Tan, Chan & Partners - Budget 2004

The corporate tax rate will be lowered to 20% with effect from Year of Assessment 2005. Personal income tax rate remains at 22%.

All foreign-sourced income received by resident individuals will be exempted from tax from YA 2005. However, this exemption is not applicable if the foreign-sourced income is received through a partnership in Singapore .

q Tax exemption for Singapore-Sourced Investment Income for Individuals from Financial Instruments

All Singapore-sourced investment income derived directly by individuals from financial instruments (other than standard deposits) will also be exempted from tax from YA 2005.

The following investment income (income that is not considered as gains or profits from any trade, business or profession) from financial instruments derived on or after 1 January 2004 will be exempted from tax:

interest from debt securities
discount income from debt securities, tenure of which is one year or less
annuities
all payments on life insurance policies, including interest from insurance benefits that have not been drawn and investment income on investment-linked policies (excluding sums realised or interest from insurance benefits that have not been drawn under any insurance against loss of profits)
distributors from unit trusts and real estate investment trusts that are authorised under sec 286 of the Securities and Futures Act (excluding distributions out of franked dividends)
borrowing fees, loan rebate fees, price differential and compensatory payments arising from securities lending and repurchase arrangements.

This tax exemption will, however, not apply if the income is derived by individuals through a partnership in Singapore .

Interest income derived by an individual from 1 January 2003 to 31 December 2004 from standard savings, current and fixed deposit accounts with approved banks and finance companies in Singapore is partially exempted from tax. Interest income derived by individuals on or after 1 January 2005 from such standard deposits will be fully exempted from tax.