singapore budget highlights 2012 - rsm singapore - audit ...rsm chio lim llp 6 singapore budget...

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CONTENTS

EXECUTIVE SUMMARY 2

CORPORATE TAX ► Corporate income tax rate and SME cash grant 3 ► Prevailing corporate income tax rates in selected countries 4 ► Productivity and Innovation Credit Scheme 5 ► Renovation and Refurbishment Deduction Scheme 10 ► Capital allowance claims for low-value assets 11 ► Merger and Acquisition Scheme 12 ► Tax treatment of gains from the disposal of equity investments 14 ► Filing and payment deadline for withholding tax 15

TAX INCENTIVES FOR BUSINESSES ► Double tax deduction for Internationalisation Scheme 16 ► Integrated Investment Allowance Scheme 17 ► Tax exemption for vessel disposal gains 18 ► Withholding tax exemption for charter fees 20 ► Enhancing MSI-Maritime Leasing (Container) Award 21 ► Extending and Enhancing Aircraft Leasing Scheme 22

FINANCIAL SECTOR ► Designated Investments and Specified Income Lists for FSI Schemes 23 ► Real Estate Investment Trusts 25

PERSONAL INCOME TAX ► Personal income tax rates 26 ► Changes in earned income relief 27 ► CPF contribution rate changes 28 ► Medisave contribution rates for self-employed persons 30

GOODS AND SERVICES TAX ► Exemption on investment-grade gold and precious metals 31 ► GST temporary import period 32 ► GST Tourist Refund System 33

MISCELLANEOUS ► Special Employment Credit 34 ► GST Voucher 36 ► Dependency ratio ceilings and man-year-entitlement 37 ► Training support for SMEs and self-employed persons 37

GLOSSARY 38

ABOUT RSM CHIO LIM LLP 39

RSM CHIO LIM SERVICES AND CONTACTS 40

Information contained in this write-up is for general reference only Readers should seek professional advice before taking any action based on this information

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EXECUTIVE SUMMARY

Growth in 2011 within expectations The economy grew by 4.9% in 2011, within the expected 4% to 6% range, following 2010’s spectacular growth of 14.9%. The overall budget surplus of $2.3 billion for 2011 was more than the initial estimate of $0.1 billion as the result of several factors, including higher than expected corporate income tax collections and higher stamp duties due mainly to the buoyant property market. Outlook ahead Singapore’s GDP is expected to slow down in 2012. The economy is expected to grow between 1% and 3%. The slower growth reflects the unpredictable global market conditions, particularly continuing weakness and uncertainty in the US, the Euro zone and Japan. Despite the slower growth, the Singapore labour market continues to be tight, with the economy at full employment. Given this backdrop of positive growth and full employment, the Finance Minister unveiled a Budget to address Singapore’s longer-term challenges and to build an inclusive society. Some measures to spur increased productivity and sustainable long term growth, particularly the reduction of foreign worker dependency ratio ceilings, are likely to keep inflation high in the immediate term, as the economy restructures. Highlights of 2012 Budget Some of the key measures announced in this year’s Budget are as follows:- ► A reduction of the foreign worker dependency ratio ceilings from 65% to 60% for manufacturing

sector and 50% to 45% for the services sector.

► Several measures to help SMEs restructure, attract local employees, and grow. These include enhancements to Special Employment Credit to attract and retain older workers; a one-off SME cash grant to help offset higher business costs; enhancements to several schemes including the Productivity and Innovation Credit scheme, the Renovation and Refurbishment Deduction Scheme and the Merger and Acquisition Scheme.

► An increase in the employer and employee CPF contribution rates for workers aged above 50, which was widely anticipated.

► A doubling of the Earned Income Relief for those aged above 55, and also for handicapped workers.

Paul Lee Managing Partner 17th February 2012

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CORPORATE TAX SINGAPORE BUDGET HIGHLIGHTS 2012

CORPORATE TAX

Corporate income tax rate and SME cash grant

Current

The current corporate income tax rate is 17% with a partial tax exemption for normal chargeable income of up to $300,000 as follows:

► 75% exemption of up to the first $10,000; and

► 50% exemption of up to the next $290,000.

The effective tax rate therefore is 8.36% for the first $300,000 of normal chargeable income.

For YA 2011, companies were given the higher of a one-off corporate income tax rebate or SME cash grant. The corporate income tax rebate is calculated based on 20% of YA 2011 corporate income tax payable; capped at $10,000 whilst the SME cash grant is based on 5% of the company’s YA 2011 revenue; subject to a cap of $5,000.

Proposed changes

The corporate income tax rate remains at 17%.

The SME cash grant is extended for a further year for all companies.

The cash grant is pegged at 5% of the company’s revenue for YA 2012; capped at $5,000.

To enjoy the cash grant, the company must have made CPF contributions for at least one employee (who must not be a shareholder) during the relevant accounting period for YA 2012.

The company will receive the cash grant automatically after the YA 2012 Form C tax return has been filed and tax assessed. The cash grant may be used to offset the tax payable for YA 2012.

Effective date

Applicable to YA 2012

Comments

With the current business slow-down, the cash grant should be a welcome relief to help offset the high costs companies face.

Between the corporate income tax rebate and the cash grant option available for YA 2011, the Government retains the cash grant for a further year. Cash grant is a better alternative for those companies who pay little or no tax.

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Prevailing corporate income tax rates in selected countries

The corporate income tax rate in Singapore is considered very competitive compared to a number of other key countries as noted below.

i. Lower rates or partial tax exemption are applicable for lower income bands, companies with

smaller paid-up capital or engaged in certain preferred trade activities. ii. A lower rate may apply to listed companies subject to meeting conditions. iii. Petroleum and mining companies are subject to tax at a rate ranging from 32% to 50%. Such

companies may also be subject to a natural resource royalty tax. iv. Tax rate of 22% is applicable to large corporations with a tax base of more than KRW20

billion. Income tax rate of 20% applies to corporations with a tax base of between more than KRW 200 million and KRW 20 billion.

v. Only applicable to trading income. Different rates apply to other income. The above rates are the top corporate income tax rates, excluding dividend withholding tax, surcharges or other state and local taxes, where applicable.

12.5 (v)

16.5

17 (i)

17 (i)

22 (i) (iv)

23 (i)

25 (i)

25 (i) (iii)

25 (i)

25 (i) (ii)

25 (i)

25.5 (i)

30

30

30

35 (i)

0 5 10 15 20 25 30 35 40

Ireland

Hong Kong

Taiwan

Singapore

Korea

Thailand

United Kingdom

Vietnam

Malaysia

Indonesia

China

Japan

Philippines

India

Australia

United States

Percentage

Country

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Productivity and Innovation Credit Scheme

Current

Productivity and Innovation Credit (“PIC”) scheme was first introduced in the Singapore Budget 2010, to take effect from YA 2011 to YA 2015, to encourage businesses to invest in innovation and increase productivity. The scheme was enhanced and simplified in the Singapore Budget 2011.

The PIC scheme provides for 400% deduction or allowance for the first $400,000 of qualifying expenditure incurred on each of the following six qualifying activities per YA:

► Research and Development (“R&D”)

► Investments in design

► Acquisition of Intellectual Property (“IP”)

► Registration of IP

► Investments in automation equipment

► Training

The current details of the PIC scheme are summarised in the Table below.

