The Inland Revenue Authority of Singapore (IRAS) has published an overview of tax changes in the Budget Statement for the Financial Year 2022 that was delivered on 18 February 2022 by Minister for Finance, Lawrence Wong. Some of the main changes for businesses are summarized as follows:

• The top marginal Personal Income Tax (PIT) rates will be increased with effect from Year of Assessment (YA) 2024, including new top rates of 23% on income of SGD 500,000 and 24% on income over SGD 1 million, with a corresponding increase in the rate for non-tax-resident individual taxpayers (except on employment income and certain income taxable at reduced withholding tax rates) from 22% to 24%;
• The withholding tax exemptions for non-tax-resident mediators and arbitrators will be extended until 31 March 2023 and, from 1 April 2023 to 31 Dec 2027, gross income derived by non-tax-residents from mediations and arbitration work carried out in Singapore will be subject to a concessionary withholding tax rate of 10%, subject to conditions, or alternatively, non-residents may elect to be taxed at 24% on the net income, instead of 10% on gross income;
• The GST rate will be increased in two steps:
  • from 7% to 8% with effect from 1 January 2023; and
  • from 8% to 9% with effect from 1 January 2024;
• The GST treatment for travel arranging services will be updated from 1 January 2023 so that 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:
  • if the customer of the service belongs in Singapore, the travel arranging service will be standard-rated; or
  • 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;
• The property tax rates for non-owner-occupied residential property are being revised upward, including an increase in the top rate from 20% to 27% from 1 January 2023 and to 36% from 1 January 2024;
• The Approved Royalties Incentive (ARI) will be extended till 31 December 2028 and will be simplified to cover classes of royalty agreements based on an activity-set-based approach to continue encouraging companies to leverage new technologies and knowhow to develop the capabilities of our local workforce and capture new growth opportunities;
• The Approved Foreign Loan (AFL) scheme will be extended till 31 December 2028 to continue encouraging companies to invest in productive equipment for the purpose of conducting substantive activities in Singapore;
• The Integrated Investment Allowance (IIA) scheme will be allowed to lapse after 31 December 2022;
• The withholding tax exemption for the following payments will be extended until 31 December 2026 to continue supporting the competitiveness of the financial sector:
  • payments made under cross-currency swap transactions by Singapore swap counterparties to issuers of Singapore dollar debt securities;
  • interest payments on margin deposits made under all derivatives contracts by approved exchanges, approved clearing houses, members of approved exchanges, and members of approved clearing houses;
  • specified payments made under securities lending or repurchase agreements by specified institutions;
  • payments made under interest rate or currency swap transactions by MAS; and
  • payments made under interest rate or currency swap transactions by financial institutions (allowed to lapse after 31 December 2022, but still covered under the exemption for payments on over-the-counter financial derivatives);
• The following tax incentive schemes for Project and Infrastructure Finance will be extended until 31 December 2025:
  • exemption of qualifying income from qualifying project debt securities (QPDS); and
  • exemption of qualifying foreign-sourced income from qualifying offshore infrastructure projects/assets received by approved entities listed on the Singapore Exchange (SGX);
• The Concessionary tax rate of 10% on qualifying income derived by an approved Infrastructure Trustee-Manager/Fund Management Company from managing qualifying SGX-listed Business Trusts/Infrastructure funds in relation to qualifying infrastructure projects/assets (ITMFM scheme) will be allowed to lapse after 31 December 2022;
• The broad-based withholding tax exemption for container lease payments made to non-tax-resident lessors under operating lease (OL) agreements will be extended for container lease payments made under OL agreements entered into on or before 31 December 2027;
• The broad-based withholding tax exemption for ship and container lease payments under finance lease (FL) agreements for Maritime Sector Incentive (MSI) recipients will be extended for ship and container lease payments made under FL agreements entered into on or before 31 December 2028; and
• The Aircraft Leasing Scheme (ALS) will be extended until 31 December 2027.

In addition to the above, the global minimum tax is also addressed. This includes that in response to the global minimum effective tax rate under the Pillar 2 Global Anti-Base Erosion (GloBE) rules of the BEPS 2.0 project, and based on consultation with industry stakeholders, the Ministry of Finance is exploring a top-up tax called the minimum effective tax rate, or "METR":

• METR will top up a multinational enterprise (MNE) group's effective tax rate in Singapore to 15%;
• METR will apply to MNE groups operating in Singapore that have annual revenues of at least EUR 750 million, as reflected in the consolidated financial statements of the ultimate parent entity; and
• METR, if introduced eventually, will be aligned with the Pillar 2 GloBE rules as far as possible.

For more information on the budget, click the following link for the Budget 2022 website.