Lim Hwee Hua
Singapore
“Mr Chairman, Sir, I believe the Minister for Finance has actually addressed that quite adequately in the Budget Statement. I will encourage the Member to read the Hansard. As I recall, he did say that our projections for revenue have been made for the next five years and we do not target a particular source of revenue.”
“Mr Speaker, Sir, I would encourage the Member to file a question for MCYS, if she would like to discuss safeguards further. What I would comment here is that at the outset when we conceived the whole Integrated Resorts idea, there were many business risks: whether it is country risk or the timing of the business cycle and so on.”
“Mr Speaker, Sir, the supplementary questions raised by Ms Denise Phua have actually been debated to some detail under the different heads, in terms of the intended strategy – why we are having Integrated Resorts and casinos in the first place. This has been debated quite extensively by the Ministry of Trade and Industry.”
“Madam, I take the Member's point about the need for checks to be done professionally, and indeed this is the case, and that is why the officers would be sufficiently trained to conduct these checks in a professional manner.”
“The proposed amendments are necessary in order to effect the new financing framework, to allow for greater contestability to be injected into the RTS industry, as well as to ensure security and continuity of the RTS operations. Madam, I beg to move. Question proposed. 4.28 pm”
“Because of the complexity of the issues and the need for us to continue consulting other players who have already been operating in that space, as well as consulting the business community in greater detail, the study would take the better part of this year. OUTCOME OF 50PLUS EXPO 6.”
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“Finally on Miss Penny Low's cut on social enterprises, the divide is really profitability status and social enterprises are distinct from charities and must therefore be fully self-sufficient and profitable. They should not enjoy the benefits of tax exemption as charities, or be allowed to solicit tax deductible donations like IPCs. They should be subject to the same tax treatment as for-profit enterprises. As regards new legal structures which have been introduced elsewhere, these key features are already accommodated within our spectrum of business vehicles right now, ranging from a CLG to a limited liability partnership. So to conclude, Sir, we have been prudent in the management and utilisation of our resources. As a result, we have accumulated significant savings, despite the lack of natural advantages of bestowed natural resources and other conditions. We have managed these savings well, and grown this nest egg. It behooves us to continue with this discipline. We will also continue to improve in the efficiency and effectiveness of service delivery, tapping on both the private and people sector to do better. And finally, we have put in place a system to track how our public service is keeping pace with trends and meeting the desired strategic outcomes.”
“Sir, we have a whole spectrum of measures relating to vehicles. We have a mixture of upfront ownership restraint and usage restraint measures to ensure free-flowing traffic and to support environmental outcomes. Mr Edwin Khew has suggested that we should continue the CNG tax concessions till 2015. CNG vehicles, as the House may remember, have been exempted from special tax and been granted green vehicle rebates since their introduction in 2002, taking into account their cleaner PM2.5 emissions than diesel cars. And to develop the CNG refuelling infrastructure, Members will also remember that the Government has been co-funding the start-up costs of three refuelling stations. These measures are, however, designed to help kick start the introduction of the then newer-type of vehicle and are not meant to be permanent. To date, we have more than 3,000 CNG vehicles on our roads and we are expecting another two refuelling stations by the end of the year. So going forward, we will gradually reduce their tax concessions to ensure that the adoption of CNG vehicles is sustainable on its own. Fuel taxes serve, first and foremost, to price in vehicle usage. There is hence no reason to exempt CNG cars from fuel tax permanently. However, we have taken into account the difference between CNG cars and other cars with respect to the environment and therefore have introduced a rate that is at a steep discount to the equivalent rate. This rate is 20 cents as opposed to what would have been 53 cents. Just to complete the point about giving CNG car owners sufficient notice, we have therefore extended the special tax exemption for a further two years before it is removed in 2012.”
“We certainly welcome feedback and suggestions on how to improve the measures. Sir, we also agree with Mr Banerjee that we should promote IP management. We currently provide incentives for IP management activities carried out as part of a company's manufacturing trade or HQ services under the Development and Expansion Incentive. In fact, our low corporate tax rate also makes it attractive for companies to operate here and earn locally sourced income, including royalties. We agree with his suggestion to negotiate lower withholding taxes on royalties in our tax treaties. Liberalising the foreign tax credit regime may well enhance our attraction as a base to generate royalties from overseas. But we need to study this further to weigh the incremental benefits against a potential erosion of our tax base. And given that our corporate tax rate is more competitive than most places, most foreign-sourced royalties would suffer little or no further taxation here upon remittance. He has also suggested that we publish advance rulings to make our tax administration more transparent. Many of our rulings are for transactions that are unique to circumstances and there are also confidentiality concerns. Hence, it would not be tenable for IRAS to publish the advance rulings. But having said that, where ruling requests have a wider tax impact, IRAS will publish tax guides on them to further improve the transparency of our tax administration. Sir, finally, on the enhanced loss carry-back relief that he mentioned during the Budget Debate, this is a conscious policy decision because the Partial Tax Exemption is a final exemption to reduce the effective tax rate for smaller companies and is not a tax deduction. Let me now move on quickly to Mr Edwin Khew's cut.”
“Sir, Singapore agrees with the principles behind the OECD standard, which will serve to help governments address offshore tax offences in a globalised world. We will be engaging the OECD and the industry to study this OECD standard with a view to endorsing it. Next, let me move on to Mr Gautam Banerjee's suggestions. We fully agree with Mr Banerjee on the need to continue to encourage more R&D activities in Singapore. The Government has actually committed significant resources to R&D and innovation over the years. In Budget 2008, we introduced several new tax measures to incentivise companies to do more R&D in Singapore, including the 150% deduction for R&D expenditure and R&D tax allowance. All these contribute to making Singapore one of the most competitive tax jurisdictions for R&D. We also revised the definition of R&D after careful study of major jurisdictions and several rounds of industry discussion and public consultation. In fact we have a lower bar for activities that qualify as R&D for tax purposes; for example, the UK and Australia require an advancement in the body of scientific or technological knowledge while we only require novelty or technical risk. However, we should not set the threshold too low to include activities that businesses would ordinarily do to improve their products and processes. For example, if someone were to change the colour of ties that Mr Banerjee prefers, that process cannot be considered R&D, even if Mr Banerjee were to buy more ties. But if there is a novel way of producing coloured ties arising from systematic investigation and experimentation, that would be a different matter. Nonetheless, these tax measures are new and we will monitor them and evaluate their effectiveness.”