Qualifying activities Qualifying expenditure Total deductions or allowances R&D Staff costs and consumables

for qualifying R&D activities carried out in Singapore or overseas

R&D expenditure incurred under a cost sharing agreement does not qualify for the PIC benefits

i. 400% - on first $400,000 (R&D done in and out of Singapore)

ii. 150% - on the balance (if R&D is done in Singapore)

iii. 100% - on the balance (if R&D is done overseas)

Investments in design Costs incurred to create new products and industrial designs where the activities are primarily carried out in Singapore

i. 400% - on first $400,000 ii. 100% - on the balance

Acquisition of IP Costs incurred to acquire any IP for use in the trade or business


Registration of IP Costs incurred to register patents, trademarks, design and plant variety


Investments in automation equipment

Costs incurred to acquire prescribed automation equipment


Training Costs of external training and accredited WDA and ITE in-house training


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Businesses are allowed to combine the $400,000 expenditure cap for each qualifying activity into the following revised ceilings for the following years of assessment:

Qualifying YA Combined expenditure cap for each activity YA 2011 and YA 2012 $ 800,000 (i.e. $400,000 x 2) YA 2013 to YA 2015 $1,200,000 (i.e. $400,000 x 3)

In lieu of tax deduction benefits, businesses have the option, for each of the YA 2011 to YA 2013, to convert up to $100,000 (subject to a minimum expenditure of $400) of their total qualifying expenditure in all the six qualifying activities into a non-taxable cash payout. The conversion is at the rate of 30% (i.e. a cash payout of up to $30,000) for each of the YA 2011 to YA 2013.

For YA 2011 and YA 2012, businesses may convert up to $200,000 of combined qualifying expenditure.

The cash payout is available any time after the end of the company’s financial year but no later than the due date for the filing of its income tax return for that year.

In addition, businesses may benefit from an option to defer income tax payments based on qualifying expenditure incurred in the basis periods relating to YA 2012 to YA 2015. Under the tax deferral option, businesses are able to defer tax payments of up to $100,000 for a YA to the following year.

Proposed changes

To make the PIC scheme more robust and provide greater support for businesses to invest in innovation and productivity, the scheme will be enhanced in the following four main areas:

► Cash payout

• The cash payout will be extended from YA 2013 to YA 2015. However, the cash payout cannot be combined on qualifying expenditure across the three years of assessment.

• The cash payout rate will be increased from 30% to 60% for up to $100,000 of qualifying expenditure from YA 2013.

• Businesses may now claim the cash payout any time after the end of each financial quarter but no later than the due date for the filing of its income tax return for the relevant year.

• Businesses may obtain the first quarterly cash payout starting from July 2012.

► R&D expenditure

• R&D cost-sharing agreements

Expenditure incurred on R&D cost-sharing agreements may qualify as expenditure on R&D activity and enjoy PIC deductions.

The qualifying expenditure will be deemed to be 60% of the shared costs similar to outsourced R&D.

• Software development

The multiple sales requirement will be removed to facilitate R&D in software development not intended for sale.

However, the development of software for internal routine administration of businesses will not be considered as R&D.

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► Investments in automation equipment

• Qualifying automation equipment acquired on hire purchase with repayment schedule straddling two or more financial years will be eligible for the cash payout option.

► Training

• In-house training courses

Certification will not be required for qualifying in-house training expenditure incurred up to $10,000 per YA.

In-house training expenditure in excess of the $10,000 cap may still qualify for the PIC benefits if the courses are accredited, approved or certified by WDA or ITE.

The $10,000 cap cannot be combined across years of assessment.

• Training of agents

Expenditure incurred by a principal on the training of its agents may qualify for PIC subject to certain conditions. The conditions include:

i. There is a regular working/contractual relationship between the principal and the agent.

ii. The principal bears the training expenses and does not charge or recover the training expenses from the agent.

iii. The training expenses must not be claimed by the agent as expenses of his/her trade or under course fees relief.

iv. The principal shares the risks and rewards of the agent.

The changes, which take effect from YA 2012, affecting the three qualifying activities are summarised in the Table below.

Qualifying activities

Qualifying expenditure Current New

R&D i. R&D cost-sharing agreements

ii. Software development

i. 100% allowance granted on an approval basis. Not eligible for PIC benefits

ii. Qualify for PIC only if it is

intended for sale to two or more unrelated parties

i. 60% of the shared costs in a R&D cost sharing agreement may now qualify for PIC deduction

ii. Qualify for PIC unless

the development of the software is for internal routine administration of businesses

Investments in automation equipment

i. Equipment on hire purchase with repayment schedule straddling two or more financial years

i. Not eligible for the cash payout option

i. Now eligible for the cash payout option

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Qualifying activities

Qualifying expenditure Current New

Training i. In-house training courses

ii. Training of agents

i. Must be accredited by WDA or approved/certified by ITE

ii. Non-qualifying for PIC

benefits

i. Certification not required for in-house training expenditure up to $10,000 per YA

ii. PIC deduction may

now include expenditure incurred by a principal on training of its agents subject to certain conditions

The IRAS will release further details of the changes by 30 June 2012.

Effective date

From YA 2012

Comments

The announced further enhancements to the PIC scheme provide greater opportunities for businesses to embark on PIC benefit claims.

The cash payout option was due to expire in YA 2013. It has now been extended for a further two years to YA 2015. This should be a welcome move for the small and growing businesses which may be cash-constrained to innovate and improve productivity.

The conversion rate for the cash payout has been doubled; from 30% to 60% with effect from YA 2013 although the overall qualifying expenditure cap remains at $100,000. This effectively means that for every $100,000 of qualifying expenditure incurred, the Government provides a subsidy of $60,000. This is particularly attractive to companies with low or no taxable income.

The timeline for making the cash payout will also be accelerated. Under current rules, if the cash payout were to be claimed in respect of the financial year ending 31 December 2012, the earliest date that the claim could be lodged is January 2013. With the announcement, the claim may now be lodged at the end of each financial quarter; starting from July 2012.

Presently, writing down allowance on expenditure incurred on R&D cost sharing agreements is granted on an approval basis and such expenditure does not enjoy PIC benefits. With the announced changes, the cost shared R&D expenses (but only 60%) may now count towards the expenditure cap for the R&D activity and enjoy PIC deductions.

In respect of expenditure incurred on software development projects, such costs qualify for PIC benefits only if the projects in question satisfy the R&D definition under the ITA. The R&D definition in the ITA requires the development of computer software to be sold, rented, leased, licensed or hired to two or more persons (referred to as “multiple sales requirement”).

The “multiple sales requirement” condition is now removed to facilitate R&D work for software development aimed for internal use but not for sale or hire. The development of software for internal routine administration of businesses is however excluded. Further guidelines and details are expected from the IRAS on what would be considered as qualifying and non-qualifying software development costs and how such internal costs are to be determined. The PIC refinement in this area hopefully will encourage businesses to upgrade.

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Currently the acquisition of automation equipment on hire purchase is not eligible for the cash payout option if the repayment schedule straddles two or more financial years. The removal of this stipulation would appear to be a fairer treatment for businesses.

Smaller businesses will benefit from the removal of the requirement to have their in-house training programmes certified by WDA or ITE in order to qualify for PIC deductions. In addition, training costs may now include cost of training agents (such as insurance agents, financial advisors and real estate agents) subject to meeting certain conditions. We expect the IRAS to provide guidelines on how to determine the quantum of the qualifying in-house training costs.

