MARCH 2022

AOYAMA SOGO NEWS
Aoyama Sogo Accounting Office Singapore

Income Tax Changes forBusinesses in Singapore
Budget 2022

The Singapore Budget for fiscal year 2022 was announced on 18February 2022 (Friday), focused on enhancing innovation, productivity,
and the sustainability of Singapore. Whilst the previous years’ Budgets
focused primarily on helping Singapore businesses to withstand theLouis Mak
Accredited Tax Advisor(Singapore Chartered Tax
Professionals)

challenges brought by COVID-19, Budget 2022 sets its sights on longerterm goals to prepare Singapore businesses for challenges andopportunities post-pandemic.
The income tax changes for businesses are summarised below:
1. Exploration of a Minimum Effective Tax Rate (“METR”) Regime

The Ministry of Finance is studying the introduction of a top-up tax called
the METR where certain multi-national enterprise group in Singapore will
be subject to a METR of 15%.
The Inland Revenue Authority of Singapore (“IRAS”) will conduct athorough study of the METR and consult industry stakeholders on thedesign of the regime.
2. Extension and Enhancement of the Approved Royalties Incentive (“ARI”)

The existing ARI originally scheduled to lapse after 31 December 2023

INSIDE THIS ISSUE

will be extended until 31 December 2028.

Income Tax changes for
Businesses in Singapore
Budget 2022
Page 1 - 4

The ARI will also be simplified to cover classes of royalty agreements

How we can help
Page 5The Singapore Economic Development Board will release further details

based on an activity-set-based approach.

of the changes by 30 June 2022.

PAGE 02
3. Extension of the Approved Foreign Loan (“AFL”) Scheme

The existing AFL Scheme originally scheduled to lapse after 31 December 2023 will be extended until
31 December 2028.
4. Extension of the Tax Framework for Facilitating Corporate Amalgamations under Section 34Cof the Singapore Income Tax Act (“SITA”) to Licensed Insurer

Subject to conditions, the existing tax framework for facilitating corporate amalgamations will be
extended to cover amalgamation of Singapore companies involving a scheme of transfer underSection 117 of the Insurance Act 1966 (“IA”), where the court order for the confirmation of the scheme
referred to under section 118 of the IA is made on or after 1 November 2021.
The tax treatments under the tax framework will apply with the appropriate modifications.
IRAS will provide further details of the changes by 31 October 2022.
5. Facilitation of the Disclosure of Company-Related Information for Official Duties

To facilitate the disclosure of information by IRAS to support data-driven policymaking, operations,and integrated service delivery, the following changes will be made:a. Where taxpayers have provided consent for their information to be shared, IRAS can disclose suchinformation to a public officer (or any other authorised person outside the public sector who isengaged by the Government or a statutory board) for the performance of his official duties.
b.

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. Anysuch information shared will be made less granular by IRAS to preserve the taxpayer’s confidentiality,
while remaining useful to public sector agencies. Additionally, 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.
6. Lapse of the Integrated Investment Allowance (“IIA”) Scheme

The existing IIA Scheme will be allowed to lapse after 31 December 2022.
7. Enhancement of the Tax Incentive Scheme for Funds Managed by Singapore-based Fund Manager

Effective 19 February 2022, the conditions imposed on the investments in physical Investment
Precious Metals (“IPMs”) will be refined where:a.

the condition that the investments in physical IPMs need to be incidental to the trading ofderivative IPMs will be removed; andb.

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 SITA.
The Monetary Authority of Singapore (“MAS”) will provide further details of the changes by 31 May2022.

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8. Extension and Rationalisation of the Withholding Tax (“WHT”) Exemption for the Financial Sector

WHT exemption for the following payments originally scheduled to lapse after 31 December 2022 will
be extended until 31 December 2026:
a.

Payments made under cross currency swap transactions by Singapore swap counterparties toissuers of Singapore dollar debt securities;b.

Interest payments on margin deposits made under all derivatives contracts by approved

exchanges, approved clearinghouses, members of approved exchanges, and members of approved
clearinghouses;c.

Specified payments made under securities lending or repurchase agreements by specifiedinstitutions; andd. Payments made under interest rate or currency swap transactions by MAS.
However, WHT exemption for payments made under interest rate or currency swap transactions byfinancial institutions will be allowed to lapse after 31 December 2022. Such payments can be covered
under the existing WHT exemption for payments on over-the-counter financial derivatives.
MAS will provide any consequential details by 31 May 2022.
9. Extension and Rationalisation of the Tax Incentives for Project and Infrastructure Finance

The following tax incentive schemes originally scheduled to lapse after 31 December 2022 will beextended until 31 December 2025:
a. Exemption of qualifying income from qualifying project debt securities; andb. Exemption of qualifying foreign-sourced income from qualifying offshore infrastructureprojects/assets received by approved entities listed on the Singapore Exchange (“SGX”).
However, the tax incentive scheme that offers concessionary tax rate of 10% on qualifying income
derived by an approved Infrastructure Trustee-Manager/Fund Management Company from managing
qualifying SGX-listed Business Trusts/Infrastructure funds concerning qualifying infrastructure
projects/assets will be allowed to lapse after 31 December 2022.
MAS will provide any consequential details by 31 May 2022.
10. Change in Basis of preparing Tax Computations for Insurers from Financial Statements (“FS”)
to MAS Statutory Returns

Following the adoption of the new Financial Reporting Standard (“FRS”) 117 for the preparation of FS,
the MAS Statutory Returns instead of FS will be used as the basis for insurers to prepare their tax
computations. Related consequential adjustments to existing tax treatments will also be introduced.