“Mr Inderjit Singh considers our corporate tax rate cut of 1% point from Year of Assessment 2010 a good move but is concerned that some countries may perceive Singapore as a tax haven. Sir, Singapore is certainly not a tax haven. Singapore is a "low-tax" – rather than a "no-tax" – jurisdiction. At 17%, Singapore's corporate tax rate is competitive, but by no means among the lowest in the world. For the record, Bulgaria's tax rate is 10%; Ireland's, 12.5%; and Romania's, 16%. Tax havens are typically dependent on "mail-box" companies. Singapore is, on the other hand, a substantive, knowledge-based economy in both manufacturing and services. Companies, both foreign and local, run real operations in Singapore that compete globally on the basis of value. Any objective observer knows that this is not a mail-box economy. Singapore also enjoys a good reputation as a trusted business and financial hub, with a strong rule of law. We do not stand for abuse of our laws to shelter criminals, including those engaged in offshore tax offences. Unlike tax havens, we have an extensive network of 60 Avoidance of Double-Taxation Agreements (or DTAs), and through this network, Singapore is able to provide assistance to foreign investigations of tax offences. We regularly review our regime to ensure that Singapore remains a trusted financial centre and a responsible low-tax jurisdiction. One area currently being reviewed is the standard of the exchange of information for tax treaties. The Organisation of Economic Cooperation and Development (or OECD) established a standard in 2005 for transparency and effective exchange of tax information. This standard has just been endorsed in October 2008, by the UN Committee of Experts on International Cooperation in Tax Matters.”
“And we are also allocating $70 million to catalyse close collaboration with the private sector through the programme called "Call-For-Collaborations" on the development of new capabilities. As I said, in addition to the several measures mentioned in the Budget to enhance business cashflow, Government, as a consumer of goods and services, is also doing its part to improve the suppliers' cashflow by making prompt and more frequent payments to suppliers, and by lowering the amount of security deposits for all tenders. Mr Inderjit Singh also asked about the reassessment of property values and the review of rental rates for commercial and industrial properties, which will help to reduce business costs. Sir, the Annual Value (or AV) of a property is assessed based on the prevailing market rentals for comparable properties. For 2009, IRAS will prioritise re-assessment of the properties that have seen the largest rental declines and where the market rentals have dropped below their AVs. More details will be given in due course. As regards rental rates, as a policy, MOF requires all Government premises to be rented out at market rates. This is to avoid distorting the property market. Rentals are therefore set based on prevailing market rates assessed by qualified valuers engaged by the relevant Government agency at the grant of a new tenancy, renewal of a tenancy or at pre-determined points in a lease contract. MOF does not intervene in the setting of these market rates. Sir, now let me move on to the role of our tax policies in enhancing our competitiveness. I welcome the suggestions from Members on how we can further enhance the competitiveness of our tax regime. I will address the specific points made by Members.”
“Tenders are therefore awarded on the basis of greatest benefits to cost. To help local companies, the solution is not to tilt the playing field by diverting purchases to local enterprises as this may, in fact, stymie their growth over time. To enable SMEs to participate easily in Government tenders, MOF removed the track record requirements for registration as a Government supplier in GeBIZ back in November 2004. Further, MOF has been providing the first GeBIZ account free-of-charge since 2005. To assist our local enterprises in this current downturn, Government is lowering business costs through the Jobs Credit and the enhanced access to bank lending with the Special Risk-Sharing Initiative. In addition, the Government has also undertaken measures along two fronts. First, by providing pipeline of public sector demand for goods and services and enabling companies to build capacity; and, second, by helping businesses with their cashflow. 2.45 pm As announced, some $18 billion worth of construction contracts will be awarded this year. Some $1.3 billion worth of smaller construction contracts, each worth up to $50 million will be advanced. Construction projects are, by nature, big ticket items. Nonetheless, public sector procurement of IT and other goods and services have also exceeded $3.5 billion annually since FY2006. And this trend will continue in FY2009, hence providing many business opportunities for the smaller companies. The Public Service Innovation Framework has been in place since 2008 to provide seed funding for R&D in areas or with applications that could offer innovative solutions to the public sector.”
“Let me just recount a few. They include: The Economy Drive and the Cut-Waste Panel. Since 2003, the Economy Drive has helped instil a mindset in public officers to use resources prudently while the Cut-Waste Panel has provided a channel for the public to give their feedback on Government spending. For example, as Mdm Halimah would be pleased to know, Government agencies were reminded in October 2008 to produce their annual reports in a cost-effective manner. Next, land and building resources. All Ministries and agencies are responsible for the effective management of land and buildings allocated to them. MOF and MinLaw have put in place various measures to ensure this, such as the Office Space Management Framework. And finally, Demand Aggregation (DA). This initiative pools together similar purchases across agencies for economies of scale, for example, in the supply of office furniture. Mr Baey Yam Keng's suggestion of "pseudo dollars" during the Budget Debate is a noteworthy one. We have, in fact, instituted such a practice of encouraging agencies to share and optimise the use of their resources, for example, co-locating community centres and libraries. To facilitate this, we also allow Government agencies to retain the revenue for such transactions through an inter-department charging mechanism, and this impacts their budgets in real terms. Sir, Mr Inderjit Singh asked whether Government could provide more business opportunities for local companies, especially the SMEs, through its procurement activities. The Singapore Government procurement regime is an open one, based on the principles of fairness, transparency and value-for-money. Consistent with Singapore's commitment to the WTO rules, we do not discriminate nor favour any supplier.”
“Firstly, there are budgetary mechanisms in place to ensure effective and efficient allocation of resources within Government. MOF scrutinises the project requirements of major capital projects to assess the worthiness of the projects and ensure that they adhere to appropriate cost norms. The cashflow for these projects are budgeted and planned for on a multi-year basis. Ministries decide on the phasing of projects based on the availability of budget and on the benefits and need for the projects. MOF monitors the progress of the ongoing projects annually. Value-for-money reviews are also carried out periodically. Secondly, we will maintain the Manpower Management Framework to ensure that Government headcount does not grow faster than the growth in the resident labour force over the medium term. The advancing of hiring plans will not lead to long-term over-manning of public sector agencies as these are intended for projects that were held back due to insufficient manpower resources, as well as to, as I have said earlier, build up additional and new capabilities in areas such as healthcare and education. During the Budget Debate, Dr Loo Choon Yong has suggested that these new jobs be outsourced. Under the bestsourcing framework, functions that are assessed to be strategic in nature will be performed within the Government agencies, while non-strategic functions would be market-tested, and outsourced to external service providers if doing so provides better value-for-money for Government. As a consumer of goods and services, we agree with Mdm Halimah Yacob's view that the Government should always use its resources efficiently. Over the years, we have introduced initiatives to streamline Government processes and to minimise wastage across the public sector.”
“Several other new projects are in progress and will reap more savings when completed. There are also more organised feedback platforms, such as: Firstly, the Pro-Enterprise Panel which works closely with the business community to foster a conducive business environment. Secondly, there is REACH (Reaching Everyone for Active Citizenry@Home) which uses a broad array of both mainstream and new media channels to engage citizens from all walks of life. Sir, our efforts at public service delivery have not gone unnoticed. Singapore was ranked the world leader in customer service maturity in the 2007 Accenture study on Leadership in Customer Service. Singapore was also ranked top in terms of ease of doing business in the World Bank 2009 report. Sir, internally within Government, we need to continue maintaining fiscal prudence over expenditure even as we assist businesses during this downturn. Our philosophy of fiscal prudence has enabled us to build up our reserves in years of feast so as to be able to respond speedily to any crisis, such as the one we are experiencing right now. We therefore agree very much with Mr Inderjit Singh that we need to be mindful not to overspend even as we have an expansionary budget. I would like to clarify that we have taken the opportunity offered by this downturn to bring forward worthy Government construction projects, and to advance our manpower hiring plans. The needs of these initiatives are clear and already planned for to build up our capacity and invest in new areas of need, and not to boost demand for its own sake, as that would be wasteful. The Government has in place a number of mechanisms to ensure it stays lean and efficient.”
