Singapore Budget 2022 Highlights
Key Takeaway
- Increase in the top marginal personal income tax rate for resident individual tax payers;
- GST increase will be delayed to 2023;
- Increase in property tax rate for residential properties starting from 2023;
- Possibility of introduction of Minimum Effective Tax Rate (METR) in future years;
On 18th February 2022, the Minister of Finance, Lawrence Wong
delivered the Budget Statement for Budget 2022. We set out below some
of the key tax highlights of the Budget.
Key Tax Changes
Affecting Individuals
1. Enhance the progressivity of Personal Income Tax (“PIT”) of tax- resident individual taxpayers
With effective from Year of Assessment (YA) 2024, individual with
chargeable income in excess of $500,000 up to $1 million will be
taxed at 23% while that in excess of $1 million will be taxed at 24%.
2. Extension the withholding tax (WHT) exemption for non-tax resident mediators
The existing WHT exemption will be extended until 31 March 2023.
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 or alternatively, non resident mediators may elect to be taxed at 24% on the net income, instead of 10% on gross income.
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 or alternatively, non resident mediators may elect to be taxed at 24% on the net income, instead of 10% on gross income.
3. Extension the WHT tax exemption for non-tax resident arbitrators
The existing WHT exemption will be extended until 31 March 2023.
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
or alternatively, non-tax resident arbitrators may elect to be taxed at 24% on the net income, instead of
10% on gross income.
Goods and Service Tax (“GST”)
1. Increase the GST rate
The GST rate will be increased in two steps:
a) from 7% to 8% with effect from 1 January 2023; and
b) from 8% to 9% with effect from 1 January 2024.
a) from 7% to 8% with effect from 1 January 2023; and
b) from 8% to 9% with effect from 1 January 2024.
2. GST treatment for travel arranging services
With effective 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:
a) If the customer of the service belongs in Singapore, the travel arranging service will be standard- rated; or
b) 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.
a) If the customer of the service belongs in Singapore, the travel arranging service will be standard- rated; or
b) 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.
Property Tax
1. Enhance the progressivity of property tax for owner-occupied residential properties
The progressive property tax rates for owner-occupied residential properties are being revised upward
as shown below:-
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%
This change will take effect from 1 January 2024.
2. Enhance the progressivity of property tax for non-owner occupied residential properties
The progressive property tax rate schedule for non-owner-occupied residential properties are
being revised upward as shown below:-
Annual Value
Property Tax Rate for Non-owner-occupied Residential
Properties
Effective 1 Jan 2023
Effective 1 Jan 2024
First $30,000
11%
12%
Next $15,000
16%
20%
Next $15,000
21%
28%
Above $60,000
27%
36%
This change will take effect from 1 January 2024.
Business
1. Introduction of the Minimum Effective Tax Rate (“METR”) Regime
The Inland Revenue Authority of Singapore is exploring a top-up tax called the Minimum Effective Tax
Rate (“METR”) which will top up the MNE group’s effective tax rate in Singapore to 15%. The METR
will apply to MNE groups operating in Singapore that have annual revenues of at least 750 million euros
as reflected in the consolidated financial statements of the ultimate parent entity.
2. Extension and enhance the Approved Royalties Incentive (“ARI”)
The existing ARI will be extended until 31 December 2028 and will be simplified to cover classes of
royalty agreements based on an activity-set-based approach.
3. Extend the Approved Foreign Loan (“AFL”) scheme
The existing AFL scheme will be extended until 31 December 2028.
4. Extend the Tax Framework for Facilitating Corporate Amalgamations under Section 34C of the ITA to Licensed Insurer
Extension of the tax framework to cover amalgamation of Singapore-incorporated licensed insurers
where the court order for confirmation of a scheme for the transfer of an insurance business is made on
or after 1 November 2021.
The extension of the framework is subject to conditions, which include the following:
The extension of the framework is subject to conditions, which include the following:
- The amalgamated company takes over all property, rights, privileges, liabilities, and obligations, etc. of the amalgamating company on the date of amalgamation; and
- The amalgamating company becomes dormant (i.e. ceases to conduct any business or any other activities, and does not derive any income) on the date of amalgamation and remains so until it is dissolved or wound up; and
