Business investments are vital for the long term growth of an economy. Investments bring in innovation and growth, with more jobs and higher wages. High business taxes are not desirable because they reduce the amount of investment. Internationally it has been recognized that an Internationally competitive business tax system is important and also to reduce taxes to encourage investments.
Corporate Income Tax (CIT) Rate Cut
To promote Singapore’s competitiveness, the Government will reduce the CIT rate from 18% to 17%. This reduction will take effect from the Year of Assessment 2010.
Accelerated Capital Allowance (CA)
To support businesses intending to invest in preparation for the recovery, the Government will allow plant and machinery acquired during the financial years ended 2009 and 2010 to qualify for an accelerated write-down.
Writing Down of Renovation and Refurbishment Expenses
To encourage especially small businesses in the service sector to refit their business premises this year and the next, the Government will allow businesses to temporarily write-down qualifying expenses incurred on renovation and refurbishment of business premises fully within one year, instead of the current three years.
New Tax Framework for Corporate Amalgamations
In a corporate amalgamation, the amalgamated company takes over all assets and liabilities of the amalgamating companies and the amalgamating companies cease to exist. To make it easier for companies to restructure and rationalize, the Government will introduce a tax framework for qualifying corporate amalgamations.