“These include enquiry of Employment Pass and Work Permit status for businesses, JOBSlite portal for unemployed workers and information on weather and traffic for the general public. The Government is mindful that a small segment of the society may be less Internet-savvy or may not have Internet access. Hence, we have also introduced CitizenConnect Centres to complement the online service channels. There are currently 28 such centres, conveniently located across the island, and serving more than 100,000 individuals each year. Sir, MOF has a framework to identify key areas for integration and provides funding incentive to agencies to share facilities and processes for areas like HR and Finance systems for Government agencies. So far, 11 statutory boards have come together to share a system that will allow them to reap economies of scale through standardisation as well as a sharing of best practices. The Civil Service College also provides courses to equip public officers with the right skills and mindset to bring about inter-agency collaboration. To do our jobs better, Government agencies also regularly obtain feedback on their service delivery, as suggested by Mr Seah Kian Peng. These agency-level channels include emails, direct correspondence, service counters and hotlines. To measure the effectiveness of public service delivery, we conduct an annual customer satisfaction survey. In 2008, nine in 10 respondents were satisfied with the overall level of our e-services and would recommend others to transact with the Government through e-services. In terms of integration within Government, 16 multi-agency projects were implemented in FY2006-FY2007, with a total projected savings of $21 million.”
“Sir, let me next move on to talk about how the Government will continue to ensure effective service delivery to the public and businesses, which is a key thrust. I thank Ms Jessica Tan for her comments on this. One of the key delivery programmes is the iGov2010 Master Plan, which is a public sector wide effort spearheaded by MOF that enables us to harness innovation and technology to bring about an Integrated Government (or iGov) that better meets the needs of the public. Almost all Government services are now available online, 24/7, and are easy to use, responsive and integrated. Members would be familiar with the following examples: (a) Taxpayers would have appreciated the ease at filing their tax returns, including the recently introduced No-Filing Service, and close to half a million taxpayers will benefit from this. (b) CPF members can readily obtain their account balances, transaction and contribution history at the click of a mouse, using personalisation features at myCPF portal. (c) Businesses can access Government services online through one-stop portals. For instance, ACRA's (Accounting and Corporate Regulatory Authority) BizFile system enables the public to register a new business or incorporate a company in 15 minutes. (d) And, more recently, the Government has introduced the Unique Entity Numbers to standardise identification numbers used by some 52 Government agencies. Feedback has so far been positive. That is not all. The Government will continue to leverage on technology to further enhance access to Government e-services in an integrated manner. For instance, Web-on-the-go will put some 40 Government e-services onto a one-stop menu on mobile phones; making it easy and convenient for transactions on-the-move.”
“What one Ministry or agency does could enhance or negate what another does. It is in this context that I would like to address some Members' views concerning the performance of the public sector. Mr Inderjit Singh and Mr Seah Kian Peng have commented on the need to review the performance of Ministries. MOF has been working with Ministries to move towards reporting outcome-oriented indicators. This will enable MOF to see how well Ministries' key programmes are doing, and whether the identified objectives are aligned with national priorities. MOF has been engaging Ministries to identify key strategic outcomes that the Government desires and which Ministries would share. These strategic outcomes have been set out clearly in a Whole-of-Government Strategy Map. As a next step, we will work on how clusters of Ministries and agencies that contribute to or are influenced by the various strategic outcomes can better optimise their work on the Whole-of-Government basis. Sir, MOF intends to introduce a Singapore Public Sector Annual Report (or SPAR) in 2010, which would provide an overview of how well the public sector would be moving towards the identified strategic outcomes across the key sectors to be shared and achieved by the different Ministries. The strategic outcomes at the Whole-of-Government level to be tracked in this Annual Report would influence the key outcomes and objectives of all Ministries and departments. Hence, this Annual Report would encapsulate the basis for cascading the high-level outcomes and targets down to departmental, unit and individual levels. Such a report would also be useful to the identification of trends and issues that need focus or resolution vis-a-vis the strategic outcomes over time.”
“It was our position then, and it remains so, that Temasek will continue to own shares or even increase its shareholding in local companies as long as it makes commercial sense, and to only divest those that are no longer relevant to its mission. 30 pm It is unwise for the Government to alter the philosophy regarding investments by Temasek and its investee companies simply in response to fluctuating market conditions or other temporary factors. As a long-term investor, Temasek would need the assurance in the constancy of policies which would impact its strategy as well as its credibility in the markets. Temasek and its investee companies should therefore continue to operate commercially, without interference from the Government. If Temasek is asked to undertake a national agenda, it would, in fact, validate some of the concerns over Sovereign Wealth Funds having political objectives, and may ultimately impede Temasek's ability to participate in investments internationally. However, this does not preclude Temasek nor its companies from making their own decisions to increase their exposure locally where there are attractive opportunities. In fact, from time to time, Temasek has made new investments in Singapore. Sir, let me now move on to the Whole-of-Government Performance. Even as the Government focuses on assuring funding from investment income, it is just as important for us to monitor the public sector's performance at the Whole-of-Government level for fiscal prudence over expenditure. At the same time, we need to take a proactive approach to enhancing our service delivery to citizens and businesses. The performance of the public sector as a whole is becoming increasingly important as issues become more intertwined and complex.”
“However, Statutory Boards are allowed to accumulate surpluses from operational savings to serve as working capital as well as funds for capital expenditure. The bulk of these retained surpluses are placed as fixed deposits. And consistent with their cashflow needs, Statutory Boards have on average less than 10% of their exposure to equity markets. Sir, let me now move on to the role of Temasek and GLCs. During the Budget Debate, Mr Zaqy Mohamad has suggested that the Government should have influence over the decisions of Government-linked companies that impact our social compact. Mr Inderjit Singh had also suggested that Temasek could be tasked to rescue local companies and re-focus on Singapore. Sir, we have to maintain a clear and consistent mandate for Temasek. Temasek’s investments are made on a purely commercial basis. For the Government to micro-manage or direct Temasek or its investee companies to invest so as to fulfil some non-commercial objective would detract from the focus on maximising shareholder returns. This would also impose unfair obligations on the respective Boards of Directors, who have the fiduciary duty to act in the companies’ interest. Mr Inderjit Singh suggested during the Budget Debate that Temasek could be tasked to rescue local companies and re-focus on Singapore. Members, including Mr Inderjit Singh himself, will remember that repeated calls have been made in the past that, as a matter of principle, Government should reduce its involvement in business and divest its stakes in local companies. We did not agree then.”
“As the Minister for Finance mentioned during the Budget Debate, the Government is confident that the prudent management of our reserves – as a long-term investor in the global markets – will continue to grow our reserves, and yield us a steady stream of Net Investment Returns Contribution over time. On the issue of liquidity, I would like to assure Mr Inderjit Singh and Ms Sylvia Lim that the Government has studied the issue of liquidity before embarking on the NIR framework. Realised capital gains, dividends and interest payments from our investment entities are but one source of liquid funds for spending. Besides our usual revenue streams, our diversified portfolio of investments includes substantial holdings in cash and highly-liquid fixed income instruments, which we can tap on for our liquidity needs. Mr Inderjit Singh has also asked how the long-term expected real rates of return have been worked out in the first year. Sir, the process has been thorough and rigorous. The Boards of MAS and GIC have certified to the Government the expected rates of return to be applied on their respective assets, based on established methodologies in the industry and taking into consideration the latest investment outlook. The Government has studied this carefully and agreed with the Boards’ recommendations, and has proposed these rates to the President. The President, after consulting the Council of Presidential Advisers (or the CPA), has concurred with the proposed rates. Mr Inderjit Singh asked how the economic crisis has affected the funds managed by the Statutory Boards. Let me just clarify that the Government does not rely on returns from Statutory Boards for expenditure.”
“There is a common misconception that the diminution in value or capital losses on our reserves mean a similar depletion of funds for Government spending. When the markets boom, and capital values rise, this does not lead to a surge in funds available for Government spending. Likewise, the drop in capital values owing to a market downturn does not mean a large decline in funds available for Government spending, as Mdm Ho, Mr Liang, Ms Sylvia Lim and Mr Inderjit Singh might have feared. The amount which the Government may spend under the Net Investment Returns (or NIR) framework incorporates the expected annual returns over a 20-year horizon for assets invested by GIC and MAS, not the actual year-on-year returns. By design, this reduces the volatility introduced to the Government’s Budget from fluctuations in the NIR contribution although it does not eliminate it entirely. As a result of the downturn, the value of the asset base would invariably be smaller. However, it does not mean that NIR would fall by the same magnitude as the reduction in asset values. This is because the asset values are smoothed over the years, precisely so as to avoid volatility in NIR – in other words, to avoid a boom-bust pattern in Government spending as a result of swings in capital asset values and in the asset markets. This is similar to the methods employed by several other major endowments. Sir, it is too premature to indicate the quantum of the investment returns that can be taken into the Budget for the next few years, taking into account the value of the asset base.”
“This is not the first major decline in markets that they have seen, and will certainly not be their last. Sir, the last 20-year period to date has had its fair share of boom and bust. For example, in 1998 at the depth of the Asian Financial Crisis, the year-on-year decline in the STI index was at one point 56%. During the dot com bust of 2000/2001, the fall in MSCI (World) index was around 30% year-on-year. In all these situations, GIC and Temasek experienced significant reductions in asset values. In spite of these market gyrations including the current downturn, for the 20-year period to late 2008, Temasek had achieved annualised returns of about 13%. GIC, which has a diversified and more conservative portfolio, has also had creditable returns over the 20-year period. GIC would release its 20-year performance ending March each year. To recap, as at March 2008, the 20-year average return was 5.8% in nominal Singapore dollar terms. The figure for March 2009 would have fallen as a result of the decline in 2008, but will not be sharply down. Temasek and GIC are long-term investors, and should be evaluated as such. GIC and Temasek have the ability and resources to weather the ups and downs, over multiple economic and market cycles. They do not have to sell in panic in a market downturn and are in fact in an advantageous position to invest in good quality assets at prices that are attractive from a long-term perspective during a downturn. The Government is confident that they will continue to deliver good long-term returns within the risk limits set. Sir, now let me move on to the impact of changes in value of reserves on the Government budget.”
“Mdm Ho has also asked if the recent investments by GIC and Temasek in financial institutions are safe. On Mdm Ho’s question, let me reiterate my reply to a Parliamentary Question filed earlier that it is not the Government’s practice to discuss the performance of individual investment deals. It is in the nature of investments that some will lose money while others will make money. The key is to weigh the risk of each investment against its potential return, and to balance it against other holdings, so that the portfolio will do well on an overall basis. This is how the Government assesses and holds the investment entities accountable for their performance. With regard to how the portfolio as a whole has performed, like what I had mentioned in a reply to another Parliamentary Question last week, while GIC’s investments have diminished in value just like any other institutional investors’, it has fallen by much less than the decline in global equity markets indices of 42% for 2008. As for Temasek, which has more than two-thirds of investments in Singapore and Asian countries, its net portfolio value at 30th November 2008 was S$127 billion, or a decline of about 31% from the value of S$185 billion as at 31st March 2008. This is less than the corresponding declines in the MSCI (Singapore) of 44% and the MSCI (Asia ex Japan) of 45%, both in Singapore dollar terms over the same period. Sir, let me now make two key points regarding the performance of GIC and Temasek: first, what the current downturn implies for GIC and Temasek as long-term investors; and, second, the impact of swings in the value of reserves on funds available for the Budget. Temasek is a long-term equity investor and GIC is a long-term diversified investor.”
“For GIC, the Government sets the risk tolerance limits and gives it a mandate to invest to enhance the global purchasing power of the funds under its management. Temasek’s mission is to create and maximise shareholder long-term value. Mr Liang asked whether MOF would review the overall portfolio risk that GIC and Temasek would be taking going forward. The Government reviews the risk limits from time to time. The current portfolio risk limits are not aggressive, and are consistent with our overall objectives of our reserves to provide a key defence in times of crisis and a continuous stream of income for the current and future generations. But I would like for us to guard against knee-jerk reactions. We set the long-term risk and return objectives, and leave it to the investment professionals to do their job in this complex environment. Dr Loo Choon Yong, however, made a valid point during the Budget Debate that a robust risk management framework is crucial to reducing or mitigating the possibility of unforeseen risk exposures. I would like to assure Dr Loo that proper and sound risk management and governance systems, structures and processes are well in place in both GIC and Temasek. Both GIC and Temasek have their own dedicated risk management teams that regularly monitor the risk exposure of investments. The Government conducts regular reviews with GIC and Temasek on the performance of their overall portfolios. The Boards of GIC and Temasek are ultimately responsible and accountable to the Government for the investment oversight and management of risk. Mr Inderjit Singh asked how the current financial crisis has affected the performance of our two Sovereign Wealth Funds and our reserves.”
“The approach we have taken is one of ensuring that our reserves continue to grow in line with the size of our economy, by tapping on the returns from the investments judiciously, exercising fiscal prudence and augmenting our reserves in good times. In this way, whatever the crisis – natural calamity, epidemic, war, or economic catastrophe – we would be better able to deal with the damage and recover more quickly to the situation before the crisis. Mdm Ho asked why GIC had now increased its asset allocation for higher risk and higher return investments when it had not done so before. GIC’s asset allocation strategy has evolved gradually over the years as its asset base grew and GIC developed its capabilities. GIC started out with a high allocation towards the lower-risk fixed income instruments, but has, over time, diversified portfolio risk across a wider range of asset classes. This enables GIC to achieve higher sustainable long-term returns, while keeping to an acceptable risk level. I would like to assure Mdm Ho that consideration of market conditions figures prominently in the actual execution of GIC’s investment strategy. In fact, in 2007, GIC’s concerns about the likelihood of market dislocations led it to decide to reduce its exposure to public equity markets in favour of cash. GIC closely monitors and analyses the global environment and capital market behaviour, and takes into consideration liquidity and capacity issues, as well as shocks and events that may impact the portfolio. Sir, Mr Inderjit Singh asked whether there is a mandate from the Government on the expected return and risk profile of GIC and Temasek. Indeed so, the Government sets the overall returns objective and risk threshold for our reserves.”
“Sir, let me first thank the hon. Members for their comments and suggestions, and given the constraint of time, I shall endeavour to elaborate on the policy intent and address as many specific comments as possible. The issues that Members have raised reflect the challenges we face in this unprecedented economic crisis and centre around three broad areas of concern: (i) the impact of the crisis on our reserves and investment returns; (ii) how the Government would maintain fiscal efficiency and measure the effectiveness of its programmes; and (iii) suggestions on how we can enhance the competitiveness of our tax regime, and how we can leverage on it to achieve social and environmental policy objectives. I will address each of these three areas, as well as related issues that several Members have raised during the Budget debate last week. Firstly, the impact of the economic crisis on our reserves and investments. Mdm Ho Geok Choo asked about the size and sufficiency of our reserves. Likewise, Mr Inderjit Singh is concerned whether we are fast depleting our reserves and whether we would be able to tap the amounts needed under the new Net Investment Returns (or NIR) framework. During his Budget Debate Round-up Speech, the Minister for Finance has assured the House that we have built up substantial financial reserves, with assets far in excess of our liabilities. Sir, as we have explained many times in this House, we do not disclose the size of our reserves. It is not in our national interest to do so. Market players have had their own various estimates, and they do not doubt that the Government has substantial resources. Mr Liang Eng Hwa wanted to know if there is an ideal size of reserves we should build up.”
“When ready, we would make an announcement on how we intend to proceed with the project.”
“Sir, I understand what the Member might be concerned with. Ultimately, the Government would track all the entities that are directly accountable to it. As for the companies that are the subsidiaries of the holding companies, then the boards and the management teams would be held accountable and the Government would expect them to do the appropriate due diligence, have the understanding and the risk assessments, before they take on these investments. KALLANG SPORTS HUB (Assistance for consortium given project delay) 4. Mdm Ho Geok Choo asked the Minister for Community Development, Youth and Sports given the strategic aim of the Kallang Sports Hub project to broaden future growth and employment opportunities for Singaporeans, whether the Government will prevent any further project delays and make credit more readily available to the Singapore Sports Hub Consortium. The Minister of State for Community Development, Youth and Sports (Mrs Yu-Foo Yee Shoon) (for the Minister for Community Development, Youth and Sports): Mr Speaker, Sir, the Sports Hub Project is a public-private-partnership (PPP) project, where the consortium that has been awarded the project would tap on the financial markets to provide the necessary funds to build the infrastructure and carry out the programming. The Government would, in turn, pay the consortium for delivering and operating the facilities, through annual payments over a five-year period. Given the current conditions in the financial markets, the consortium has found it difficult to raise the necessary amount of funds to start the project. The Government is in active discussion with the consortium to address this and options on how to move the project forward. Discussions are still on-going.”
“Mr Speaker, Sir, I do not know specifically what the Member is referring to but I would give him the assurance that this is done on an annual basis and in full compliance with the accounting standards, which are established against international benchmarks. The accounting profession keeps pace and reviews the assessment of the different contingent liabilities. Any new revisions would be watched carefully by us and adopted, where appropriate. So where there are new developments, which have been accounted for or adopted by other jurisdictions, we in Singapore would, likewise, follow very carefully whilst at the same time, we would do our own assessment as well. Dr Loo Choon Yong: Will the Senior Minister of State please look deeper into this because there are situations that she mentioned – guarantees and all that – which are known liabilities? But very often, when people hedge with the intention of protecting their positions they actually end up with open positions. Big companies' operations, seasoned investors in the region, have gone into these sorts of situations and got their fingers burned, where they lost more than the principal. They are indebted because of the position that they have taken and these are open positions. For example, products like –”
“The Ministry of Finance (MOF) monitors the financial position, including any contingent liabilities, of all Ministries and Organs of State, statutory boards, as well as holding companies which are owned directly by the Government. MOF compiles annual returns from all Ministries and Organs of State on any guarantees they have provided, promissory notes issued, outstanding contributions to international organisations, as well as statutory obligations under the Acts. Any guarantees provided by the Government must be approved by the President. MOF also requires all statutory boards to submit their annual audited financial statements. Any contingent liabilities of the statutory boards would either be provided for in these financial statements or disclosed within the notes to the financial statements. These financial statements are presented to Parliament. As for the holding companies which are owned directly by the Government, they are managed independently by their respective boards. As with the private sector, these companies submit to its shareholder, in this case the Ministry of Finance, regular reports on its financial position and performance, including contingent liabilities, if any. MOF does not micro-manage the liabilities or contingent liabilities of the companies.”
“Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$3,717,500", "$312,000", "$4,040,000", "$1,414,000" and "$89,000" in the second column and substituting for them the figures "$3,137,700", "$69,000", "$3,823,400", "$2,015,300" and "$598,400" respectively.”
“Mr Speaker, Sir, I beg to move, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$3,717,500", "$312,000", "$4,040,000", "$1,414,000" and "$89,000" in the second column and substituting for them the figures "$3,137,700", "$69,000", "$3,823,400", "$2,015,300" and "$598,400" respectively. Sir, for Class I expenditure, I propose a provision of $3,210,300 which is a reduction of $822,800 from the approved FY 2008 expenditure. This is mainly due to a decrease in the Privy Purse and a reclassification of the expenses for ceremonies and celebrations hosted by President from Class I expenditure to Class III expenditure. For Class II expenditure, I propose a provision of $3,823,400 which is a reduction of $216,600 from the approved FY 2008 expenditure due to lower bonuses paid out to staff as a result of the economic slowdown. For Class III expenditure, I propose a provision of $2,015,300 or an increase of $601,300 over the approved FY 2008 expenditure. This is mainly due to the reclassification of the expenses for ceremonies and celebrations hosted by President to Class III expenditure, as mentioned earlier, and an increase in maintenance and IT contract costs. For Class IV expenditure, I propose a provision of $598,400 or an increase of $509,400 over the FY 2008 expenditure. The higher provisions are mostly due to replacement of two State cars and a new document repository. It is therefore necessary to vary the provisions in the Schedule to the Civil List and Pension Act (Chapter 44), as indicated in the motion before the House. Sir, I beg to move. Question put, and agreed to.”
