Latest on Singapore Budget 2018
Last week the final step of Singapore’s Budget Cycle for 2018 was concluded by President Halimah Yacob giving assent to the enactment of the Supply Act 2018. This Act formally ends the process of proposing to authorising the spending of the Singapore Government for the financial year starting 1 April 2018.
As per the earlier delivered Budget Speech in February 2018, the focus has been to consider the relevant and necessary expenditures to be made in laying the foundations for Singapore’s development into the next decade. The Government has developed four strategies, to address the trends of global economy shifting weight to Asia, the tumultuous emergence of new technologies and aging population in Singapore.
In the Budget 2018, fiscal measures had been proposed as along the four pillars of developing a vibrant and innovative economy, building a smart, green and liveable city, fostering and cohesive society and preserving a fiscally sustainable and secure future.
For direct taxes, the measures capture amongst others rules to incentivise acquisition, use and/or build of new technologies (IP licensing, R&D spending).
On the indirect GST front, there is some more impactful news. The ‘dreaded’ GST rate hike has been announced as to be implemented somewhere in the period 2021-2025. In addition, GST will be applied on imported services on or after 1 January 2020. More details on implementation mechanisms are to be expected. To date only ‘draft guidance’ had been issued by the Inland Revenue Authorities of Singapore.
In light of the prudent manner of spending there would also be a need for an increased tax collection. There is an expected increase of Corporate Income Tax, Goods and Service Tax collections in fiscal year 2018 on the basis of increased economic activity. The expected increase of Personal Income Tax collection is attributed to wage growth (and expiry of personal income tax rebates and capping of personal income tax reliefs).
More information on proposed tax changes of Singapore Budget 2018 can be found in the attached summary.
Here are some excerpts from the Tax Budget slides: