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Source:
www.gov.sg |
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BUDGET 2005 CREATING
OPPORTUNITY, BUILDING COMMUNITY |
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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”. |
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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. |
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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. |
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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. |
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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. |
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Creating a Dynamic and Entrepreneurial Economy |
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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. |
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A Competitive Tax Regime |
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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. |
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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. |
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Help for Small Businesses |
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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. |
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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. |
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Growing the Financial Services Sector |
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PM Lee outlined measures to position Singapore as
the premier wealth management centre in Asia. |
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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. |
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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. |
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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. |
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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. |
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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. |
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More..... |
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Source:
Ministry of Finance Press Release 18 Feb
2005 |
Singapore Budget 2005