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Renovation and Refurbishment Deduction Scheme

Current

Businesses that incur qualifying Renovation and Refurbishment (“R&R”) costs during the period from 16 February 2008 to 15 February 2013 may claim the R&R tax deduction. The R&R costs should not however include expenditure for the structural alterations made to business premises.

The expenditure claimable is capped at $150,000 for each three-year period. The qualifying costs are written off on a straight-line basis over three consecutive years; from the year such costs are first incurred.

Proposed changes

The R&R deduction scheme will become a permanent feature of the tax regime.

The qualifying expenditure cap will be doubled to $300,000 for each three-year period.

The unutilised portion of the R&R costs may be transferred under the group relief system, from YA 2013, subject to qualifying conditions.

The IRAS will release further details of the changes by 30 June 2012.

Effective date

From YA 2013

Comments

Making the R&R deduction scheme a permanent feature of the tax regime is a welcome move. In the past, such expenditure encountered difficulties in securing a deduction or capital allowances relief as they were usually regarded as structural costs or expenditure incurred in relation to the business setting within which the business was carried on.

The scheme will help businesses such as retail shops or food and beverage outlets to defray business costs if they need to renew and refresh their premises regularly to remain competitive.

Additionally the scheme has been enhanced to allow any unutilised R&R costs to be transferred under the group relief system. This was not possible before YA 2013.

We expect the IRAS to announce some transitional relief for situations where there is an over-lap of the three-year period that involves the old and the new expenditure cap of $150,000 and $300,000 respectively.

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Capital allowance claims for low-value assets

Current

Capital allowance claim on the full cost of acquired assets in one year is allowed if the cost of each asset is no more than $1,000.

The total claim for all such assets is limited to $30,000 per YA.

Proposed changes

To further ease the claiming of capital allowances, the full cost of each asset that may be written down in one year will be increased to no more than $5,000 per asset.

The IRAS will release further details of the change by 30 June 2012.

Effective date

From YA 2013

Comments

The proposed change will further simplify the process of claiming capital allowances for small ticket items and ease administration.

The capital allowances claim for non-automated equipment and costing less than $5,000 per asset will now be accelerated instead of the usual write-off period of three years. This would ease cash flow somewhat if there are six such assets costing $5,000 each in a YA. The overall cap for the aggregate of such claims remains at $30,000 per YA.

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Merger and Acquisition Scheme

Current

The Merger and Acquisition (“M&A”) Scheme provides for M&A allowance and stamp duty relief on qualifying M&A completed from 1 April 2010 to 31 March 2015.

Qualifying M&A includes those undertaken in the following scenarios:

► The acquiring company acquires shares of the target company either directly or through a directly and wholly-owned subsidiary which was set up for the primary purpose of acquiring and holding the investment. In both situations, the M&A allowance is granted only to the acquiring company.

► The acquiring company acquires a target where either the target company or a subsidiary directly and wholly-owned by the target company satisfies the relevant conditions. The relevant conditions are that the target company or its directly and wholly-owned subsidiary carries on a trade or business and has at least three employees working for the company for at least twelve months preceding the date of M&A.

The acquiring company and its ultimate holding company must be Singapore companies incorporated and tax resident in Singapore.

The maximum amount of M&A allowance claimable is $5 million (5% of purchase consideration of up to S$100 million) for all qualifying M&A executed per YA. There is no tax relief for the M&A transaction costs incurred.

The M&A allowance is granted over five years on a straight line basis and cannot be deferred.

The stamp duty relief on the transfer of ordinary shares for qualifying M&A is capped at $200,000 (0.2% of deals worth up to $100 million) for each YA. The relief is granted to the acquiring company only.

Proposed changes

The M&A Scheme will be enhanced to grant a 200% tax allowance on the transaction costs incurred for qualifying M&A, subject to an expenditure cap of $100,000 per YA. The allowance will be written down in one year.

Qualifying M&A may now include the following situations:

► The acquiring company may acquire shares of the target company through multiple tiers, instead of just one tier, of wholly-owned subsidiaries.

► The relevant conditions that the target company has to satisfy may be satisfied by any of the multiple tiers of wholly-owned subsidiaries of the target company.

The M&A Scheme will be available as an added feature for existing Headquarters Incentive Schemes administered under the EDB. The requirement that the ultimate holding company of an acquiring company must be a Singapore incorporated and resident company may be waived subject to approval by the EDB. The EDB will administer this waiver.

The IRAS and EDB will release further details of the changes by 30 June 2012.

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Effective date

For qualifying M&A completed during the period from 17 February 2012 to 31 March 2015

Comments

The M&A Scheme was introduced to encourage and help Singapore-based companies which carry out substantive business operations in Singapore to grow through mergers and acquisitions.

The Scheme is limited to qualifying share acquisitions only. It is not applicable to a company which acquires the business assets of the target. It also does not apply to an internal restructuring or reorganisation of companies undertaken within a corporate group.

The introduction of tax relief for transaction costs incurred in qualifying M&A will certainly reduce business costs incurred in carrying out such transactions. The stipulated expenditure cap of $100,000 per YA may suggest that the relief is targeted at the smaller-size M&A transactions. The transaction costs which qualify for the 200% tax allowance would include professional fees incurred for due diligence work, legal and valuations.

Currently any unabsorbed M&A allowance is neither available for transfer under the group relief system nor for carry back. It can only be carried forward subject to the shareholders test. Presumably the same restrictions will apply to the unabsorbed tax allowance on transaction costs. This remains to be clarified by the IRAS.

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Tax treatment of gains from the disposal of equity investments

Current

Singapore does not have capital gains tax. There are no clear guidelines on the determination of whether gains derived from the disposal of shares in a company are capital or revenue in nature. Consideration is largely based on the facts and circumstances of each case. Factors such as the motive of the seller, frequency and volume of transactions, length of ownership of the shares disposed of, means of financing the acquisition and the reasons for the sale are taken into consideration.

Proposed changes

Gains derived from the disposal of equity investments by companies will not be taxed if:

► The divesting company holds a minimum shareholding of 20% in the company whose shares are being disposed of; and

► The divesting company maintains the minimum 20% shareholding for a minimum period of 24 months just prior to the disposal.

For share disposals in other scenarios, the tax treatment of the gains arising from share disposals will continue to be determined based on consideration of the facts and circumstances of the case.

The scheme will be reviewed after five years.

The IRAS will release further details of the change by 1 June 2012.

Effective date

For share disposals taking place on or after 1 June 2012

Comments

The Government recognises that acquisition and sale of shares are often necessary as a company restructures for growth or consolidation. With this proposed change, it provides clarity and upfront certainty of the non-taxability of gains derived from equity investment disposals under certain conditions. Such tax certainty goes to further strengthen and enhance Singapore’s attractiveness as a global business hub.

The clarity now provided will avoid unnecessary lengthy factual analysis in dealing with the issue of the taxability of gains and hence minimise compliance costs.

In situations where the 24-month holding period is not met but the disposal is not undertaken with a trading intent but rather it is due to commercial circumstances and reasons, the present uncertainty on the gain taxability remains.

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Filing and payment deadline for withholding tax

Current

Certain payments, such as interest and royalty payments, made to a non-Singapore resident will be subject to tax withholding. The obligation to withhold tax and account for it to the IRAS rests with the payer who makes such payments. The due date for filing and making the tax payment to the IRAS is the 15th of the month following the date of the payment to the non-resident.

