Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Income Tax (Amendment No. 3) Bill [Bill No. 34/2016]
Madam, I stand in support of this Bill. I welcome these progressive and timely amendments to the Income Tax Act, which supports domestic businesses and spurs economic growth, especially in view of the forecasted sluggish growth in 2017.
Sluggish growth forecasted by MAS
In its twice-yearly Macroeconomic Review released on the 25th October 2016, the MAS stated that global growth is expected to come in at 3.7 per cent this year, and edge up slightly to 3.8 per cent next year, as business investment in major economies stay sluggish due to elevated economic uncertainty.
The central bank also said that business sentiment remains negative, especially among small and medium-sized enterprises.
As a nation, we have to face the upcoming tough challenges together in the year ahead. However, it is encouraging that the government policy continues to be relevant to meet the needs of the finance sector and other businesses.
Here, allow me to highlight two aspects of this Bill.
Supporting domestic businesses through Tax Rebates
Corporate Income Tax Rebate is given to all companies to help them with rising business costs and is applicable for Years of Assessment 2013 to 2017.
The rebate has varied over the years.
For Year of Assessment 2013 to 2015, companies received 30% income tax rebate, capped at $30,000.
For Year of Assessment 2016 to 2017, companies were to receive 30% rebate, capped at $20,000. The cap reduced the maximum rebate by $10,000 from what it was previously.
The current bill seeks to increase the rebate rate for Year of Assessment 2016 to 2017 from 30% to 50%, but retains the cap at $20,000.
Can the Minister clarify the rationale behind reducing the cap by $10,000?
And in view of the sluggish economy ahead, will the Minister consider not just increasing the rebate rate but also increasing the cap?
Enhancing productivity in businesses
In Section 8A and 63, the Bill has sought to introduce mandatory electronic filing for corporate income tax returns in stages for all companies eventually, by 2020.
I welcome this change as this is in line with the government’s direction for more effective delivery of public services.
This is also in line with the government’s Smart Nation vision to harness technology to enhance productivity.
While I commend our move to lead a life empowered by technology, this may be difficult for the staff members, particularly those in the older generation, who may be unfamiliar with such computer systems. This may impede their productivity, or even cause them to be replaced by businesses if they are unable to rise to the task.
As such, I would suggest that the phasing out be taken at a slower pace, especially for traditional businesses, which should have the option of opting-out of mandatory e-filing with good reason.
IRAS can consider these applications on a case-by-case basis, taking into consideration the age and capabilities of the administrative staff members of that company.
These comments notwithstanding, Madam, this Bill can only serve the interests of Singapore’s businesses and economy, and I stand in support of it.