FEEDBACK SOUGHT ON PROPOSED CHANGES TO INCOME TAX ACT
Members of the public are invited to provide feedback on proposed amendments to the Income Tax Act, which include a move to end a scheme giving tax breaks to highly skilled foreigners.
The Not Ordinarily Resident (NOR) scheme was introduced in the 2002 Budget and allowed workers who earned at least $160,000 a year but spent no fewer than 90 days abroad each year on business to pro-rate their taxable income, for a five-year period.
The scheme is now set to lapse after the tax year of assessment (YA) 2020, with the last NOR status to expire by YA 2024.
This change to the NOR scheme is among seven proposed amendments to the Income Tax Act announced in Budget 2019 in February. The Ministry of Finance (MOF) is inviting interested parties to give feedback between June 19 and July 10 on the draft Bill.
Other potential changes include a personal income tax rebate of 50 per cent, capped at $200, as part of the Bicentennial Bonus.
The rebate will be granted to all residents paying taxes for YA 2019 on income earned in 2018.
Another proposed change is to extend and refine tax incentive schemes for funds managed by Singapore-based fund managers, in a bid to continue growing the asset management industry here.
Tax concessions relating to qualifying funds under Sections 13CA, 13R and 13X of the Income Tax Act will be extended to Dec 31, 2024, along with refinements to the scheme parameters, said the MOF. These were originally scheduled to lapse after March 31.
The proposed amendments also provide for 12 changes to existing tax policies and administration arising from periodic reviews of the system. These include the introduction of an expense ratio for taxpayers who are “self-employed commission agents”, such as insurance or real estate agents, earning a gross annual commission income of up to $50,000.
To ease tax compliance, these agents will be allowed to claim tax deduction based on either a “prescribed deemed expense ratio”, set at 25 per cent of their gross commission income, or the actual expenses incurred in the production of their commission income. This will be effective from YA 2020, applied to income earned in 2019.