Page 5 - RSM Budget 2020 Highlights

CORPORATIONS

AND BUSINESSES

Corporate Income Tax Rate and Rebate Interest-free Instalments of Tax Payments
Current Current

The current corporate income tax rate is 17%. Companies paying their corporate income tax by
Companies can qualify for a corporate income tax GIRO currently enjoy interest-free monthly
rebate of 20% of tax payable, capped at $10,000 for instalments if they file their estimated chargeable
YA 2019. income (“ECI”) within three months from their
financial year end (“FYE”), as follows*:
Proposed changes  File ECI within one month from FYE - Up to ten
monthly instalments; or
To help companies with cash flow, a corporate  File ECI within two months from FYE - Up to
income tax rebate of 25% of tax payable, capped at eight monthly instalments; or
$15,000, will be granted for YA 2020.
 File ECI within three months from FYE - Up to six
monthly instalments.
Effective date
* Companies have to e-file by 26th of the month in order
Applicable to YA 2020. to enjoy the maximum number of instalments allowable
for that month.

Comments Proposed changes
 With the corporate income tax rebate Companies paying their corporate income tax by
announced of 25% of tax payable (capped at GIRO can automatically enjoy an additional two
$15,000) for YA 2020, the effective tax rate for months of interest-free instalments when they file
the first $200,000 of normal chargeable income their ECI within three months from their FYE.
is 6.22%. For the same level of normal
chargeable income of $200,000 for YA 2019, Effective date
where the rebate is 20% of tax payable (capped
at $10,000), the effective tax rate is slightly This automatic extension of instalment plan by 2
higher at 6.63%. more months will apply to:
 Companies that file their ECI from 19 February
2020 to 31 December 2020; and
 For a company with normal chargeable income
of $214,000 for both the YA 2019 and YA 2020,  Companies that file their ECI before 19 February
it will have the same effective tax rate of 6.64% 2020, and have ongoing instalment payments
on its taxable income. to be made in March 2020.

Comments
 This measure aims to provide a higher level of  Cash flow is a concern to some during the
cash flow relief to SMEs. current economic downturn. The additional
interest-free two months grace period to settle
taxes should provide a much needed relief to
those in need of short-term financial support
and to tie them over this difficult period.

 Companies with substantial amount of tax
payable should consider filing their ECI as early
as possible to take advantage of this concession.

BUDGET 2020 HIGHLIGHTS | 3