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Singapore Budget 2005

Source: www.gov.sg

BUDGET 2005 CREATING OPPORTUNITY, BUILDING COMMUNITY

Prime Minister and Minister for Finance Lee Hsien Loong unveiled the Budget for Financial Year (FY) 2005 based on the theme “Creating Opportunity, Building Community”.
The Budget will provide $1.3 billion worth of help to Singaporeans, and save taxpayers over $150 million in Year of Assessment (YA) 2006 and $310 million in YA2007.
The Government expects to run a modest overall budget surplus of $210 million in FY2005, after taking into account all the tax changes, projected income from investment of reserves, and special transfers announced in the Budget Statement.
The Singapore economy rebounded strongly in 2004, growing by 8.4%. The economy is expected to grow at a more moderate pace of 3-5% in 2005.
To ensure that Government spending remains prudent, PM Lee announced a further permanent 3% cut in the budget ceilings for all ministries, except the Ministry of Defence. PM Lee assured the House that the quality of public services will not be compromised.
Creating a Dynamic and Entrepreneurial Economy
The 2005 Budget included a comprehensive package of measures to create an environment conducive to businesses, foster the growth of the services sectors, help small and medium enterprises, and prepare workers for the new economy.
A Competitive Tax Regime
The Government will lower the top personal income tax rate over two years, from the current 22% to 21% in YA2006 and 20% in YA2007. Marginal tax rates for all other income brackets will be correspondingly reduced.
These cuts will save taxpayers $150 million in YA2006 and $310 million in YA2007, and help Singapore attract internationally mobile talent. The schedule of the reductions in personal income tax is shown at Table 1 of the Annex.
Help for Small Businesses
PM Lee announced further measures to help small businesses. To provide more timely relief for small companies, a one-year loss carry-back for corporate taxes, subject to a cap of $100,000 in losses, will be introduced with effect from YA2006.
And from 1 April 2005, all Government suppliers will be given one free Government e-procurement account with GeBIZ. This will be of particular benefit to smaller businesses that supply to Government.
Growing the Financial Services Sector
PM Lee outlined measures to position Singapore as the premier wealth management centre in Asia.
Start-up fund managers will be given a 12 month grace period to meet the requirement that 80% of share capital must come from foreign investors under the tax incentive scheme. Foreign charitable trusts will be given tax exemption on foreign income earned, without restrictions on expenditure levels or where the funds are spent.
The Government has also made special provisions to support Islamic banking. It will remove the double imposition of stamp duties for real estate mortgage financing structured in accordance with Islamic practices, and extend concessionary tax treatment to payouts from “Islamic” bonds.
To deepen and broaden capital markets, the Government will confer a 10% income tax rate on approved companies in securities borrowing and lending, including intermediaries. The Commodity Derivative Trading incentive will also be enhanced, with a concessionary tax rate of 5% on qualifying income from trading exchange-traded commodity derivatives.
To attract more Real Estate Investment Trust (REIT) listings, stamp duty on the instruments of transfer of Singapore properties into REITs to be listed, or already listed on the SGX, will be waived for a five-year period. Most of the qualifying preconditions for tax transparency will also be removed.
To attract foreign non-individual investors to the REIT market, the withholding tax on REIT distributions will be lowered from 20% to 10% for a five-year period.
More.....

Source: Ministry of Finance Press Release 18 Feb 2005

 

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Saturday
19 February 2005