Proposed changes

The due date for the filing and payment of withholding tax to the IRAS is extended by one additional month; i.e. by the 15th of the second month following the date of payment to the non-resident.

Effective date

For payments made to non-residents on or after 1 July 2012

Comments

The extension of one additional month will provide businesses with more time to comply with the filing requirements and pay over the tax withheld. This hopefully will minimise or eliminate the incurrence of late payment penalties.

By delaying the withholding tax payment to the IRAS by a further month, the payer may gain certain cash flow advantage if the amount of the tax withheld pending remission to the IRAS is substantial.

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TAX INCENTIVES FOR BUSINESSES SINGAPORE BUDGET HIGHLIGHTS 2012

TAX INCENTIVES FOR BUSINESSES

Double tax deduction for Internationalisation Scheme

Current

Singapore-based businesses may claim a deduction of up to 200% on qualifying expenditure incurred on qualifying market expansion and investment development activities. The expenses may include those incurred in establishing, maintaining or otherwise participating in approved trade fairs, trade exhibitions, trade missions or trade promotion activities. It may also include expenses incurred in maintaining an approved overseas trade office or market development expenditure for the carrying out of any approved marketing project.

Businesses are required to apply for approval in advance from IE or STB before the projects commenced and the incurrence of the expenses.

Proposed changes

To further encourage our SMEs to venture abroad and in an effort to reduce administrative burden on businesses, tax deduction of up to 200% may be allowed on qualifying expenditure, capped at $100,000 per YA, incurred on four specified activities, without the need for approval from IE or STB.

The four specified activities are:

► Overseas business development trips / missions;

► Overseas investment study trips / missions;

► Participation in overseas trade fairs; and

► Participation in approved local trade fairs.

IE and STB will continue to approve claims made by businesses that require larger funding support in excess of $100,000 or on qualifying expenditure incurred on other qualifying activities.

IE and STB will release further details of the changes by 31 March 2012.

Effective date

Qualifying expenditure incurred on or after 1 April 2012

Comments

The removal of the requirement to apply to IE or STB for pre-approval for the four specified activities should be an incentive for businesses to venture abroad as this aspect of the administrative burden is now dispensed with.

Qualifying expenditure may include external consultants’ charges for conducting overseas market survey and feasibility study, product certification for overseas markets, site visits, overseas advertising and promotion, advertising in approved local trade publications, printing of corporate brochures for overseas distribution, establishing overseas marketing offices, professional fees incurred for investment feasibility and due diligence studies, etc.

We expect IE and/or STB to publish periodically a listing of approved local trade fairs eligible for the claim.

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Integrated Investment Allowance Scheme

Current

Currently a Singapore incorporated and resident company may claim capital allowance on productive equipment used by its wholly owned overseas subsidiary for an approved project under the Integrated Industrial Capital Allowance Incentive (“IICA”) scheme, subject to meeting certain conditions.

Proposed changes

To keep pace with the evolving business environment, a new Integrated Investment Allowance (“IIA”) scheme will be introduced to replace the IICA scheme.

The IIA scheme will provide an additional allowance on fixed capital expenditure incurred for productive equipment placed overseas on approved projects.

The IIA, a five-year scheme, will be administered by the EDB.

Effective date

Effective from YA 2013 for qualifying capital expenditure incurred on or after 17 February 2012

Comments

The rules of the IICA scheme were rather restrictive in its application. In view of the evolving trend of companies moving part of their manufacturing operations offshore to a lower-cost jurisdiction or to sub-contract certain aspect of the manufacturing processes offshore but for the Singapore-based company to provide the necessary productive equipment for such offshore activities, the introduction of this scheme is to provide an additional allowance, in addition to the normal capital allowance, on fixed capital expenditure incurred for such productive equipment used overseas in approved projects.

Specific criteria and conditions for the IIA scheme have not been published. It is also unclear at this point in time on how the quantum of the additional allowance is to be computed and at what rate.

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Tax exemption for vessel disposal gains

Current

Since YA 2005, as an administrative concession, the following will not be taxed:

► Gains derived from the sale of vessels registered or provisionally registered under the SRS.

► Gains derived from the sale of vessels owned or operated under the MSI-Approved International Shipping Enterprise (“MSI-AIS”).

► An MSI-AIS company’s dividend income paid out from gains from vessel sales derived by the MSI-AIS company’s Approved Network Company under the MSI-AIS award.

With effect from 16 February 2008, the concession was expanded to include gains derived from the sale of:

► Vessels registered under the SRS under a sale and lease-back transaction.

► Vessels owned or operated under the MSI-AIS award under a sale and lease-back transaction.

► 100% of shareholding in a wholly-owned Special Purpose Company that owned or operated vessel(s) registered under SRS, or owned or operated vessel(s) under the MSI-AIS award. The Special Purpose Company must be in the business of ship operations.

The concession however does not apply to:

► Gains on the sale of vessels derived by the lessor under a finance lease treated as sale under Section 10D of the ITA and the Income Tax (Income from Finance Leases) Regulations.

► Gains derived from the sale of new building contracts (i.e. contract for a vessel under construction where the vessel does not have provisional registration with the SRS or registration with a foreign registry in the case of a MSI-AIS company).

► Gains derived from the sale of a vessel which has not been delivered to an entity, where the entity only owns that vessel, and is not related to any other ship operating entity in Singapore.

With effect from 1 June 2011, qualifying ship operators and ship lessors have to opt for the concession and abide by the conditions imposed.

Proposed changes

Qualifying ship operators and ship lessors under the MSI awards will be granted tax exemption automatically without the need to opt for the exemption on gains from the disposal of vessels.

The gains from the disposal of vessels under construction and new building contracts will also be exempt.

For ship lessors under the MSI-Maritime Leasing (Ship) award, the exemption applies to gains from the disposal of foreign vessels.

The MPA has released further details of the changes on 17 February 2012.

Effective date

For MSI which commences from 1 June 2011

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Comments

One of the key concerns for the ship operators and ship lessors is the tax treatment of gains derived from the eventual disposal of vessels. In response to industry feedback, this main concern has now been addressed and clarity provided.

The proposed changes are further attempts by the Government to enhance the attractiveness of Singapore as the shipping hub. It also brings our maritime tax regime on par with other maritime nations.

It should be noted that the tax exemption does not apply to a company that buys and sells vessels as its main business; i.e. a vessel trader or a ship builder.

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Withholding tax exemption for charter fees

Current

Resident payers making time, voyage and bareboat charter fees to non-residents for the use of ships have to withhold tax on such payments at the concessionary withholding tax rate of 2%.

Proposed changes

To further enhance Singapore’s competitiveness as an International Maritime Centre and reduce business costs for ship charterers, bareboat, voyage and time charter payments made to non-residents, excluding permanent establishments in Singapore, for the use of ships will be exempted from withholding tax.

Payers will not however need to withhold tax on charter fee payments made to a permanent establishment in Singapore. Permanent establishments in Singapore will continue to be assessed to tax on their charter fee income reported in their tax return submissions.

Effective date

Payments made on or after 17 February 2012

Comments

The withholding tax exemption applies to charter fees which fall due and payable on or after 17 February 2012. For charter agreements entered into before 17 February 2012, the exemption would still apply so long as the charter fees are due and payable on or after 17 February 2012.

