The highest corporate tax rate (headline tax rate) of the foreign jurisdiction from which the income is received is at least 15% at the time the foreign income is received in Singapore;
  2. The foreign income had been subjected to tax in the foreign jurisdiction from which they were received. The rate at which the foreign income was taxed can be different from the headline tax rate; and
  3. The Comptroller is satisfied that the tax exemption would be beneficial to the person resident in Singapore.