Singapore’s status as a global business hub continues to attract companies from across the globe. In September alone, around 4,300 new companies were incorporated, highlighting Singapore’s appeal as a key destination for business growth and expansion.
Our monthly Singapore Regulatory Update blog post highlights key developments in Singapore’s regulatory environment including tax regulations, business regulations, manpower regulations, financial regulations, immigration regulations, and others that have impact on small to midsize businesses based in Singapore. Below is our update for the month of September 2024.
Singapore’s 2024 GDP Growth Could Exceed Government Forecast of 2–3%
Economists now expect Singapore’s 2024 GDP growth to exceed the official forecast of 2% to 3%, following a significant surge in industrial production. In August, factory output increased by 21% year-on-year, with the electronics sector driving nearly 50% of that growth. Excluding the volatile biomedical sector, overall industrial production rose by 27.5%. Semiconductors saw the largest gains, up 54.6%, marking the fastest industrial growth since mid-2021. Analysts now project third-quarter GDP growth at 4.3%, raising the possibility that full-year growth could surpass 3%.
The continued strength in manufacturing could push overall economic growth beyond initial estimates. Economists from Maybank, ANZ, and Barclays highlight that the recovery in key sectors like electronics and chemicals may sustain this upward momentum. While some uncertainty remains for the fourth quarter, Singapore’s economy appears poised to benefit from this manufacturing resurgence in the coming months.
New SME Pro-Enterprise Office to Assist SMEs with Regulatory Navigation
Singapore’s Small and Medium-sized Enterprises (SMEs) will soon benefit from the SME Pro-Enterprise Office (PEO), set to launch in the first quarter of 2025 under Enterprise Singapore (EnterpriseSG). The office aims to assist SMEs with understanding and complying with government regulations, particularly for complex or multi-agency matters. This new initiative, announced by Senior Minister of State for Trade and Industry Low Yen Ling, is part of a broader government effort to simplify regulatory processes and reduce the burden on businesses.
The SME PEO will have three core functions — triage, track, and treat. It will first triage regulatory feedback from businesses and forward it to the relevant government agencies. It will then track service standards related to these regulatory issues and monitor case outcomes. Lastly, the office will treat systemic issues by identifying patterns in the feedback, allowing for early resolution of recurring regulatory challenges. By improving inter-agency coordination and reducing approval times, this office aims to make regulatory processes more efficient for SMEs, helping them focus on growth and innovation.
Strengthening Corporate Regulations: The ACRA (Registry and Regulatory Enhancements) Bill
Singapore Parliament passed the ACRA (Registry and Regulatory Enhancements) Bill, marking an important step in improving Singapore’s corporate regulatory framework. The bill empowers the Accounting and Corporate Regulatory Authority (ACRA) to enhance digital communication between the government and businesses while maintaining a balance between corporate transparency and data protection. These changes aim to streamline corporate processes, improve the accuracy of data, and ensure smoother interactions between companies and regulatory authorities.
Key amendments include the introduction of a digital mailbox in which businesses will more efficiently receive statutory correspondence, such as notices. (This excludes legal summons.) The bill also allows ACRA to automatically update its registers using data from other public agencies, making filing more convenient and ensuring greater accuracy. Additionally, ACRA will now have the authority to update registers of directors who are deemed disqualified under all provisions of the Companies Act, improving the reliability of corporate records.
Singapore Aligns with BEPS 2.0: New Legislation for Top-Up Corporate Taxes
Singapore has introduced new legislation to implement a domestic top-up tax for Multinational Enterprises (MNEs), aligning with global tax rules under Pillar 2 of the Base Erosion and Profit Shifting (BEPS 2.0) framework. The law, proposed in September 2024, ensures that large MNEs with consolidated annual revenues exceeding 750 million euros (S$1.1 billion) over two of the preceding four financial years will face a minimum effective tax rate of 15%. This move is part of Singapore’s commitment to the global tax pact and is aimed at reducing profit shifting to low-tax jurisdictions, as announced in Budget 2023.
