Singapore Budget Highlights 2008

Contributed by: RSM Chio Lim ( www.RSMChioLim.com.sg)

The Minister for Finance, Mr Tharman Shanmugaratnam, delivered the 2008 budget statement on 15 February 2008.

The key thrusts are to focus on education and training, spur growth of innovative enterprises, adjust tax policies to stay competitive and strengthen financial security for retirement and help less well-off individuals.

As in past years, the Government uses tax policies to target at intended activities and achieve desired economic outcomes.

To create a top quality economy by encouraging research and development (R&D) work in Singapore, two new R&D tax incentives (R&D Tax Allowance and R&D Incentive for Start-up Enterprises) will be introduced and an existing one (Tax Deduction for R&D expenditure) enhanced. The Financial, Insurance and Maritime Sectors received a boost with new incentives (such as the new Family-owned Investment Holding Scheme) in addition to enhancement and extension of existing ones. To reduce business costs, the new Fittings & Fixtures Incentive allows businesses three years write-off of their expenditures on fittings and fixtures, excluding expenditures on structural works and expansion of space. The start-up tax exemption scheme will be liberalised and the unilateral tax credit system will be expanded to include all foreign-sourced income.

A slew of tax goodies are given to individuals with the abolition of estate duty on the top of the list, followed by a 20% tax rebate for YA 2008 and others. Certain existing schemes currently available to provide tax concessions/relief to individuals will be extended/enhanced (e.g. NOR scheme, Employee Equity Based Remuneration Scheme, SRS, CPF scheme). RSM Stone Forest is happy to share with you the details of the tax changes introduced in Budget 2008 and provide our comments on each tax change for your consideration.

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