“Mr Speaker, Sir, I would just like to repeat my answer. Should we enhance the tax incentives, they will be contained in the Budget. EMPLOYMENT FOR CONTRACT AND PART-TIME WORKERS (Compliance by employers) 16. Mdm Halimah Yacob asked the Acting Minister for Manpower what measures are in place to ensure that employers comply with the basic terms and conditions of employment stipulated under the Employment Act for contract and part-time workers and that these workers are paid CPF.”
“50) to align all three legislations on the governance of aircraft object leasing and financing, so as to avoid any conflict between the unique provisions of the Cape Town Convention and Aircraft Protocol and those of existing laws. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua]. Bill considered in Committee. [Mr Speaker in the Chair]”
“First, the Cape Town Convention and Aircraft Protocol set out an array of remedies available to the creditor when a debtor defaults or in the event of debtor insolvency. We intend to choose to dispense with the requirement for the creditor to seek leave of court when exercising such remedies. This manner of 'self-help' will give financiers the maximum degree of assurance of their ability to recover possession of an aircraft object following a debtor default or upon the commencement of insolvency proceedings on the debtor. But there will be safeguards in the form of specific procedures which the creditor will be required to follow in order to prevent abuse of such an arrangement. These are spelt out in the relevant sections of the Cape Town Convention and Aircraft Protocol, and will be further expanded in subsidiary legislation to this Bill in due course. Second, under the Cape Town Convention and Aircraft Protocol, we will declare that non-consensual rights or interests will have priority over any registered international rights. Essentially, we want a right or an interest in an aircraft object that is recognised and enforceable under Singapore laws to have priority over a registered international interest in that same aircraft object. Mr Speaker, Sir, this Bill seeks to give effect in Singapore to the Cape Town Convention and Aircraft Protocol. Apart from providing for the Cape Town Convention and Aircraft Protocol to have the force of law in Singapore and for the making of regulations as are necessary or expedient, the Bill makes certain consequential amendments to the Bills of Sale Act (Cap. 24) and the Companies Act (Cap.”
“Third, an electronic International Registry is established for the registration of international interests which gives public notice of such an interest to third parties and protects the priority of the holder of that interest in insolvency proceedings against the debtor. Interested parties may now search and obtain information on who has security interests in such aircraft objects. Importantly, the creditor with a duly registered interest is now able to preserve his priority against subsequently registered interests or unregistered interests as well as the debtor's insolvency administrator. Sir, in effect, such a legal regime gives intending creditors greater confidence in their decision to grant credit on highly mobile capital-intensive assets. It enhances the credit rating of equipment receivables and reduces borrowing costs to the advantage of all interested parties. Singapore's accession to the Cape Town Convention and Aircraft Protocol would facilitate the financing of aircraft objects here by providing greater legal predictability and assurance of lower risk. These would directly translate into lower lending costs and better lending terms. Notwithstanding the current downturn, in the longer term, we would benefit from opening the local aircraft financing and leasing industry to a growing global market in other Contracting States. Mr Speaker, Sir, the Cape Town Convention and Aircraft Protocol are flexible in allowing variation in some of their provisions which Contracting States must decide upon and choose by making the necessary Declarations when acceding to the Treaties. I would like to elaborate on the key provisions which Singapore intends to vary.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, Singapore intends to accede to the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment. The two Treaties are commonly referred to as the Cape Town Convention and Aircraft Protocol. The Cape Town Convention and Aircraft Protocol establish an international legal regime to facilitate aircraft-asset leasing and financing. They aim to overcome the problem of obtaining secure and readily enforceable rights in aircraft and aircraft equipment or what are collectively known as aircraft objects. Such aircraft objects are items of high-value, yet are mobile and without any fixed location. By establishing a harmonised, transparent and efficient legal framework governing such transactions, they create greater certainty amongst intending financiers as to the efficacy of their rights. This helps to lower the risks and, therefore, costs of lending. Sir, let me highlight the key features of the Cape Town Convention and Aircraft Protocol. First, they provide for the creation of an international interest in aircraft objects which is recognised in all Contracting States. This facilitates the securing and enforcing of rights in aircraft objects in the Contracting States which now share a common legal framework in this respect. Second, a set of rules are laid down to govern speedy relief pending final determination of a creditor's claim, and the priority of competing interests and assignments of such interests in aircraft objects. At the same time, there are safeguards for debtors to ensure that remedies are exercised in a commercially reasonable manner.”
“– [Mrs Lim Hwee Hua]. Bill considered in Committee. [Mr Speaker in the Chair]”
“With this amendment, professional practices that are registered as businesses (sole proprietorships or partnerships) will be required to register with the Registrar, if so prescribed by the Minister. This will facilitate a consistent treatment for professional practices across the various legislations. Enforcement of injunctions granted under the Trade Marks Act In 2005, the Companies Act was amended to allow the Registrar to direct a company to change its name if the use of the name has been restrained by an injunction granted under the Trade Marks Act. Clause 4 of the Bill amends section 13 of the Business Registration Act to allow the Registrar to do likewise for business names, bringing the Business Registration Act in line with the Companies Act. Sir, let me now go on to the other amendments. Clause 6 repeals and re-enacts section 29 of the Business Registration Act such that the sum to be collected for compoundable offences will not exceed half of the amount of the maximum fine that is prescribed for the offence, or $5,000, whichever is the lower. This is to align the section with the equivalent provisions for the composition of offences in the Limited Liability Partnerships Act and the new Limited Partnerships Act. The rest of the amendments are of a technical nature. Mr Speaker, Sir, these amendments will bring the Business Registration Act in line with other existing legislation, such as the Companies Act. This is consistent with our policy to provide a more efficient means of registering businesses and a more conducive regulatory environment for businesses. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill seeks to amend the Business Registration Act to allow the Registrar to: (a) register certain professionals or professional firms which are currently exempted from registration; (b) facilitate the enforcement of injunctions granted under the Trade Marks Act; and (c) to make certain miscellaneous and technical amendments. The Business Registration Act provides the basic regulatory framework for unincorporated businesses, such as sole proprietorships and partnerships. The proposed amendments in the Bill will update the legislation and harmonise certain provisions of the Business Registration Act with the equivalent provisions in the Companies Act. Sir, I shall now go on to highlight the main amendments proposed in the Bill. Registration of professionals and professional firms Clause 3 of the Bill amends section 4 of the Business Registration Act to empower the Minister to make regulations to prescribe any person or class of persons to which the exemption under section 4(1)(g) will not apply. Currently, section 4(1)(g) exempts professionals and professional firms from registering under the Business Registration Act if they carry on business which under the provisions of law can be exercised only by those who possess certain qualifications prescribed by law. Examples of such professional businesses include law firms, doctors and architects. However, professional practices set up as corporations or limited liability partnerships are required to register with the Accounting and Corporate Regulatory Authority (ACRA) under the Companies Act and Limited Liability Partnerships Act respectively.”
“Other provisions in the Bill Finally, the Bill provides for consequential and related amendments to the Income Tax Act and the Goods and Services Tax Act. Given that an LP is not a separate legal entity, the tax treatment of the LP for income tax and GST purposes would follow the tax treatment of general partnerships. Sir, the creation of the LP business vehicle will increase the options available to businessmen and investors, and is consistent with our overall policy to make Singapore a conducive place for business. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua]. Bill considered in Committee; reported without amendment; read a Third time and passed.”
“The First Schedule of the LP Bill sets out a list of "safe harbour activities" which are activities that a limited partner can undertake that will not be considered nor construed as "participation in management". The Minister for Finance is empowered, under clause 43 of the Bill, to amend the list through subsidiary legislation. Flexibilities and safeguards in the LP Bill Limited partners are not required to disclose the capital contributions made at the point of registration, and they are also allowed to withdraw their capital contributions under clause 7 of the Bill. This is because creditors would generally look towards the general partners of the LP to fulfil all the debts, liabilities and obligations of the LP. To minimise abuse and protect the LP's other stakeholders, clause 16 of the Bill requires the name of an LP to contain the words "limited partnership", or the acronym "LP", so that the status is clear to those who transacts with it. While an LP is not required to file its accounts or have them audited, clause 27 of the Bill requires it to keep proper accounting records that will enable true and fair financial statements to be prepared and audited if deemed necessary. In addition, while limited partners are allowed to withdraw their capital contribution, this is subject to a claw back of the distribution received from the LP if the general partners are bankrupt at the point of distribution, or will become so as a result of the distribution and the limited partners have knowledge of this. The claw back requirement under clause 7 of the Bill will only affect the distributions paid out one year prior to the bankruptcy of the general partner(s).”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill before the House seeks to introduce a new business structure called Limited Partnership, or LP in short. The LP is a well-established concept in other leading jurisdictions and is most commonly used in the types of businesses that focus on a single or limited term project. They are also useful in "labour-capital" partnerships, where one or more financial backers prefer to contribute money or resources while the other partner performs the actual work. The introduction of LPs will enable Singapore to better meet the diverse business needs and offer entrepreneurs and investors an additional form of business structure to choose from. Guiding principle In coming up with the Singapore LP structure, we took reference from the US Delaware model, the Jersey model as well as the UK model, and were mindful of the need to be both pro-business and to safeguard the interests of potential creditors and partners. General features of an LP Sir, allow me to elaborate on the general features of an LP. Clause 3 of the LP Bill requires that every LP shall have at least one general partner and one limited partner at the point of registration. The LP and its partners must be registered with the Accounting and Corporate Regulatory Authority. The general partners of an LP are, in all major aspects, in the same legal position as partners in a conventional partnership. They have management control and have joint and several liability for the debts of the LP. The limited partners' liability is limited to the extent of their investment in the LP. They cannot participate in management; otherwise, they would lose their limited liability protection.”
“Sir, I beg to move, In page 2, line 27, to leave out "53(b)", and insert "53(a)". Amendment agreed to. Clause 1, as amended, ordered to stand part of the Bill. Clauses 2 to 57 inclusive ordered to stand part of the Bill. Bill reported with an amendment, read a Third time and passed. LIMITED PARTNERSHIPS BILL Order for Second Reading read.”
“Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua]. Bill considered in Committee. [Mr Speaker in the Chair] Clause 1 –”
“Mr Speaker, Sir, I would like to thank Mdm Ho Geok Choo for her support of the Bill as well as her feedback on the various initiatives. I would like to respond to her points about the R&D. If I may recap, in terms of explaining the policy intent under the revised definition of R&D, previously R&D referred to systematic or intensive study and this has created ambiguity for taxpayers. Therefore, we have this definition to cover systematic, investigative and experimental study. The change is not to make the definition more restrictive but, by its very nature, R&D is indeed systematic, investigative and experimental. As regards her point as to why we are limiting it only to the field of science and technology and not to include social sciences and humanities, let me explain that this is really in line with the importance of science and technology that we are currently attaching to our economic strategy. It is not unique to us. Major jurisdictions such as the UK and Ireland also focus their R&D incentives on science and technology. But if I may finally recap, if there is research in social sciences and humanities which are undertaken to support a qualifying R&D project, then we will certainly allow the expenses incurred for this supporting research. Finally, if I may make an important point as regards the spirit of handing out this R&D tax incentive. It is really not the taxpayer's ability to claim the R&D concession only when his R&D succeeds. Rather, it is our policy intent that the tax concessions will help to encourage projects that are intended to have novel outcomes or to involve attempts to resolve some scientific or technological uncertainty, and that is really built into the definition of the qualifying R&D. Question put, and agreed to.”
“Clauses 47, 48, 49, 50, 51 and 52 effect the No-Filing Service. Secondly, extending tax incentives to General Partnerships and Limited Liability Partnerships (LLPs). Typically, tax incentives have been awarded to companies. However, as a general principle, we should not discriminate among the different business forms when awarding tax incentives. As business forms other than companies are becoming more prevalent and businesses often seek to structure themselves as partnerships for legitimate commercial reasons, we have decided to extend tax incentives to General Partnerships and LLPs. Nonetheless, we need to proceed carefully on opening up tax incentives to general partnerships and LLPs, because income of partnerships are taxed in the hands of the partners who can be corporate or individuals, and individuals are taxed under personal income tax schedule. Nonetheless, for a start, specific tax incentives such as writing down allowance for acquisition of intellectual property rights, aircraft leasing and further deductions for R&D expenditure will be extended to General Partnerships and Limited Liability Partnerships, subject to conditions. Clause 30 effects this change. Sir, for the remaining nine legislative changes arising from our periodic review of the income tax system, I will not put Members through details of these changes. They are either technical in nature or relate to improvements in administration. With the above changes, the Income Tax Act will be enhanced and updated to better achieve our economic and social objectives. Sir, I beg to move. Question proposed. 3.27 pm”
“The rebate of $5,000 will now be extended to the first child and $20,000 to each child beyond the fourth child. Clause 38 of the Bill provides for this change. Sir, I shall now deal with the third group of tax changes which require amendments to the Act arising from our ongoing regular review of our existing tax policies and administration. Let me highlight two of these changes as the rest are either technical or relate to improvements to our tax administration. Firstly, exempting selected groups of taxpayers from income tax filing under the No-Filing Service of IRAS. The No-Filing Service is an initiative where taxpayers, who are selected by IRAS based on pre-determined criteria, will receive their notices of assessment, without having to submit any income tax return. The selected taxpayers will not be required to file a tax return if, firstly, there are no additional sources of income (other than employment income received from employers under the auto-inclusion scheme) during the year; and secondly, the tax reliefs which they intend to claim are the same as those claimed in the previous year. However, they will be required to declare to IRAS if there is any inaccuracy of the information in the notice of assessment issued to them or if there has been any change in their circumstances, such as a change in their claims of tax reliefs. The No-Filing Service will result in benefits for approximately 300,000 taxpayers as well as for the Government. As these selected taxpayers need not file their returns, others who have to do so will enjoy a faster and smoother tax filing process. For the Government, it will alleviate the filing load during the peak period and reduce tax administration costs such as the issuance of PIN mailers and paper returns.”