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Enhancing MSI-Maritime Leasing (Container) Award

Current

Companies approved under the MSI-Maritime Leasing (Container) award enjoy a concessionary tax rate of 5% or 10% on income derived from the leasing of qualifying containers.

The MSI-Maritime Leasing (Container) award recipients may also apply for withholding tax exemption on interest and related payments arising from loans taken to finance qualifying containers on a case-by-case basis.

Qualifying containers refer to containers that adhere to the standards defined by the ISO or the IICL.

Proposed changes

Interest and related payments, made on and after 17 February 2012, arising from loans taken to finance qualifying containers and intermodal equipment will be granted automatic withholding tax exemption upon self-assessment of the qualifying conditions.

With effect from YA 2013, income derived from the leasing of intermodal equipment (e.g. trailers) which is incidental to the leasing of qualifying containers will also enjoy the concessionary tax rate of 5% or 10%.

With effect from YA 2013, qualifying containers will refer to containers that adhere to the standards defined by the ISO, IICL or any other equivalent organisation.

Effective date

Withholding tax exemption on interest and related payment - from 17 February 2012 to 31 May 2016

YA 2013 for the other two changes

Comments

The announced changes will go towards promoting the growth of container leasing activities in Singapore.

In cases where the withholding tax cost is borne by payers, the withholding tax exemption on interest payments would mean that it is a business cost reduction to the payers.

Companies are required to submit a self-declaration form for each loan obtained from foreign lenders for the purchase of containers and intermodal equipment to inform the relevant authorities that the qualifying conditions have been met. The completed form has to be submitted to MPA by the 15th of the month following the first relevant payment due date to the non-resident lender. The automatic withholding tax exemption will only be granted with effect from the earlier of (i) the date of submission of the form or (ii) the date of the earliest relevant payment made in the month prior to the deadline for submitting the form.

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Extending and Enhancing Aircraft Leasing Scheme

Current

Companies approved under the Aircraft Leasing Scheme (“ALS”) enjoy the concessionary tax rate of 5% or 10% on income derived from the leasing of aircraft or aircraft engines and other prescribed activities specified in the Income Tax (Concessionary Rate of Tax for Aircraft Leasing Company) (Prescribed Activities) Regulation 2008.

Withholding tax exemption on interest and qualifying related payments arising from qualifying foreign loans taken to finance the purchase of aircrafts or aircraft engines may be granted on a case-by-case basis, subject to conditions.

The ALS expires on 29 February 2012.

Proposed changes

To continue the promotion of aircraft leasing activities in Singapore, the ALS will be extended to 31 March 2017.

To provide upfront tax certainty and reduce business costs, withholding tax exemption will be granted automatically, subject to conditions, on interest and qualifying payments.

The payments must be made on or after 1 May 2012 by existing and new ALS recipients in respect of qualifying foreign loans entered into on or before 31 March 2017. The loans are to finance the purchase of aircraft or aircraft engines.

The EDB will release further details of the change by 30 April 2012.

Effective date

Interest and qualifying related payments made from 1 May 2012 to 31 March 2017

Comments

The withholding tax exemption on interest and qualifying payments provides upfront tax certainty and reduce business costs for those payers who bear the withholding tax burden.

It remains to be seen what the conditions will be for the automatic withholding tax exemption to apply.

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FINANCIAL SECTOR SINGAPORE BUDGET HIGHLIGHTS 2012

FINANCIAL SECTOR

Designated Investments and Specified Income Lists for FSI Schemes

Current

There is a list of specified income and a list of designated investments that are applicable for the following tax incentive schemes:

► Foreign Trust Scheme

► Foreign Account of Charitable Purpose Trust Scheme

► Fund Management Incentive Schemes

► Approved Trustee Company Scheme

► FSI-Standard Tier Scheme

► FSI-Fund Management Scheme

Proposed changes

To simplify the list of specified income and designated investments and to keep up with industry development and changes, the list of specified income will be revised into an exclusion list. Unless specifically excluded, all income derived from designated investments by the qualifying entities will qualify for tax exemption under the respective FSI schemes.

The existing list of designated investments will be rationalised as follows:

► Stocks and shares of any company, other than an unlisted company that is in the business of trading or holding of Singapore immovable properties (other than the business of property development).

► Debt securities (which means bonds, notes, commercial papers, treasury bills and certificates of deposits), other than non-qualifying debt securities issued by an unlisted company that is in the business of trading or holding of Singapore immovable properties (other than the business of property development).

► All other securities (not already covered under the list of designated investments):

• Issued by foreign governments in foreign currency;

• Listed on any Exchange;

• Issued by supranational bodies; or

• Issued by any company, other than those issued by an unlisted company that is in the business of trading or holding of Singapore immovable properties (other than the business of property development).

► All financial derivatives that relate to any designated investment or financial index, subject to existing conditions and counterparty restrictions.

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The designated investment list will also be expanded to cover:

► Private trusts that invest wholly in designated investments.

► Freight derivatives.

► Publicly-traded partnerships that do not carry on a trade, business, profession or vocation in Singapore.

MAS will release further details of the changes by 29 February 2012.

Effective date

From 17 February 2012 unless otherwise stated in the upcoming MAS circular

Comments

MAS regularly reviews and updates both the “designated investments” and “specified income” lists to keep up with changes and developments and in recognition that fund vehicles invest in new instruments and products.

The excluded income or gains mentioned in the exclusion list are:

► Interest and other payments that fall within the ambit of Section 12(6) of the ITA subject to certain exclusions.

► Distributions made by a trustee of a real estate investment trust that is listed on the Singapore Exchange.

► Distributions made by a trustee of a trust who is a resident of Singapore or a permanent establishment in Singapore other than a trust that enjoys tax exemption under Section 13C, 13G,13O or 13X of the ITA.

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Real Estate Investment Trusts

Current

To enjoy tax transparency, Real Estate Investment Trusts (”REITs”) must distribute at least 90% of taxable income in the same financial year in which such income is derived.

If tax transparency treatment applies, the trustee of the REIT is not subject to tax on the specified income that is distributed to the unit holders. Instead the distributions are taxed in the hands of the unit holders as follow:

► Individuals are exempt from tax (except for those derived by the individual through a partnership in Singapore or from the carrying on of a trade, business or profession).

► Qualifying non-resident non-individuals are subject to final tax at a 10% concessionary tax rate.

► Resident non-individuals (including a permanent establishment in Singapore) are subject to tax at the prevailing corporate tax rate.

The distributions to the unit holders must be made fully in cash.

Proposed changes

A REIT that makes distributions to unit holders in the form of units can continue to enjoy tax transparency provided the following two conditions are met:

► Before the distribution, the trustee of the REIT grants the unit holders the option to receive the distributions either in cash or units in that REIT.

► On the date of distribution, the trustee of the REIT must have sufficient cash to make the entire distribution fully in cash had no option been given to those unit holders to receive the distribution in units in that REIT.

Unit holders who elect to receive distributions in units will be taxed in the same manner as if they had received the distribution in cash.

Effective date

For distributions made on or after 1 April 2012

Comments

This enhancement to the tax regime for REITs is a welcome move for the REIT industry as trustees of REITs would now have the flexibility of granting distributions to their unit holders in cash or in kind. For the latter option, the cash retained by the REIT could be re-deployed for further investments or expansion and the REIT’s borrowings could be reduced.

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PERSONAL INCOME TAX SINGAPORE BUDGET HIGHLIGHTS 2012

PERSONAL INCOME TAX

Personal income tax rates

Current

For Singapore tax residents, the income tax rates currently range from 0% for the first $20,000 of chargeable income to 20% for chargeable income in excess of $320,000.

Current Tax Structure

Chargeable Income

$

Tax Rate

%

Tax payable

$ On the first On the next

20,000

10,000

0

2.0

0

200 On the first On the next

30,000

10,000

3.5

200

350 On the first On the next

40,000

40,000

7.0

550

2,800 On the first On the next

80,000

40,000

11.5

3,350


120,000

40,000

15.0

7,950


160,000

40,000

17.0

13,950


200,000

120,000

18.0

20,750

21,600 On the first Excess over

320,000

320,000

20.0

42,350

Proposed changes

No personal tax rate changes were announced. Hence the same tax rates remain for YA 2013.

Comments

A general disappointment that the top marginal rate of tax is not reduced to align it to the corporate income tax rate of 17%.

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Changes in earned income relief

Current

Individuals may claim Earned Income Relief (“EIR”) or Handicapped EIR.

Proposed changes

To encourage elderly workers to stay employed and to provide more support to handicapped workers, the amount of EIR and Handicapped EIR will be increased.

The current and the new EIR and Handicapped EIR for the elderly and handicapped workers are tabulated below.

Age group

Current

$ From YA 2013

$

EIR Below 55 1,000 1,000

55 to 59 3,000 6,000

60 and above 4,000 8,000 Handicapped EIR Below 55 2,000 4,000 55 to 59 5,000 10,000 60 and above 6,000 12,000

Effective date

From YA 2013

Comments

The increases will hopefully encourage more older workers to stay employed longer.

The Government recognises the need to provide a far higher level of financial support to handicapped workers. The substantial increase should be a welcome relief to handicapped workers as it would go to reduce their tax burden.

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CPF contribution rate changes

Current

The Table below summarises the current CPF contribution rates for employer and employees who are Singapore citizens or Permanent Residents (in the third year and onwards of obtaining Singapore Permanent Resident status) for the age group indicated.

Age Group

Current Contribution Rates (%) (for monthly wages exceeding $1,500)

Credited into (%)

Employer Employee Total Ordinary Account

Special Account

Medisave Account

Above 50 to 55 12.0 18.0 30.0 13.0 8.0 9.0 Above 55 to 60 9.0 12.5 21.5 11.5 1.0 9.0 Above 60 to 65 6.5 7.5 14.0 3.5 1.0 9.5 Above 65 6.5 5.0 11.5 1.0 1.0 9.5

The maximum CPF salary ceiling is $5,000 per month.

Proposed changes

CPF contribution rates for Singapore citizens and Permanent Residents will be raised for the following three age groups from 1 September 2012. The percentage of increases is noted in the Table below.

Age Group Contribution Rate Increases (%)

Employer Employee Total Above 50 to 55 2.0 0.5 2.5 Above 55 to 60 1.5 0.5 2.0 Above 60 to 65 0.5 0.0 0.5

Effective date

From 1 September 2012

Comments

The CPF rate increases for older workers are part of the Government’s effort to encourage employees to stay employed for a longer period after they reach age 50 and also to entice individuals aged 50 and above to re-join the workforce. Coupled with the Special Employment Credit granted to employers, these measures work towards tapping the latent pool of Singapore’s workforce in the face of an ageing population and in an effort to reduce reliance on foreign labour.

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The new CPF contribution rates for employer and employee effective from 1 September 2012 are summarised in the Table below.

Age Group

New Contribution Rates (%) (for monthly wages exceeding $1,500)

Credited into (%)

Employer Employee Total Ordinary Account

Special Account

Medisave Account

Above 50 to 55 14.0 18.5 32.5 13.5 9.5 9.5 Above 55 to 60 10.5 13.0 23.5 12.0 2.0 9.5 Above 60 to 65 7.0 7.5 14.5 3.5 1.5 9.5 Above 65 6.5 5.0 11.5 1.0 1.0 9.5

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Medisave contribution rates for self-employed persons

Current

The Medisave contribution rates for self-employed persons are based on the individuals’ age and net trade income for the year. Currently the contribution rate for yearly net trade income of $18,000 and above is 9.0% for individuals aged 45 and above.

Proposed changes

The Government will increase the Medisave contribution rate by 0.5% for self-employed persons, aged 50 and above, who have annual trade income of $18,000 and above.

Annual Net Trade Income $

Current contribution rates

(%)

New contribution rates (%) for income earned from 2013

45 years and above

45 to below 50 years

50 years and above

6,001 to 12,000 3.00 3.00 3.17 12,001 to 13,000 4.38 4.38 4.63 13,001 to 14,000 5.57 5.57 5.88 14,001 to 15,000 6.60 6.60 6.97 15,001 to 16,000 7.50 7.50 7.92 16,001 to 17,000 8.29 8.29 8.76 17,001 to 18,000 9.00 9.00 9.50 Above 18,000 9.00 9.00 9.50

Effective date

From 1 January 2013

Comments

With the proposed increase in Medisave contributions for self-employed persons aged 50 and above, their Medisave contributions will align with that for older employees.

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GOODS AND SERVICES TAX SINGAPORE BUDGET HIGHLIGHTS 2012

GOODS AND SERVICES TAX

Exemption on investment-grade gold and precious metals

Current

Sale of investment-grade gold1 and precious metals2

Currently, businesses may alleviate the GST impact on domestic sales of investment-grade gold and precious metals by utilising the Zero-GST Warehouse Scheme.

such as platinum and silver in Singapore is subject to GST at the prevailing standard-rate of 7% and zero-rated if they are exported overseas.

Proposed changes

The importation and supply of investment-grade gold and precious metals will be treated as exempt supplies under the GST Act.

Measures will be introduced to ease cash flow and compliance of qualifying refiners and local consolidators of precious metals in the payment of input GST on import and purchase of raw materials.

The IRAS will release further details of the changes, including the new GST treatment of exempt investment-grade precious metals and its corresponding input tax claims, by 1 September 2012.

Effective date

From 1 October 2012 Comments

This change will promote and strengthen Singapore’s commodity markets by significantly easing the cash flow and compliance burden for industry players.

Furthermore, it will place Singapore on a more level playing field with the other international countries and encourage more renowned industry names to set up businesses here. This also brings our tax treatment to be in line with the practices of many developed economies such as Australia, Switzerland and the United Kingdom.

Currently such transactions if carried out outside of Singapore will be zero rated and the claim of input tax will not be impacted. The exempt supply classification of investment-grade gold and precious metals transactions may give rise to the restriction on future input tax claims. The IRAS are expected to address this issue when further guidelines are issued by 1 September 2012.

1 Investment grade gold (e.g. a bar, ingot, coin or wafer) in purity of 99.5% and above, possesses the following

characteristics that differentiate itself from gold in other forms such as jewellery: (i) Capable of being traded on the international bullion market; (ii) Bears a mark/characteristics accepted as guaranteeing its quality; and (iii) Trade at a price based on the spot price of the metal it contains.

2 Investment-grade silver in purity of 99.9% and above, and investment-grade platinum in purity of 99% and above,

possess the same characteristics as investment-grade gold.

