Singapore Budget 2013: Various Tax Rebates, Wage Credit Scheme Announced, ERIS Abolished
Singapore in its 2013 budget announced a 30% corporate tax rebate, a wage credit Scheme, and an innovation credit among other measures to encourage enterprise growth and help employers with rising labour costs, Nair & Co.,
(prHWY.com) March 4, 2013 - Sunnyvale, CA --
Singapore Budget 2013: Key Highlights for Enterprises
Wage Credit Scheme (WCS)
Singaporean government announced it will co-fund 40% of wage hikes given to Singaporean employees with monthly salaries of up to S$4,000. Under this scheme, pay hikes given from 2013 through 2015 are eligible for the WCS. Wage credits will be paid out to the eligible employers directly by the Inland Revenue Authority of Singapore (IRAS) with the first payout scheduled for the second quarter of 2014 and the last for 2016. More details will be made available by the IRAS in June 2013.
An example of how the wage credit will be issued to a Singapore employer: If an employee is given a S$200 monthly pay raise in 2013, the Singapore government will pay 40% of the S$200 raise for the subsequent two years (if the increase is sustained). If an additional S$200 increase is given in 2014 and another S$200 increase in 2015, the government will co-fund 40% of the further wage increases i.e. pay out 40% of S$400 in 2014 and payout 40% of S$600 in 2015. At the end of three years, out of the total S$14,400 pay raise given to the employee, the government funded S$5,760.
Corporate Income Tax ("CIT") Rebate (YA = Year of Assessment)
Singapore Companies will receive a 30% Corporate Income Tax rebate capped at S$ 30,000 per YA for YA 2013 to YA 2015.
Productivity and Innovation Credit ("PIC") Bonus
Under the PIC scheme, companies investing a minimum of S$5000 in qualifying investments in a YA are eligible for a dollar-for-dollar matching cash bonus. The bonus limit is capped at S$15000 for 3-years (YA 2013 to YA 2015). Eligbile companies can in addition also avail:
* 400 % tax deductions on expenditure made up to S$400,000 (for qualifying activities) or
* 60% cash payout on expenditure made up to S$100,000 (for qualifying activities).
However, the PIC bonus is taxable.
 
Amendments to the Productivity and Innovation Credit (PIC) Scheme
The government has also moved to include Intellectual Property ("IP") in-licensing costs incurred from YA 2013 to YA 2015 in the PIC scheme.
"Acquisition of Intellectual Property" which is a qualifying activity in the PIC, is being renamed to "Acquisition and In-Licensing of Intellectual Property" to reflect this change. Additional details will be made available by the IRAS in April 2013.
Rationalising the Start-up Tax Exemption ("SUTE") Scheme
Property Developers and Investment holding companies incorporated on or after Feb 26, 2013 are no longer eligible for SUTE. However, they are still eligible for the partial tax exemption, generally available to all companies.
Other changes: Expense incurred in relocation or recruitment of overseas talent is no longer eligible for the Tax Deduction Scheme and the Overseas Enterprise Incentive (OEI) scheme has been withdrawn with effect from February 25, 2013.
Singapore Budget 2013: Key Highlights for Individuals
Personal Income Tax Rebate
Resident taxable individuals are eligible for a personal income tax rebate for the tax payable for the YA 2013. The rebate is depended upon the individual's age as on December 31, 2012 and capped at an amount of S$1500.
* 30% for resident individuals aged below 60; and
* 50% for resident individuals aged 60 and above.
There was no rebate in YA 2012
Taxation of Accommodation Benefits
Beginning YA 2015, employees (including company directors) deriving accommodation benefits will be taxed based on the market value.
* Housing: Annual value of the accommodation minus the rent paid by the employee.
* Hotel: Actual cost of the full stay at the accommodation
* Furniture and Fittings: A % of the annual value of the accommodation
Additional details will be made available by the IRSA in October 2013.
Equity Remuneration Incentive Schemes ("ERIS")
ERIS for Start Ups has been terminated with effect from February 15, 2013 and will not be revived. ERIS for all corporations and SMEs will be terminated from January 1, 2014.
Employees who were allocated stock options or shares before the expiry of the scheme will continue to avail the tax exemptions.
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