“These are covered in various clauses of the Bill such as clause 18 for family-owned investment holding companies and clause 42 for container leasing entities; and Lastly, enhancement of tax reliefs for the CPF and SRS contributions to encourage voluntary savings for retirement and healthcare. These changes are covered by clauses 5, 25 and 35. Sir, I shall now move on to the legislative changes to effect the three tax changes under the Marriage and Parenthood Package (M&P Package) announced in August this year. The first tax change is the enhancement of the Qualifying Child Relief (QCR) and the Handicapped Child Relief (HCR). With effect from the Year of Assessment (YA) 2009, the quantum for QCR will be increased from $2,000 to $4,000, and for HCR, from $3,500 to $5,500. QCR will also be extended to all qualifying children, beyond the fourth child. Clauses 35(a) and 54(a) of the Bill provide for these changes. The second tax change is the enhancement of the Working Mother’s Child Relief (WMCR). This relief, which is computed as a certain percentage of the qualifying mother’s earned income, will be enhanced and is now extended to all her qualifying Singaporean children, including the fifth child and beyond. Working mothers can claim this relief up to 100% of their earned income for all qualifying Singaporean children. The cap for the total amount of Qualifying Child Relief or Handicapped Child Relief and the Working Mother's Child Relief claimable in respect of the same child by all qualifying individuals has been doubled to $50,000. Clause 54 of the Bill provides for these changes. The third tax change is the enhancement of the Parenthood Tax Rebate (PTR).”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill 2008 comprises three groups of legislative changes. The first group provides for the income tax changes announced in the 2008 Budget Statement. The second group gives legislative effect to the tax changes under the recently enhanced Marriage and Parenthood (M&P) Package. The third group covers other amendments to the Income Tax Act arising from regular reviews to improve our income tax system. The Income Tax (Amendment) Bill was released for public consultation from 27th June to 28th July this year. The Bill has been revised to incorporate public feedback accordingly. Sir, I will now touch on tax policy changes announced in the 2008 Budget Statement, which the Bill provides for. Six key tax changes are as follows: Firstly, personal income tax rebate of 20% for the Year of Assessment 2008, up to a cap of $2,000. This is provided by clause 56 of the Bill; Secondly, tax changes to encourage companies, including the smaller ones, to carry out research and development in Singapore. Clauses 2, 20, 21, 22, 26 to 29, 32 to 34, and 53 of the Bill provide for this change; Thirdly, a new deduction for qualifying renovation or refurbishment expenditure. The deduction is aimed at helping businesses upgrade their business premises, especially small companies in the retail and service sector. Clauses 24, 25 and 32 of the Bill provide for this change; Fourthly, liberalisation of the start-up tax exemption scheme to encourage entrepreneurship, as effected through clause 39; Fifthly, various incentives for the financial and maritime sectors.”
“Bill considered in Committee; reported without amendment; read a Third time and passed. INCOME TAX (AMENDMENT) BILL Order for Second Reading read. 3.19 pm”
“The adjudication process serves as a safeguard against the revenue risk for such gift cases. IRAS has reviewed the process and concluded that the current requirement for mandatory adjudication for gift cases is no longer necessary. Firstly, most of the gift cases involved HDB flats where IRAS can easily ascertain their values through HDB's Valuation Table. Secondly, most property transfers have third party valuation reports which safeguard against the under-declaration of property values. Lastly, the value of the shares transacted can be computed based on the audited accounts (for unlisted shares) or traded prices (for listed shares) without the need to conduct another valuation in most cases. With the removal of mandatory adjudication, taxpayers can enjoy a faster transfer process and save on the adjudication and valuation fees. To safeguard stamp duty revenue, IRAS will continue to rely on the controls currently in place under the Stamp Duties Act and periodic audit of gift cases to detect stamp duty abuse. Thus, clause 4 will make it no longer compulsory for taxpayers to go through mandatory adjudication for transfer of shares and immovable property by way of gift. Third, allowing the Government to set-off the amount of outstanding tax owed to it The Stamp Duties Act will also be amended to allow the Government to set-off tax arrears against monies due to the taxpayers from the Government. As I have already explained this change, I will not go into the details again. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua].”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill proposes three changes to the Stamp Duties Act. The first amendment gives legislative effect to a tax change announced earlier in Budget 2007 while the other two amendments are changes resulting from MOF’s on-going review of our stamp duty system and rules. A public consultation on the Stamp Duties (Amendment) Bill 2008 was conducted between August and September 2008. The draft Bill has been revised to incorporate the public feedback received accordingly. Sir, let me now explain the main amendments to the Bill. First, extension of stamp duty relief to more corporate structures Currently, only transfer of assets between associated companies and registered business trusts qualifies for section 15 stamp duty relief. As the global business environment evolves, new business vehicles have also been introduced, such as Limited Liability Partnerships. Clause 3 of the Bill amends section 15 to allow other types of business vehicles to also qualify for relief, as long as the transferor and transferee entities are associated. With the change, more corporate structures – namely, unlimited companies, statutory boards, and Limited Liability Partnerships (LLPS) where the partners are companies, registered business trusts, statutory boards and other qualifying LLPs – will now qualify for stamp duty relief. Second, removal of mandatory adjudication for gifting of shares and property Sir, IRAS currently requires taxpayers to submit a request for mandatory adjudication for transfer of shares and immovable property by way of gift, where the consideration paid for the transfer is nil or significantly below market value.”
“Third, statutory power to appoint agent to recover GST arrears from non-taxable persons Currently, the Comptroller has statutory power under the GST Act to appoint agents to recover GST arrears, but only for arrears owed by taxable persons (ie, persons who are registered for GST or are liable to register for GST). Hence, the Comptroller is unable to recover GST arrears owed by non-taxable persons under the GST Act, such as directors who commit GST fraud offences through their GST-registered companies. Clause 4 of the Bill provides the Comptroller with the statutory power to appoint agents to recover GST arrears from both taxable and non-taxable persons. Fourth, allowing the Government to set-off the amount of outstanding tax owed to it The GST Act will also be amended to allow the Government to set-off tax arrears against monies due to the taxpayer from the Government. As I have just explained this change in my earlier speech for the Property Tax (Amendment) Bill, I will not go into the details again. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua]. Bill considered in Committee; reported without amendment; read a Third time and passed. STAMP DUTIES (AMENDMENT) BILL Order for Second Reading read.”