Bill to amend Income Tax Act to implement Budget changes passed

26 November 2020

On 3 November 2020, the Income Tax (Amendment) Bill (“Bill”) was passed in Parliament. The Bill seeks to implement the tax changes in the Government’s 2020 Budget Statements in the Income Tax Act and to make certain other amendments to the Act.

Changes arising from the Bill include the following:

  • Corporate income tax rebate: To help companies with cash flow, a 25% rebate of corporate income tax payable, capped at S$15,000 per company, will be granted for the Year of Assessment (“YA”) 2020.
  • Carrying back of qualifying deductions: The number of YAs for which the current year unabsorbed capital allowance and trade losses for a YA may be carried back will be increased. Unabsorbed capital allowance and trade losses for YA2020 may be carried back up to three, instead of one, immediate preceding YAs. This initiative seeks to help businesses with cash flow and will allow businesses to get a refund of up to S$17,000 of income tax paid for YA2017 to YA2019. 
  • Extension of Double Tax Deduction for Internationalisation (“DTDi”) scheme: To continue encouraging firms to internationalise, the DTDi scheme will be extended until 31 December 2025. The scope of the scheme will also be enhanced to cover more qualifying expenses
  • Extend Mergers & Acquisitions (M&A) scheme: To continue encouraging companies to consider M&A for growth and internationalisation, the M&A scheme will be extended to cover qualifying acquisitions made on or before 31 December 2025. 
  • Exemption of certain payments received in connection with Covid-19 events: A new provision will be introduced to exempt from income tax certain payments that are made in connection with the Covid-19 pandemic. These include payments made in connection with various public schemes established to mitigate the impact of Covid-19 events on persons, such as the Job Support Scheme. 
  • Surcharge to deter tax avoidance arrangements: To further deter tax avoidance arrangements, the Income Tax Act will be amended to introduce a surcharge equal to 50% of the amount of additional income tax payable as a result of the adjustments by the Comptroller of Income Tax to counteract tax avoidance arrangements. As a related amendment, the Stamp Duties Act will be amended to introduce a surcharge equal to 50% of the amount of additional stamp duties payable as a result of adjustments made to counteract the tax avoidance arrangement. 

Reference materials

The following materials are available on the MOF website www.mof.gov.sg and the Singapore Parliament website www.parliament.gov.sg: