Cut in Corporate Income Tax
This tax change will take effect from YA2008

Reduction in Personal Income Tax
Personal tax reduced to 20% in YA 2007

Loss Carry-Back System
From YA2006, losses of up to $100,000 incurred by the company in the current year can be carried back for one year.
Note:
We are able to assist companies in claiming back certain amount of the tax paid in the previous YA, if the companies fulfill the requirements stipulated by IRAS. There will be a nominal fee charged for the tax services.

Income Tax Section 44 Statement  From 1 Jan 2008:

• All companies in <?XML:NAMESPACE PREFIX = ST1 />Singapore remaining on the imputation system would move to the one-tier system. Imputation system will cease to exist;
  

• All dividends payable by companies in Singapore would be exempt from tax in the hands of shareholders;
  

• All corporate shareholders receiving dividends paid by companies in Singapore can onward pay the dividends to their shareholders with no restriction on the shareholding and number of tiers for which such dividends can be flowed through;
  

• All companies in Singapore are not required to maintain Section 44 accounts;
  

• All section 44 charge not utilised by 31^st December 2007 would not be available for set-off against any tax assessed on or after 1^st January 2008; and  All tax discharged after 31^st December 2007 (net of any tax due to the Comptroller of Income Tax) may be refunded to companies at the point of tax discharge without the need to refer to companies’ section 44 balances as at 31 December 2002.

Note:
We are able to assist companies in claiming back the balance tax credit from IRAS before 31 December 2007, if the companies fulfill the requirements stipulated by IRAS. There will be a nominal fee charged for the tax services.

DIVIDEND
Differences between One-Tier Corporate Tax System and Imputation System

Changes to Form C Filing deadline and instalment payment of tax based on estimated chargeable income

To help the majority of Singaporeans save more for their future needs, the employer component of CPF contribution rates will be increased by 1.5% from 1 July 2007.

• 1% will go into the worker’s Ordinary Account (OA) and 0.5% will go into the Medisave Account (MA).

This will not apply to older low-wage workers – those who earn $1,500 or less and are also above 35 years old.

Reminders for clients
For PLCs:

• Please let us know the expected date you could finalise the accounts and ready for the audit as jobs are pre-assigned in advance.

• Ensure that you have all documents ready to avoid any delay in the audit work. A list of information needed can be found in our website at http://www.tanchan-cpa.com/download.htm (under For Auditing of company, association, firm, society and enterprise, Schedules required for Audit and Tax Purposes) Audit is to examine accounts with schedules provided.

• Income tax Form C is due for submission by 31st July the following year after its YE. If ECI is submitted electronically within 3 months from the YE date, there will be an auto extension of time until 31st December to file your Income Tax Return.

• Do inform us once you know your chargeable income. 'NIL' is required for making losses.

Funding for SMEs

Over the last couple of years, many financial institutions, both local and foreign, have set up dedicated units to serve the needs of SMEs and to develop new financing tools that suit their requirements. 

The efforts of Government agencies and the Action Community for Entrepreneurship (ACE) Action Crucible for Financing – a private and public sector initiative aimed at improving SME’s access to financing , have contributed to raise the awareness of the importance of SMEs and improving the infrastructure to help SMEs obtain financing through many fixed channels.

Financing options available –

• Local Enterprise Finance Scheme(LEFS) - SPRING
• Loan Insurance Scheme (LIS) - SPRING
• SME ACCESS loan, managed by DBS – SPRING
• Business Instalment Loan – Standard Chartered Bank
• Credit Biz – Maybank
• Business Term Loan – OCBC
• UOB SME Cash – UOB

While there are many avenues for SMEs to seek financing on their own, working with Government agencies still has its benefits. Some SMEs found that testimonials or referrals by the Government helped lend credibility to their business plans.