The new framework introduces two key tax measures: the Multinational Enterprise Top-Up Tax (MTT) and the Domestic Top-Up Tax (DTT). The MTT applies to Singapore-based companies with ownership stakes in entities in lower-tax regions, requiring them to pay a top-up tax if their effective tax rates fall below 15%. The DTT ensures that MNEs operating domestically are also taxed at a minimum of 15% on their Singaporean profits. The proposed bill outlines penalties for non-compliance, including surcharges, fines, and prosecution for more serious offenses, reinforcing Singapore’s commitment to global tax fairness.
GST-Inclusive Pricing becomes Mandatory for GST-Registered Businesses
As of August 2024, all GST-registered businesses in Singapore are required to display prices inclusive of Goods and Services Tax (GST) when presenting prices to the public. This rule applies across sectors to ensure clarity and transparency in pricing for consumers. The only exception is for Food and Beverage (F&B) and hotel establishments that impose an additional service charge. These businesses may display GST-exclusive prices but must clearly inform customers that the final bill will include GST and the service charge.
While the service charge is not mandated by the government, many businesses in the F&B sector choose to apply it. To ease operational complexities, such as managing different price lists for dine-in and takeaway orders, these businesses are allowed to show GST-exclusive prices. However, establishments are encouraged to opt for displaying GST-inclusive prices along with the service charge, to offer customers a more straightforward experience by providing the final price upfront.
The Importance of Tax Compliance
Tax compliance is a crucial responsibility for businesses and individuals in maintaining Singapore’s efficient tax system. Adhering to tax laws ensures that public services function smoothly and benefits the broader economy. Non-compliance, whether through late filings or deliberate evasion, can lead to significant financial penalties, legal consequences, and damage to the reputation of a business. The following recent cases highlight the serious repercussions of failing to meet tax obligations.
Over 4,700 Companies Prosecuted for Late or Non-Submission of CIT Filings
In 2023, more than 4,700 companies were prosecuted by the Inland Revenue Authority of Singapore for either filing their Corporate Income Tax (CIT) returns late or failing to submit them entirely. These cases resulted in more than S$4.9 million in penalties. This situation highlights the importance of timely tax submissions, as failure to comply can lead to fines of up to S$5,000. Errant companies may also face compounded penalties or court action if they fail to file tax returns for two or more consecutive years.
To encourage prompt compliance, IRAS offers a 15-day extension to companies that file their tax returns using prescribed software. Despite such measures, about 10% of companies fail to meet their CIT filing obligations each year.
Company Director Jailed for 3 Years and 8 Months for GST Evasion
Lau Zhen Zhou, a 38-year-old company director, was sentenced to 3 years and 8 months in prison after being convicted of evading S$1.1 million in Goods and Services Tax. In addition to the jail term, Lau was ordered to pay over S$3.2 million in penalties. Lau’s offenses included submitting falsified GST returns and providing fabricated documents to auditors in an attempt to evade GST.
This case highlights the serious legal consequences of GST evasion, which can include imprisonment, hefty fines, and penalties amounting to three times the tax evaded. Businesses are reminded that intentional submission of false GST claims is a punishable offense, with stricter penalties introduced under the enhanced sentencing framework since 2022.
Veteran Undertaker Convicted for Tax and GST Offences
Roland Tay, a 77-year-old undertaker, was convicted of multiple tax offenses, including submitting incorrect income tax returns and failing to register for GST. Tay was fined S$12,000 and ordered to pay a penalty of over S$529,000. He faces a default penalty of time in prison if these amounts remain unpaid. His businesses failed to report significant amounts of taxable income, resulting in underpaid taxes for several years.
Tay’s case serves as a reminder of the importance of accurately reporting business income and ensuring timely GST registration. Failure to register for GST when required can lead to both financial penalties and legal action. Businesses must maintain proper financial records and monitor their taxable turnover to remain compliant.
