Income Tax (Amendment) Bill 2024

The Income Tax (Amendment) Bill 2024 (“Amendment Bill”) proposes 15 amendments to legislate measures announced in the 2024 Budget. The salient amendments are highlighted below.

Refundable Investment Credit (“RIC”)

The RIC provides that upon approval, a company which incurs qualifying expenditure will be entitled to tax credits that may be utilized as follows:

To offset (including interest, penalties and surcharges) levied on or due from the company under the Income Tax Act (“ITA”);
To offset Domestic Top-Up Tax (“DTT”) or multinational enterprise top-up tax (“MTT”) (including interest, penalties and surcharges) that is levied on or due from the company under the Multinational Enterprise (Minimum Tax) Act 2024 (“Minimum Tax Act”), when it enters into effect;
To offset tax levied on or due from one or more companies of the same group; or
Where the RIC cannot be fully utilized, paid to the company.

The RIC may be utilized against income tax payable under the ITA, and DTT or MTT under the Minimum Tax Act.

Other salient features:

The RIC should be granted in respect of expenditure which is incurred;
The RIC is to be granted only by reference to expenditure, i.e., value added inputs to the business;
If the awardee company contravenes a provision of the ITA or a condition in its letter of award, the relevant authority may require the company to show cause why its letter of award should not be amended or revoked, giving 30 days to the taxpayer to respond.

Extension and revision of tax incentive schemes for funds managed by Singapore-based fund managers

The various tax incentive schemes for funds, the Goods and Services Tax (“GST”) remission, and the withholding tax exemption schemes will be extended until 31 December 2029.

A significant change is the revision of the economic conditions for qualifying funds under Section 13O and Section 13U of the ITA. The economic conditions relate to the level of assets under management, the amount of annual business spending and the number of investment professionals employed by a Singapore fund management company.

The Monetary Authority of Singapore (“MAS”) has issued a circular on this on 1 October 2024.

Introduction of additional concessionary tax rate tiers for certain tax incentive schemes

The Amendment Bill also proposes to introduce an additional 10 % concessionary tax rate tier to the Finance and Treasury Centre incentive and Aircraft Leasing Scheme, and an additional 15 % tax rate tier to the Intellectual Property Development Incentive, Development and Expansion Incentive and Global Trader Programme.

The Amendment Bill also provides that the Minister or an authorized body may, on their own initiative or by application of the company, substitute the currently approved concessionary rate with another prescribed rate.