Tax Write-Up: Enhancements in Stabilisation and Support Package to help Singapore Businesses

By: Wei Shin, Shao Kang, Hui Mei, Gabriel (Research and Training Department)

In this month’s publication, we refer to the Singapore Budget 2020, specifically the Stabilisation And Support Package. With the ongoing Covid-19 pandemic, the Singapore government has stepped up on its measures to help businesses cope. Announced on 26 March and 6 April 2020, the government will be enhancing its measures under the Stabilisation and Support package. Included in this package are economy-wide measures to help businesses with their cash flow.

One such measure is the increase in the Corporate Income Tax (CIT) Rebate. Instead of 20%, capped at $10,000 in Year of Assessment (YA) 2019, it has increased to 25% of the income tax payable, capped at $15,000 for the Year of Assessment (YA) 2020.

There are other enhancements of tax treatments under the Corporate Income Tax System as well. Companies using GIRO to pay for their CIT are automatically eligible for an additional two months of interest-free installments when they file their Estimated Chargeable Income (ECI) from 19 February 2020 to 31 December 2020, or before 19 February 2020 and have ongoing installment payments to be made in March 2020. Furthermore, companies with CIT payments due in months of April, May, and June 2020 will be granted a 3-month deferment.

Apart from these, unabsorbed capital allowance and trade losses for YA 2020 are allowed for carry-back up to 3 immediate preceding YAs at a cap of $100,000, instead of 1 preceding YA. Companies are also provided with the option to accelerate the claiming of capital allowance for plant and machinery acquired in the financial year ending in 2020 over 2 years. 75% of the acquisition cost can be written off in the first year and the remaining 25% will be written off in the second year. The option to accelerate the deduction of Renovation and Refurbishment (R&R) expenses incurred in the financial year ending 2020 to one year is available as well.

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