Singapore Strengthens Global Tax Relations
As part of its efforts to foster stronger international tax cooperation, Singapore continues to expand and update its network of Double Taxation Agreements (DTAs) with key global partners. These agreements are crucial in promoting cross-border trade, preventing tax evasion, and ensuring a fair allocation of tax rights between jurisdictions.
New Double Taxation Agreement Signed with Kenya
Singapore and Kenya have taken a significant step to enhance their economic partnership by signing a new Agreement for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance (“DTA”). This agreement, signed on 23 September 2024, replaces a prior agreement from 2018. The DTA was formalized in New York by Singapore’s Foreign Minister Dr. Vivian Balakrishnan and Kenya’s Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs, Hon. Dr. Musalia Mudavadi.
This updated DTA clarifies the taxing rights of both countries on income derived from cross-border business activities. It aims to eliminate the risk of double taxation, thus reducing barriers to investment and promoting economic ties between Singapore and Kenya. Key provisions of the DTA address issues such as income tax obligations for individuals and businesses operating in both jurisdictions. This agreement is expected to enhance trade and investment flows between the two nations. The DTA will come into effect once it has been ratified by both governments.
Protocol to Amend Double Taxation Agreement Signed with Rwanda
Singapore also strengthened its international tax framework with the signing of a Protocol to amend its Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Rwanda. This protocol, signed on 20 September 2024 by Singapore’s Second Minister for Finance, Mr. Chee Hong Tat, and Rwanda’s Minister of Finance and Economic Planning, Mr. Yusuf Murangwa, introduces key updates to the original agreement.
The amendment includes revisions to the preamble of the DTA and the addition of a new Article 26A, which addresses Entitlement to Benefits. This change aligns with internationally agreed Base Erosion Profit Shifting (BEPS) minimum standards, aimed at preventing treaty abuse. With this protocol, Singapore and Rwanda further solidify their commitment to fair and transparent tax practices. The protocol will take effect following ratification by both countries.
IRAS Releases Annual Report for Financial Year 2023-2024
The Inland Revenue Authority of Singapore has released its Annual Report for the Financial Year (FY) 2023/24, showcasing significant milestones in tax collection, grant disbursements, and digital innovations.
In Financial Year 2023/24, IRAS collected S$80.3 billion in tax revenue, a 17% increase from the previous year, driven by Singapore’s economic and wage growth. This revenue accounts for 77.6% of the government’s operating revenue and 11.9% of Singapore’s GDP, funding essential services, economic growth, and social development programs.
Additionally, IRAS processed S$2.3 billion in grants, benefiting over 131,000 businesses through programs like the Progressive Wage Credit Scheme (PWCS) and Jobs Growth Incentive (JGI). The authority continues to enhance its digital offerings, such as InvoiceNow and the One-Stop Payroll initiative, to simplify tax compliance. IRAS also strengthened enforcement, auditing nearly 9,600 cases and recovering S$857 million in taxes and penalties. Full details can be found in the Annual Report on the IRAS website.
Updated International Valuation Standards Released
On August 28, 2024, the IVAS-IVSC Business Valuation Conference, themed “Intangible Impact: Unlocking Business Value in the New Economy,” brought together over 1,000 participants, including policymakers, business leaders, and valuation professionals. Organized by the Institute of Valuers and Appraisers Singapore (IVAS) and the International Valuation Standards Council (IVSC), the conference was held in collaboration with the Intellectual Property Office of Singapore (IPOS) during IP Week @ SG 2024. During the event, Minister Indranee Rajah announced that IVAS has developed proposed guidelines for the valuation of Intangible Assets (IA) and will seek public feedback in 2025.
Aligned with the International Valuation Standards (IVS), the proposed guidelines aim to enhance the credibility and consistency of IA valuations globally. Additionally, updated valuation standards will come into effect on January 31, 2025, clarifying that Automated Valuation Models (AVM), including those using AI, must involve professional judgment to ensure compliance. These updates reflect the growing role of AI in valuations, while emphasizing the importance of expert oversight.
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