ST : Offset for corporate tax fall

Nov 23, 2009
Offset for corporate tax fall
By Alvin Foo

A PROJECTED fall in government revenue from a corporate tax cut here will be more than offset by steps taken in recent years to raise revenue from other sources, said Second Minister for Finance and Transport Lim Hwee Hua on Monday.

Her comments coincided with the passing of the Income Tax (Amendment) Bill on Monday, which gave effect to pro-business tax measures announced during the Budget speech in January.

Among other things, the new law exempts companies from paying tax on foreign-sourced income for one year, and allows businesses to claim losses against three previous years of income instead of just one.

It also cuts the corporate tax rate from 18 per cent to 17 per cent, bringing Singapore's rate closer to that of key rival economy Hong Kong, where the rate is 16.5 per cent.

Mrs Lim, who is also Minister in the Prime Minister's Office, said this reduction will cost the Government between $400 million and $500 million a year.

But she assured members of the House that earlier steps - including the raising of the goods and services tax (GST) from 5 per cent to 7 per cent in 2007 - will more than make up for this fall.