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This change is because of the following:a. Insurers will not be able to prepare their tax computations using the FS prepared under FRS 117 as theFS will not provide sufficient information necessary to apply the existing tax rules such as those underSection 26 of SITA; andb. Using MAS Statutory Returns as the basis for preparing the tax computations will allow the existing tax
rules and tax incentives (if applicable) to continue to apply without adding substantial tax complianceburden on insurers.
This change will take effect from the year of assessment (“YA”) 2024 (or YA 2025 for insurers whose
financial year-end is not 31 December).
IRAS will provide further details of the changes by 30 September 2022.
11. Extension of the Broad-Based WHT Exemption for Container Lease Payments made to Non-TaxResident Lessors under Operating Lease Agreements

The existing WHT exemption originally scheduled to lapse after 31 December 2022 will be extended until
31 December 2027.
12. Extension of the Broad-Based WHT Exemption for Ship and Container Lease Payments under
Finance Lease Agreements for Maritime Sector Incentive (“MSI”) Recipients

The existing WHT exemption originally scheduled to lapse after 31 December 2023 will be extended until
31 December 2028.
13. Extension of the Aircraft Leasing Scheme (“ALS”)

The existing ALS originally scheduled to lapse after 31 December 2022 will be extended until 31
December 2027.

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ABOUT THE WRITERLOUIS MAKLouis is an accredited tax advisorof the Singapore Chartered Tax
Professionals and is currently a taxmanagerinAoyama
Sogo
Accounting Office Singapore PteLtd.
Louis has over 20 years of tax work
experience in various capacities.
Louis started his career in theenforcement division of the Inland
Revenue Authority of Singapore,
after which he moved into tax
consulting where he spent most of
his career mainly in the corporate
tax departments of first andsecond tier public accounting
firms including PwC Singapore,KPMG Singapore, RSM Singapore
and Nexia TS, handling bothcompliance and advisory works.
Louis also spent a year as an
assistant tax manager in aSingapore listed company withoperations in Singapore, Malaysia,Hong Kong and Thailand.
Louis has extensive experiencemanaging a portfolio of corporate
tax clients and are responsible fora range of tax services. His clients
include multinational enterprises
as well as companies with local
and overseas operations.
Louis holds a diploma inaccountancy from Singapore
Polytechnic and certificate fromthe Association of Chartered
Certified Accountants.

HOW WE CAN HELP
We, Aoyama Sogo Accounting Office Singapore Pte. Ltd., is awell-established consultancy firm set up in 2011.
We provide a wide range of professional services such as direct& indirect tax compliance, international tax advisory, transfer
pricing, accounting, payroll, corporate secretarial and otherbusiness support services. Our clients include multinational andlocal businesses of different industries including maritime, fundmanagement and trading.
Our specialization includes tax and business advisory onmaritime and fund-related matters, including the application for
the following tax incentives in the Singapore Maritime andFinancial Sectors, which provide for tax exemption orconcessionary tax rates on qualifying income:MSI - Approved International Shipping Enterprise Award forinternational ship owners and ship operators establishingcommercial shipping operations in Singapore;
MSI – Maritime Leasing Award for entities using Singapore
as their capital and funding base to finance their vessels or
sea containers;
MSI – Shipping Related Support Services Award for ancillary
shipping service providers and shipping conglomerates
establishing corporate services functions in Singapore;
Withholding tax exemption on interest and related
payments made by qualifying shipping enterprises forarrangements to finance the purchase and/or constructionof vessels, containers and intermodal equipment; andFinancial Sector Incentive (FSI) Award for licensed financial
institutions with plans to establish or expand theiroperations in Singapore.
Our team of experienced professionals would be able to offer
integrated and customized solutions and services to address
your business needs and requirements.
For more information on how we can help to address your tax
compliance and advisory needs, please contact thepersonnel below:
Junichi Naganawa <naganawa@sg.aoyama.ac>
Shinobu Sugiyama <shinobu.sugiyama@sg.aoyama.ac>
Louis Mak <louis.mak@sg.aoyama.ac>
This profile was provided by professionals from Aoyama Sogo Accounting Office
Singapore Pte. Ltd.
The information contained herein is of a general nature and is not intended toaddress the circumstances of any particular individual or entity. Although weendeavor to provide accurate and timely information, there can be no guarantee thatsuch information is accurate as of the date it is received or that it will continue to beaccurate in the future. No one should act on such information without appropriate
professional advice after a thorough examination of the particular situation.