SECOND READING SPEECH BY LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY (TRADE) ON THE ECONOMIC EXPANSION INCENTIVES (RELIEF FROM INCOME TAX) (AMENDMENT) BILL 2016, MONDAY, 14 MARCH 2016
Madam Speaker, I beg to move, "That the Bill be now read a second time."
2 The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2016 puts into legal effect the income tax changes introduced in Budget 2015, as well as other amendments arising from the regular review of our tax incentive regime.
3 Let me draw Members’ attention to the two key legislative changes contained in the Bill.
Apply the maximum tax relief period for each Pioneer Certificate (PC) on the incentivised activities
4 The Pioneer Incentive is designed to attract and anchor new economic activities (i.e. pioneer activities) with significant economic benefits to Singapore, and to encourage companies to acquire new technologies. The objective of the incentive is to drive the growth of high value-added or high-technology industries in Singapore.
5 A company can be awarded multiple Pioneer Certificates (PCs) when it anchors different qualifying economic activities in Singapore over time. However, the Economic Expansion Incentives (Relief from Income Tax) Act (EEIA) currently only allows for each company to enjoy a maximum tax relief period of 15 years regardless of the number of PCs awarded to the company.
6 To encourage all companies, including existing ones, to continue to anchor more pioneering activities in Singapore, the EEIA will be amended to make clear that the maximum tax relief period is to be applied on the incentivised pioneer activity instead of the company as a whole.
7 Clauses 3, 4 and 13 amend Sections 5, 6 and 17 respectively to give legislative effect to this
Apply the maximum tax relief period for each certificate issued for Development and Expansion Incentive (DEI) on the incentivised activities
8 The Development and Expansion Incentive (DEI) was introduced to encourage companies to expand by investing in technology as well as major upgrading of equipment and operations. Under the EEIA, the tax relief period under the DEI is generally capped at 20 years and currently applied on the company instead of the incentivised qualifying activities. As DEI similarly aims to encourage all companies engaged in high value-added manufacturing or services activities, including existing ones, to continue to expand in Singapore, the EEIA will also be amended to make clear that the maximum tax relief period will apply on the qualifying activities for DEI.
9 Clauses 17 and 18 amend Sections 19J and 19K respectively to give legislative effect to this.
10 The remaining legislative changes arising from our periodic review of the income tax system are either technical in nature or relate to improvements in tax administration.
11 Madam Speaker, the proposed changes to the EEIA seek to encourage economic activities in Singapore. These changes also reflect the Government’s commitment to monitor the effectiveness of our tax incentive regime and to keep it competitive and relevant as economic conditions change.
12 Madam Speaker, I beg to move.