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GST temporary import period

Current

The Temporary Import Scheme allows goods3

, other than liquor and tobacco, to be imported without the payment of GST and/or duty if they are to be re-exported within three months from the date of importation. If the goods are not re-exported within three months from the date of importation, GST at the prevailing standard-rate of 7% will be payable.

Proposed changes

The temporary import relief period of three months will be extended to six months.

Singapore Customs will release further details of the change by 26 March 2012.

Effective date

From 1 April 2012

Comments

The extension of the temporary import period will:

► allow businesses to have more commercial flexibility and enjoy greater economies of scale in their proposed arrangements; and

► do away with the administrative hassle of requiring to seek an extension of time or to the extent of moving goods out of Singapore and re-importing them again.

3 The goods must be imported for approved purposes, such as exhibitions, fairs, auctions, repairs, stage performances,

testing, experiments and demonstration.

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GST Tourist Refund System

Current

The GST Tourist Refund Scheme (“GST TRS”) is currently available only to tourists who depart from Singapore via air from the Changi International Airport4

GST TRS is not available to tourists leaving Singapore via land and sea exits.

and Seletar Airport, subject to the tourists’ eligibility and conditions of the GST TRS.

Proposed changes

To capitalise on the growth of international cruise tourism, GST TRS will be extended to international cruise passengers5 departing from the Singapore Cruise Centre at Harbourfront and the new International Cruise Terminal at Marina South.

A tourist departing Singapore on an international cruise must satisfy the existing GST TRS conditions to qualify for the GST refund. In addition, the tourist will be required to comply with the following:

► Declare that Singapore is his final exit point using his cruise itinerary as documentary proof of his departure; and

► Commit that he will not return to Singapore within 48 hours.

The IRAS, Singapore Customs and STB will release further details of the change by 1 September 2012.

Effective date

From January 2013

Comments

The new treatment effectively widens the scope of the GST refund scheme currently enjoyed in the tourism sector to also benefit tourists leaving Singapore via sea exit 5

This initiative will have a positive impact to retailers participating in GST TRS as the prices of their goods are now 7% more attractive to eligible tourists leaving Singapore via sea-exit.

in addition to those departing via air-exit.

The change announced could also encourage more retailers to participate in GST TRS and invariably boost its contributions to the growth of the Singapore economy.

4 Consist of Terminals 1, 2, 3 and the Budget Terminal. 5 Cruises-to-nowhere and round-trip cruise passengers are excluded because their goods brought out of Singapore would

be brought back into Singapore at the end of the trip. The change is also not extended to ferry passengers or tourists leaving Singapore via land exits as it will be difficult to detect any round-tripping of GST refunded goods.

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MISCELLANEOUS SINGAPORE BUDGET HIGHLIGHTS 2012

MISCELLANEOUS

Special Employment Credit

Current

The one-off Special Employment Credit (“SEC”) for employers, to be paid out over three years, to promote the hiring of Singaporean workers aged above 55 was announced in Budget 2011. The SEC is applicable to older workers who are on the payroll from January 2011 to December 2013.

The payout is up to 50% and 80% of the employer’s portion of the CPF contributions for workers aged 55 to 60 and 60 and above respectively.

Proposed changes

The SEC will be enhanced in 2012 to help businesses attract and retain older Singaporean workers.

The SEC will be paid to employers who hire Singaporean workers aged above 50 and earning up to $4,000 per month.

The enhanced SEC will be put in place for five years (2012 to 2016).

Employers will receive a SEC of 8% of income for each Singaporean worker aged above 50 who earns up to $3,000 per month. Employers of Singaporean workers aged above 50 and earning between $3,000 and $4,000 will receive a lower amount of SEC.

Monthly income level SEC entitlement for the month

$ $500 40 $1,000 80 $1,500 120 $2,000 160 $2,500 200 $3,000 240 $3,500 120 Above $4,000 0

SEC will be given to employers who hire Singaporean employees aged above 50 and earn up to $4,000 per month and are on the payroll between January 2012 to December 2016.

The enhanced SEC is also extended to employers who hire Singaporean graduates from special schools for the disabled, regardless of their age, at the rate of 16% of the employee’s monthly income, up to $240 per month.

Employers who make regular CPF contributions for their employees need not take further action in order to receive the SEC. The CPF Board will automatically assess their eligibility and notify them by post before payments are made.

SEC will be paid out twice yearly in March and September. The first payment will be in September 2012.

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Effective date

Years 2012 to 2016

Comments

These measures are to further encourage employers to retain and re-employ older Singaporean workers. The SEC is also extended to those employers employing persons with disabilities and who graduated from Special Education schools.

The SEC payout announced in Budget 2011 applies to employees aged 55 and above and the credit is calculated based on 50%/80% of the employer’s portion of the CPF contributions. The enhancement announced in contrast is for workers aged above 50 and is to be calculated based on 8% of the employee’s monthly income up to $3,000; with a lower credit for those workers earning between $3,000 to $4,000 per month.

The SEC received will be taxed in the hands of employers.

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GST Voucher

Current

There is currently no such vouchers.

Proposed changes

Retirees and lower-income families will receive GST vouchers to offset GST incurred on their expenditures via three components:

► Cash component

► CPF Medisave top-up (Singaporeans aged 65 and above only)

► U-Save rebates to offset part of the utility bills for HDB dwellers

Effective date

From July 2012 for U-Save rebates and from August 2012 for the cash component and Medisave top-up

Comments

The GST voucher introduced will be a permanent feature to assist lower-income Singaporeans to offset GST input tax suffered on their expenditures.

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Dependency ratio ceilings and man-year-entitlement

The Dependency Ratio Ceiling (“DRC”) and Man-Year-Entitlement (“MYE”) stipulate the maximum number of foreign workers (S-Pass and Work Permit holders) that companies could hire or engage on projects.

The Government’s aim is to encourage companies to reduce dependency on foreign workers over time. With this in mind, the DRCs and MYE in various business sectors have been reduced.

The Table below reflects the changes.

Business sector Current DRC New ratios

Manufacturing 65% 60% Services 50% 45% Sub-DRC for S Passes across all sectors 25% 20%

For existing foreign workers, companies will be given until 30 June 2014 to comply with the new DRCs.

From 1 July 2012, companies employing new foreign workers must comply with the new DRCs.

In the construction sector, the MYE will be reduced by 5% for new projects awarded with effect from 1 July 2012. A higher foreign worker levy of $650 will be introduced for basic skilled work permit holders in the MYE-waiver category with effect from 1 January 2013, with an additional increase to $750 from 1 July 2013.

Training support for SMEs and self-employed persons

To further encourage the upgrade of skills for the workforce, the Government announced that it will enhance the training support for SMEs for three years starting from July 2012:

► A 90% course subsidy for WDA-certified courses and Academic Continuing Education and Training programmes conducted at polytechnics and ITE.

► Increasing the absentee payroll cap from $4.50 to $7.50 an hour.

The absentee payroll subsidy is granted on a per employee basis to help employers defray payroll costs whilst their employees are sent on courses.

Similar training benefits will be provided for self-employed persons.

There will also be increases in grants for the schemes administered by SPRING and IE for the development of SME capabilities in the areas of upgrading and increase in productivity.

