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Singapore: Tax considerations in advance of 2020 budget (expected 18 February)

Singapore: Tax considerations in advance of 2020 budget

The budget for 2020 is expected to be delivered on 18 February 2020.

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The KPMG member firm in Singapore has identified several items that, if addressed in the budget for 2020, would enhance Singapore’s tax regime and improve business relevance.

  • Tax Issue 1: Group relief scheme: To qualify for the group relief scheme, two Singapore companies are required to be members of a group (i.e., at least 75% of ordinary share capital in one company is beneficially held by the other; or at least 75% of ordinary share capital in each of the two Singapore companies is beneficially held directly or indirectly by a third Singapore-incorporated company). Tax professionals believe that it would be beneficial if the budget for 2020 included provisions enhancing the scheme such that group relief is available to Singapore companies held by a non-Singapore incorporated company (subject to satisfying all other conditions).

  • Tax Issue 2: Carryforward loss items: Currently, carryforward or brought-forward loss items (e.g., unabsorbed capital allowances and unabsorbed tax losses) can only be used by the company that incurred the loss and not by other companies within the same group. Tax professionals believe that allowing group relief for carryforward losses (i.e., allowing companies to use the brought-forward losses against profits of other companies within a group) would be beneficial for taxpayers.

  • Tax Issue 3: Investment allowance: Under the current rules, investment allowance is only available for companies. With the introduction of limited liability partnerships in Singapore, tax professionals believe that the tax law needs to be updated to extend investment allowances to limited liability partnerships.

  • Tax Issue 4: Tax relief for premiums paid on medical-related or health insurance policies: Currently, there is no stand-alone tax relief available to individuals for premiums paid on medical-related or health insurance policies. Tax professionals note that enabling a tax relief measure for health insurance premiums would not only encourage more taxpayers to take up health insurance policies for themselves and their families, but also afford them greater access to healthcare. For instance, the tax relief could be subject to a cap ($5,000) which could be scaled according to age. Tax relief for medical costs incurred by those over 50 years of age for health screenings every other year might also be considered, to encourage preventive healthcare (for instance, with a cap of $500 per year).

  • Tax Issue 5: Income tax treaties: Singapore currently does not have income tax treaties with a number of countries that Singapore companies have trade relations with. Such treaties are important for promoting international trade and investment by providing certainty of tax treatment of cross-border transactions and by eliminating double taxation, thereby reducing business costs. Accordingly, tax professionals propose that the government consider entering into income tax treaties with certain countries including Algeria, Angola, Chile, Jordan, Mozambique, Peru, Tanzania, Timor Leste, and the United States.


Read a January 2020 report prepared by the KPMG member firm in Singapore

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