As announced during Singapore’s Budget 2024, a Corporate Income Tax (CIT) Rebate of 50% will be granted to all taxpaying companies. This includes both tax resident, and non tax resident companies, for Year of Assessment (YA) 2024. IRAS Source.
What is the CIT Rebate for YA2024?
The CIT Rebate reduces the amount of corporate tax the company needs to pay by 50%, up to a maximum of $40,000.
This rebate is offered to all taxpaying companies.
A portion of the CIT rebate will be offered as a Cash Grant of $2,000 to eligible companies.
In other words, there are 2 components to the CIT Rebate:
- Cash Grant of $2,000 for eligible companies (explained below).
- A CIT rebate of 50%. This is equivalent to getting a 50% discount on the amount of tax the company needs to pay.
All taxpaying companies will be eligible for the rebate. Whether or not a portion of the CIT Rebate is offered as a cash grant of $2,000 is dependent on whether the company meets the eligibility criteria mentioned below.
What is the CIT Rebate Cash Grant?
The purpose of the cash grant is to provide support for smaller companies, where their CIT rebate would be less than $2,000. This ensures that eligible companies would have a minimum benefit of $2,000 in cash.
The CIT Rebate Cash Grant is not considered taxable income. It will be automatically disbursed to eligible companies by 25th August 2024.
Eligibility of the CIT Rebate Cash Grant
A company must have employed at least one local employee during calendar year 2023.
If so, they will automatically be eligible to receive the CIT Rebate Cash Grant of $2,000.
This grant is a part of the CIT rebate, but it’s given as cash. The cash grant is not taxable and will be paid out by 25th August 2024.
In other words, so long as the company has made CPF contributions to at least one local (Singapore Citizen or Permanent Resident) employee, not including shareholders who are also directors of the company, in the calendar year 2023 – they will be eligible.
How the CIT Rebate Works
Note that the total benefit is capped at a maximum of $40,000 (incl. CIT Rebate Cash Grant).
For all taxpaying companies:
A 50% rebate (discount) on the tax they owe.
For companies eligible for the CIT Rebate Cash Grant:
$2,000 cash will automatically be given by 25th August 2024.
If the CIT rebate is less than $2,000, you’ll only get the $2,000 cash and won’t get the 50% tax reduction.
This ensures a minimum benefit of $2,000 in cash.
Examples of CIT Rebate
a. Corporate Income Tax Payable of $3,000.
For companies not eligible for the CIT Rebate Cash Grant:
Receive a 50% CIT Rebate of $1,500, reducing their tax payable to $1,500.
For companies eligible for the CIT Rebate Cash Grant:
Normally, the company would get a 50% rebate, reducing the tax payable to $1,500.
However, since they qualify for the CIT Rebate Cash Grant, they’d get $2,000 in cash instead.
Since $2,000 is more than $1,500, the company don’t get the 50% rebate. The tax payable stays at $3,000, and the company will receive $2,000 in cash.
This means companies who are eligible for the CIT Rebate Cash Grant, will not receive the 50% rebate so long as the tax due is up to $4,000, and will only receive the cash grant.
b. Corporate Income Tax Payable of $9,000.
For companies not eligible for the CIT Rebate Cash Grant:
Receive a 50% CIT Rebate of $4,500, reducing their tax payable to $4,500.
For companies eligible for the CIT Rebate Cash Grant:
Receive a 50% CIT Rebate of $4,500, of which $2,000 is paid in cash.
The remaining $2,500 will be used to reduce the tax amount payable.
So, the tax payable would be $6,500 ($9,000 minus $2,500), and the company would also receive $2,000 in cash.
The total benefit the company receive would still be $4,500, of which $2,000 is in cash.
Summary of CIT Rebate Benefits
- Every taxpaying company gets a 50% rebate on their tax payable, up to $40,000.
- If the company qualifies for the cash grant, a portion of the CIT rebate will be given in cash ($2,000), even if the tax rebate would have been less than $2,000.
