Amendments to Income Tax Act 1947 in force from various dates to effect Budget 2024 changes

18 December 2024

The Income Tax Act 1947 (“ITA”) has been amended by the Income Tax (Amendment) Act 2024 (“Amendment Act”) with the changes taking effect from various dates. The Amendment Act implements the tax changes in the Government’s 2024 Budget Statement such as the new Refundable Investment Credit (“RIC”). Amendments are also made to the ITA arising from a periodic review of Singapore’s income tax regime by the Ministry of Finance to better reflect policy objectives and improve tax administration.

The following are some of the changes under the Income Tax (Amendment) Act 2024:

  • Refundable Investment Credit: The Refundable Investment Credit (“RIC”) encourages companies to make sizeable investments that bring substantive economic activities to Singapore in key economic sectors and new growth areas. The RIC will support up to 50% of qualifying expenditures for qualifying activities on an approval basis. The credits are to be offset against corporate income tax (“CIT”) payable. Any unutilised tax credits will be refunded to the company in cash within four years from the time the company makes the claim application in respect of the qualifying expenditures incurred. Companies awarded the RIC will receive tax credits to support their local expenditure in areas such as capital investments, R&D, manpower, and freight and logistics, when they make new investments in high-value and substantive economic activities. These include the development or expansion of manufacturing facilities, setting up of headquarters and services, pursuit of R&D and innovation activities, commodity trading, and decarbonisation.
  • Reducing administrative burden and supporting businesses: Under the normal tax rules, renovation and refurbishment expenses are not tax-deductible as they are capital in nature. The Renovation and Refurbishment Scheme (“R&R Scheme”) specifically allows a deduction for such expenses, up to a cap of S$300,000 every three years. This is to support small and medium enterprises (SMEs) in customer-facing sectors like F&B and retail, which typically need to incur such expenses to enhance their customer service and experience. The R&R Scheme is enhanced in three ways.
    • From Year of Assessment (“YA”) 2025, the scope of qualifying expenditure will be expanded to include designer and professional fees as it is now common for such fees to be incurred for renovation works.
    • To simplify the process and reduce compliance costs for companies, the three-year period for determining the expenditure cap for all businesses will be standardised, instead of having it commence when each business makes its first claim. The Bill will fix the relevant three-year period, with the first three-year period being from YA 2025 to YA 2027.
    • All businesses will be provided with a permanent option to claim R&R deductions in one YA, instead of over three YAs. This will give businesses more flexibility to manage their cashflow needs.
  • Corporate income tax rebate: To help companies manage rising costs, a CIT rebate of 50% of tax payable is granted for Year of Assessment (“YA”) 2024. As companies which are not profitable may not benefit from the CIT rebate, companies that have employed at least one local employee in 2023 will receive a minimum benefit of S$2,000 in the form of a cash payout. The maximum total benefit that a company may receive is S$40,000.
  • Overseas Humanitarian Assistance Tax Deduction Scheme:
    To encourage giving towards overseas emergency humanitarian assistance causes, the Overseas Humanitarian Assistance Tax Deduction Scheme (“OHAS”) will be piloted for four years from 1 January 2025 to 31 December 2028. The OHAS will provide individual and corporate donors with 100% tax deduction for qualifying overseas cash donations made through a designated charity and towards a fundraiser for emergency humanitarian assistance with a valid Fund-Raising for Foreign Charitable Purposes permit from the Commissioner of Charities. Tax deductions under the OHAS will be capped at 40% of the donor’s statutory income.

Reference materials

The Income Tax (Amendment) Act 2024 is available from Singapore Statutes Online sso.agc.gov.sg.