Summary Of
Singapore Budget 2022
Tax Changes: Individual
Increasing the top marginal personal income tax rate for resident individuals
The top marginal Personal Income Tax (PIT) rates will be increased with effect from Year of Assessment (YA) 2024. The PIT rates for non-tax-resident individual taxpayers (except on employment income and certain income taxable at reduced withholding tax rates) will be raised from 22% to 24%.
From YA 2024 onwards:
Chargeable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
First $20,000 | NIL | NIL |
Next $10,000 | 2 | 200 |
First $30,000 | – | 200 |
Next $10,000 | 3.50 | 350 |
First $40,000 | – | 550 |
Next $40,000 | 7 | 2,800 |
First $80,000 | – | 3,350 |
Next $40,000 | 11.5 | 4,600 |
First $120,000 | – | 7,950 |
Next $40,000 | 15 | 6,000 |
First $160,000 | – | 13,950 |
Next $40,000 | 18 | 7,200 |
First $200,000 | – | 21,150 |
Next $40,000 | 19 | 7,600 |
First $240,000 | – | 28,750 |
Next $40,000 | 19.5 | 7,800 |
First $280,000 | – | 36,550 |
Next $40,000 | 20 | 8,000 |
First $320,000 | – | 44,550 |
Next $180,000 | 22 | 39,600 |
First $500,000 | – | 84,150 |
Next $500,000 | 23 | 115,000 |
First $1,000,000 | – | 199,150 |
In excess of $1,000,000 | 24 |
Extend the WHT exemption for non-tax resident mediators
From 1 April 2023 to 31 Dec 2027, gross income derived by non-tax-resident mediators from mediation work carried out in Singapore will be subject to a concessionary WHT tax rate of 10%, subject to conditions. Alternatively, non-resident mediators may elect to be taxed at 24% on the net income, instead of 10% on gross income.
Extend the WHT tax exemption for non-tax resident arbitrators
From 1 April 2023 to 31 Dec 2027, gross income derived by non-tax-resident arbitrators from arbitration work carried out in Singapore will be subject to a concessionary WHT tax rate of 10%, subject to conditions. Alternatively, non-tax resident arbitrators may elect to be taxed at 24% on the net income, instead of 10% on gross income.
Tax Changes: GST
Increase the GST rate to meet increased recurrent spending needs
The GST rate will be increased in two phases:
a) From 7% to 8% with effect from 1 January 2023; and
b) From 8% to 9% with effect from 1 January 2024.
Update the GST treatment for travel arranging services
With effect from 1 January 2023, the basis for determining whether zero-rating applies to a supply of travel arranging services will be updated to be based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:
- If the customer of the service belongs in Singapore, the travel arranging service will be standard-rated, or
- If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the travel arranging service will be zero-rated.
Travel arranging services refer to:
- Services comprising the arranging of international transport of passengers and the arranging of insurance related to such transportation (currently zero-rated), and
- Services comprising the arranging of accommodation (currently standard-rated if the property is located in Singapore, and zero-rated if the property is located outside Singapore).
This change will ensure that the GST rules accurately reflect the place of consumption of travel arranging services. The change will also ensure parity in GST treatment between local and overseas suppliers on the supplies of travel arranging services. However, it will not affect the GST treatment of the supply of the underlying travel product such as international air tickets, hotel accommodation and travel insurance.
The Inland Revenue Authority of Singapore will provide further details on the changes by 31 July 2022.
Tax Changes: Property Tax
Enhance the progressivity of property tax for owner-occupied residential properties
The progressive property tax rates for owner-occupied residential properties will be revised for the portion of annual value in excess of $30,000. This change will be phased in over two years as shown below. The final property tax rates of up to 32% will take effect for property tax payable from 1 January 2024.
Annual Value | Property Tax Rate for Owner-occupied Residential Properties | |
Effective 1 Jan 2023 | Effective 1 Jan 2024 | |
First $8,000 | 0% | 0% |
Next $22,000 | 4% | 4% |
Next $10,000 | 5% | 6% |
Next $15,000 | 7% | 10% |
Next $15,000 | 10% | 14% |
Next $15,000 | 14% | 20% |
Next $15,000 | 18% | 26% |
Above $100,000 | 23% | 32% |
Enhance the progressivity of property tax for non-owner occupied (such as vacant, or let-out) residential properties
The progressive property tax rate schedule for non-owner-occupied residential properties will be revised. This change will be phased in over two years as shown below. The final property tax rates of up to 36% will take effect for property tax payable from 1 January 2024.
Annual Value | Property Tax Rate for Non-Owner-occupied Residential Properties | |
Effective 1 Jan 2023 | Effective 1 Jan 2024 | |
First $8,000 | 11% | 12% |
Next $22,000 | 16% | 20% |
Next $10,000 | 21% | 28% |
Next $15,000 | 27% | 36% |
Tax Changes: Business
Study the introduction of the Minimum Effective Tax Rate (“METR”) Regime
In response to the global minimum effective tax rate under the Pillar 2 Global Anti-Base Erosion (“GloBE”) rules of the BEPS 2.0 project, MOF is exploring a top-up tax called the minimum effective tax rate, or “METR”.
