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January 6, 2022

Singapore enacts Income Tax (Amendment) Act 2021

Executive summary

Singapore’s Income Tax (Amendment) Act 2021 (the Amendment Act) was passed by the Singapore Parliament on 5 October 2021 and gazetted on 16 November 2021.

The Amendment Act gives legislative effect to the Budget 2021 tax changes, as well as non-Budget changes arising from the periodic review of Singapore’s income tax system.

This Alert summarizes the key tax changes pursuant to the Amendment Act. Unless otherwise specified, the amendments have taken effect from 16 November 2021, i.e., the date on which the Amendment Act was gazetted.

Detailed discussion

The tax changes announced in Budget 2021 include:

  • Extending the option to accelerate a capital allowance claim over two years (i.e., 75% in the first year and 25% in the second year) for plant and machinery acquired in the basis period for the Year of Assessment (YA) 2022.
  • Extending the option to claim an accelerated (100%) deduction in one YA for qualifying renovation and refurbishment expenditure incurred in the basis period for YA 2022.
  • Expanding the scope of the Double Tax Deduction for Internationalization (DTDi) to include new categories of expenses and activities on or after 17 February 2021, such as approved virtual trade fairs, design of packaging for overseas markets, approved product or service certification to increase buyer’s acceptance in overseas markets and overseas advertising and promotional campaigns.

Some notable non-Budget tax changes are listed below.

Tax treatment of trading stock appropriated for non-trade or capital purposes and vice versa

Under the newly legislated Section 10P, when trading stock is appropriated for non-trade or capital purposes (other than for donation), the open market value of the trading stock on the date of appropriation is treated as income that is subject to tax in the YA relating to the basis period during which the appropriation occurred. For qualifying donations made to approved museums or institutions of a public character, the cost of the stock is treated as the income, such that no gain or loss arises on the appropriation.

Conversely, under the newly legislated Section 32A, where non-trade or capital assets are converted to trading stock, the open market value on that date is treated as the cost of the trading stock. Upon disposal of the trading stock, the taxable profits will be computed based on this cost.

Tax deductions for upfront lease expenses

A new Section 14ZG was enacted to allow income tax deductions for upfront lease expenses (e.g., commission fees, legal fees, stamp duties and advertising expenses) incurred by:

  • Tenants1 for obtaining, renewing or extending the lease of an immovable property used for trade or business purposes.
  • Landlords for granting, renewing or extending the lease of an immovable property used to derive passive rental income.

This takes place with effect from YA 2022, if the lease term does not exceed three years, and the lease is not under a sale and leaseback arrangement, or associated with the acquisition, sale, transfer or restructuring of any business.

Amendments to the foreign tax credit claim process

With effect from YA 2022, the time limit for the claim of a foreign tax credit (FTC) will be increased from two years to four years from the end of the YA in which the income is assessed to tax in Singapore.

In addition, a new subsection requires taxpayers to give a written notice to the Comptroller of Income Tax (Comptroller) within one year if a foreign tax authority makes a downward adjustment of the foreign tax that results in the FTC previously allowed becoming excessive. Consequently, the time limit for the Comptroller to raise additional tax assessments or for taxpayers to claim additional FTC due to adjustments in the foreign tax paid or payable is increased from two years to three years from the time such adjustments are made.

Lifting of statutory time limit in relation to advance pricing arrangements (APAs)

The statutory time limit of four years for the Comptroller to raise additional assessments is lifted for additional assessments relating to APAs concluded with foreign tax authorities, similar to those relating to mutual agreement procedures (MAP), to facilitate the implementation of the outcome of such agreements.

Increase of the maximum penalty for various non-filing and non-registration offenses

The maximum penalty has been increased from SG$1,000 to SG$5,000 for the non-filing of income tax returns and non-registration and non-filing offenses related to Automatic Exchange of Information (AEOI) [i.e., country-by-country reporting (CbCR), Foreign Account Tax Compliance Act of the United States of America (FATCA) and Common Reporting Standard (CRS)]. For each day the non-registration or non-filing offense continues after conviction, the penalty has been increased from SG$50 to SG$100 per day.

This aligns the maximum penalty with those for similar offenses under the Goods and Services Tax (GST) Act and the Property Tax Act.

Amendment to the official secrecy provision

The amendment allows for access to the Inland Revenue Authority of Singapore’s (IRAS) records and documents containing taxpayers’ information by persons authorized by the IRAS, including non-public servants such as private sector auditors and information technology consultants, to conduct audits in relation to the administration of public schemes (e.g., Jobs Support Scheme). The authorized persons are prohibited from using the data in an unauthorized manner.

Similar amendments will be legislated in the GST Act.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Solutions LLP, International Tax and Transaction Services – International Corporate Tax Advisory, Singapore

Ernst & Young LLP (United States), Singapore Tax Desk, Chicago

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago



  1. This excludes tenants that are subject to tax under Section 10E and have a proprietary interest (other than as a legal owner) in the property.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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