This report covers Singapore’s 2019 budget delivered on 18 February 2019.
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In his 2019 Budget Statement delivered on 18 February 2019, the finance minister for Singapore announced key changes to personal tax for the income tax rebate for Year of Assessment (YA) 2019 and the withdrawal of the Not Ordinarily Resident (NOR) scheme. In addition, there will be a reduction in foreign workforce quota for the services sector.1
We discuss these measures in more detail in this GMS Flash Alert.
1. Time apportionment of Singapore employment income; and
2. Tax exemption of employer’s contributions to non-mandatory pension fund or social security scheme.
Resident individuals who earned income in the year 2018 will receive a rebate of 50 percent of the tax payable, capped at $200.
Where a tax equalisation policy is applied, employers will have to take certain steps if they are requesting a refund on behalf of their employees eligible for the rebate. Nevertheless, in view of the nominal sum, employers may not wish to pursue.
The final NOR status will be granted for YA 2020 and expire in YA 2024, where relevant conditions are satisfied. Individuals currently accorded NOR status will continue to be granted NOR tax concessions until expiry of their NOR status.
The NOR scheme was introduced in 2002 with a view of attracting talent with regional and global responsibilities to relocate to Singapore. The planned withdrawal of the NOR scheme implies that Singapore’s foreign talent pool may be adequate for now. Nonetheless, given the competitive tax regime and stable political and economic environment, Singapore should be able to continue to attract and retain highly-skilled individuals.
In addition, the Finance Minister has announced measures to reduce the foreign workforce quota for the services sector of Singapore’s economy. The intention is to manage the growth in foreign workers in that sector, sustain the impetus for restructuring, and support good employment outcomes. The services sector includes any company if it has registered any of the following as its principal business activity:
To ease the transition, the measures will be implemented in two steps as follows:
1 See the budget speech and related documentation on the Singapore Ministry of Finance website.
2 S-Pass is the work pass for mid-level skilled staff. Candidates need to earn at least S$2,300 a month and meet the assessment criteria.
S$1 = US$0.74
S$1 = £0.57
S$1 = €0.65
S$1 = ¥81.72
S$1 = A$1.03
The information contained in this newsletter was submitted by the KPMG International member firm in Singapore.
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