The METR will top up a multinational enterprise (“MNE”) group’s effective tax rate in Singapore to 15%, which applicable to MNE groups operating in Singapore that have annual revenues of at least €750 million, as reflected in the consolidated financial statements of the ultimate parent entity.
IRAS will study the METR further and consult industry stakeholders on the design of the METR.
Extend and enhance the Approved Royalties Incentive (“ARI”)
The ARI will be extended till 31 December 2028 and also be simplified to cover classes of royalty agreements based on an activity-set-based approach. EDB will provide further details of the changes by 30 June 2022.
Extend the Approved Foreign Loan (“AFL”) scheme
The AFL scheme will be extended till 31 December 2028.
Facilitate disclosure of company-related information for official duties
To support data-driven policymaking, operations, and integrated service delivery, the following changes to the ITA and GSTA will be made to facilitate the disclosure of information by IRAS for such purposes:
- Where taxpayers have provided consent for their information to be shared, IRAS can disclose such information to a public officer (or any other authorised person outside the public sector who is engaged by the Government or a statutory board) for the performance of his official duties.
- In addition, IRAS can disclose a prescribed list of identifiable information on companies to public sector agencies for the performance of official duties. This sharing of identifiable company-related information within the public sector will be conducted without the need for taxpayer’s consent. Any such information shared will be made less granular by IRAS to preserve the taxpayer’s confidentiality, while remaining useful to public sector agencies. For instance, the prescribed list will include the sales revenue band an identified company belongs to, but not the exact value of its sales revenue. In addition, such information will not be disclosed to any person outside the public sector even if the person is engaged by the Government or a statutory board.
Allow the Integrated Investment Allowance (“IIA”) scheme to lapse after 31 December 2022
Integrated Investment Allowance (IIA) scheme will be allowed to lapse after 31 December 2022.
Tax Changes: Finance
Enhance the Tax Incentive Scheme for Funds Managed by Singapore-based Fund Manager (“Qualifying Funds”)
The conditions imposed on the investments in physical Investment Precious Metals (“IPMs”) under the DI list will be refined as follows and will be effective on and after 19 February 2022:
- The incidental condition will be removed, i.e. investments in physical IPMs need not be incidental to the trading of derivative IPMs; and
- The cap will be revised to 5% of the total investment portfolio for the taxpayer’s incentive award under sections 13D/13O/13U of the ITA.
The Monetary Authority of Singapore will provide further details of the changes by 31 May 2022.
Under the ss 13D, 13O and 13U schemes, funds managed by Singapore-based fund managers are granted tax exemption on specified income derived from designated investments, subject to conditions. The designated investments list currently includes physical commodities that are subject to the following conditions:
- The trading of the physical commodity must be incidental to the trading of the derivative commodity, and
- The trade volume of such physical commodity is capped at 15% of the total trade volume of those physical commodities and related commodity derivatives.
Extend and rationalise the WHT exemption for the financial sector
WHT exemption for the following payments are scheduled to lapse after 31 December 2022:
- Payments made under cross currency swap transactions by Singapore swap counterparties to issuers of Singapore dollar debt securities;
- Interest payments on margin deposits made under all derivatives contracts by approved exchanges, approved clearing houses, members of approved exchanges and members of approved clearing houses;
- Specified payments made under securities lending or repurchase agreements by specified institutions;
- Payments made under interest rate or currency swap transactions by MAS; and
- Payments made under interest rate or currency swap transactions by financial institutions.
This will cover payments made under a contract or agreement that takes effect on or before 31 December 2026. The withholding tax exemption for the above payments were scheduled to lapse on 31 December 2022.
To rationalise the withholding tax exemption for the financial sector, the withholding tax exemption for payments made under interest rate or currency swap transactions by financial institutions will be allowed to lapse after 31 December 2022. Such payments can be covered under the existing withholding tax exemption for payments on over-the-counter financial derivatives.
The MAS will provide any consequential details by 31 May 2022.
Support for Workers and Businesses
Progressive Wage Credit Scheme (PWCS)
The Progressive Wage Credit Scheme (PWCS) provides transitional wage support for employers to adjust to upcoming mandatory wage increases for lower-wage workers covered by the Progressive Wage and Local Qualifying Salary requirements and voluntarily raise wages of lower-wage workers.
The Government will co-fund wage increases of eligible resident employees from 2022 to 2026. IRAS will notify eligible employers and they can expect to receive the first payout by the 1st Quarter of 2023.
Small Business Recovery Grant (SBRG)
The Small Business Recovery Grant (SBRG) provides one-off cash for SMEs that have been most affected by COVID-19 restrictions over the past year, like those in the F&B, Retail, Tourism and Hospitality sectors.
IRAS will notify eligible firms starting from June 2022.
Jobs Growth Incentive (JGI)
The Jobs Growth Incentive (with stepped-down rates) will be extended by six months to September 2022 to cover mature workers aged 40 and above who have not been employed for six months or more, persons with disabilities, and ex-offenders.
Ministry of Manpower (MOM) will share more details at their Committee of Supply (COS).
