Singapore Finance Minister Mr Tharman Shanmugaratnam unveiled new personal and corporate tax reliefs on 15 February 2008, designed to help both the working class as well as corporate business community. The government anticipates the new tax relief measures will help to attract more foreign investment

Business Tax Reliefs

After reducing the corporate tax rates last year to 18% from the earlier 20%, there was no new tax cut in this year's budget. However, a number of new tax incentives and relief measures were be given in the areas of innovation through R&D, liberalization of tax exemption for SMEs, allowance for cost of fixtures & fittings, tax credits on foreign sourced income, including certain sector specific tax incentives.

• The qualifying conditions on the existing tax exemption of $100,000 on normal chargeable income for each of its first three consecutive tax filing years have been relaxed. According to the new policy, tax exemption is allowed as long as there is at least one individual shareholder that holds at least 10% of the shares. The rest of the shareholding can be owned by corporate entities.
• All Singapore companies that earned income from countries that don't have double tax agreement with Singapore, will be allowed a tax credit on their foreign-sourced income from those countries.
• Allowed tax deductions for R&D done in Singapore increased from 100% to 150%. The restriction of R&D done must be related to a company's existing business has been removed. In addition, to help offset future local R&D spending expenses, companies will be given a R&D tax allowance of up to 50% of the first 300,000 of their taxable income.
• Singapore companies will be allowed to write down the cost of fixtures and fittings over a period of three years up to a maximum of $150,000. They can do this every three years.
• Licensed insurance companies to enjoy a concessionary tax rate of 10% on the income they derive from offering insurance broking and advisory services to offshore clients.
• Shipping companies to enjoy a concessionary tax rate of 5-10% on income from container leasing activities.
• Family owned investment holding companies to enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced income.

Personal Tax Reliefs

• Estate duty abolished for locals as well as foreigners. Singapore to become world's new wealth accumulation centre.
• One-time income tax rebate of 20% (capped at $2000) for all resident taxpayers for YA2008.
• Government to top up the Medisave accounts of all Singaporeans aged 51 and above by up to $450 this year.
• All Singaporeans to receive a Growth Dividend from government ranging from $100 to $450 depending on their income level.
• Full-time students pursuing higher education to receive scholarships ranging from $800 to $1600 per annum.
• Government to subsidize part-time studies of Singaporeans for up-to 40%.

Source: asiabizsetup.com