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GLOSSARY SINGAPORE BUDGET HIGHLIGHTS 2012

GLOSSARY

CPF Central Provident Fund EDB Economic Development Board FSI Financial Sector Incentive GDP Gross Domestic Product GST Goods and Services Tax IE International Enterprise Singapore IICL Institute of International Container Lessors IRAS Inland Revenue Authority of Singapore ISO International Organisation for Standardization ITA Income Tax Act ITE Institute of Technical Education MAS Monetary Authority of Singapore MPA Maritime and Port Authority of Singapore MSI Maritime Sector Incentive SME Small and Medium Enterprises SRS Singapore Registry of Ships STB Singapore Tourism Board WDA Workforce Development Agency YA Year of Assessment

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SINGAPORE BUDGET HIGHLIGHTS 2012

ABOUT RSM CHIO LIM LLP

ABOUT RSM CHIO LIM LLP

RSM Chio Lim LLP (“RSM Chio Lim”) is the public accounting arm of the Chio Lim Stone Forest (“CLSF”) Group, the largest accounting and business advisory group outside the Big 4 in Singapore, with a total strength of over 630 in Singapore and about 300 in six key cities in China. Our reputation is built on technical competence, proactive client servicing and a commitment to uncompromising integrity, professionalism and high standards of service. We are one of the first accounting firms in Singapore to be ISO 9001:2008 certified in 1997 and is ranked as a leading firm in Singapore in “World Tax 2012”, a Euromoney guide to the world’s leading tax firms. We are also a leading player in the IPO market as Reporting Accountants. International Affiliation RSM Chio Lim is the Singapore member of RSM International, the world’s sixth largest accounting and consulting network, with over 700 offices in more than 80 countries. Member firms are well-established practices of high local standing, often ranking within the Top Ten in their respective countries. PCAOB Registration The public accounting arm is registered with the Public Company Accounting Oversight Board (“PCAOB”) in the USA. SSAE 16 (Type II) Compliant The accounting and payroll outsourcing units are SSAE 16 (Type II) Compliant*. *The Statement on Standards for Attestation Engagements No. 16 (“SSAE 16”) is an internationally recognised auditing

standard developed by the American Institute of Certified Public Accountants (“AICPA”). A SSAE 16 Compliant status conferred to a service organisation is a testimony that the service provider has adequate controls and safeguards in place to host and process the data of its clients.

RSM Chio Lim LLP

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RSM CHIO LIM SERVICES AND CONTACTS SINGAPORE BUDGET HIGHLIGHTS 2012

SERVICES

CPA PRACTICE Audit

Statutory Audits

Reporting Accountants

Due Diligence for Mergers & Acquisitions

Non-statutory Audits & Special Reviews

Funds Audits Tax Compliance Services

Corporate Tax Return Services

Partnership Tax Return Services

Personal Income Tax Return Services

Tax Disputes & Controversies

GST Services

Assisted Compliance Assurance Programme (“ACAP”) Review

Assisted Self-Help Kit (“ASK”) Review

GST Health-check

Due Diligence Review for Mergers & Acquisitions & IPO

Major Exporter Scheme (“MES”) Certifications

GST Compliance Reviews & Outsourcing

GST Consulting & Advisory

BUSINESS ADVISORY SERVICES Mergers & Acquisitions

Restructuring, Mergers, Joint Ventures & Strategic Alliances

Management Buy-outs & Buy-ins

Fund-Raising & Refinancing

Sales, Acquisitions & Divestments Transaction Support

Due Diligence

IPO Advisory

Corporate Restructuring

Transaction Management Forensic & Litigation Support

Investigations

Valuations

Forensic Accounting

Digital Forensics Services

Profit Improvement

Financial Health-check

Business & Revenue Modelling

Funding Structure Review

Business Process Re-Engineering

Deployment of Key Performance Indicators Corporate Recovery & Insolvency

Liquidation & Receivership

Judicial Management

Scheme of Arrangement IT Advisory

Review & Setup of IS Control Environment

Policies & Procedures Documentation

Consulting in SAS70 / IT SOX Readiness, Business Continuity Planning & IT Disaster Recovery Planning

Corporate Risk Advisory

Internal Audit

Corporate Risk Management

Corporate Governance Advisory Services

Sarbanes-Oxley Services

Sarbanes-Oxley Advisory & Compliance Services

Outsourcing & Co-sourcing SOX Compliance Efforts

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INTERNATIONAL TAX ADVISORY SERVICES

Cross-border Tax Structuring & Planning

Intellectual Property Planning & Migration

Investment Structures & Holding Companies

Transfer Pricing Issues

Pre-IPO & Funds Structuring

Tax Incentive Applications

Tax Investigation & Audit

BUSINESS SUPPORT SERVICES

Financial Reporting

Company Incorporations & Employment Pass Applications

Payroll & HR Administration

Staffing Solutions & Managed Services

CHINA PRACTICE

Audit & Tax Compliance Services

Financial Reporting for PRC Annual Returns

Mergers & Acquisitions Advisory

Fund-Raising Advisory

Advisory in Foreign Exchange Control Issues

International & Domestic Tax Advisory

Financial Due Diligence

Internal Audit & Risk Management Audit

Incorporation, Liquidations & De-registrations

Payroll & Payroll Related Services

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CONTACTS

GENERAL [email protected] Main Tel +65 6533 7600 Main Fax +65 6538 7600

CPA PRACTICE Audit Teo Cheow Tong [email protected] +65 6594 7838 Paul Lee [email protected] +65 6594 7818 Tax Compliance Koh Puay Hoon [email protected] +65 6594 7820 GST Richard Ong [email protected] +65 6594 7821

INTERNATIONAL TAX ADVISORY SERVICES

Cindy Lim [email protected] +65 6594 7852

BUSINESS ADVISORY SERVICES Business Advisory Tay Woon Teck [email protected] +65 6594 7803 Corporate Finance Doreen Quek [email protected] +65 6594 7827 Corporate Recovery & Insolvency / Forensic & Litigation Support Y C Chee [email protected] +65 6594 7828 Abuthahir Abdul Gafoor [email protected] +65 6594 7830 Corporate Risk Advisory / Sarbanes-Oxley Services Tan Jenny [email protected] +65 6594 7534 Mergers & Acquisitions Doreen Quek [email protected] +65 6594 7827 Valuation Advisory Lars Barslev [email protected] +65 6594 7812

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BUSINESS SUPPORT SERVICES Financial Reporting Angie Lee [email protected] +65 6594 7806 Payroll & HR Administration Olivia Yeoh [email protected] +65 6594 7782 Staffing Solutions & Managed Services Yang Li Lian [email protected] +65 6594 7897 IT Services Eileen Tan [email protected] +65 6594 7889 Corporate Services Maureen Low [email protected] +65 6594 7817

FUNDS AUDIT PRACTICE

Chia Meng Ru [email protected] +65 6594 7841 Victor Chang [email protected] +65 6594 7861

NPO PRACTICE

Woo E-Sah [email protected] +65 6594 7843

CHINA PRACTICE Audit Services Lim Lee Meng [email protected] +65 6594 7899 Teo Cheow Tong [email protected] +65 6594 7838 Ng Thiam Soon [email protected] +65 6594 7809 Laura Xie [email protected] +86 21 6270 2215 Non-audit Services Chio Kian Huat [email protected] +65 6594 7800 Tan Lee Lee [email protected] +86 21 6270 2215

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SINGAPORE BUDGET HIGHLIGHTS 2012

NOTES

singapore budget highlights 2012 - rsm singapore - audit ...rsm chio lim llp 6 singapore budget...

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