Proposed Amendment to Section 2(2) of Property Tax Act



Background

IRAS had proposed an amendment to Section 2(2) of Property Tax Act which will result in higher taxation for Data Centres operating in Singapore. This was brought to SiTF’s attention on 25 May 2017.

 

Proposed Change

The proposed change which had a direct impact on data centres was the levy tax on machinery used or intended to be used in a peripheral process or for supporting function at the data centres.

 

Machinery included the provision of heating, cooling ventilation or lighting, draining or supplying of water, telecommunication, supply of electricity and the provision of back-up power to or within the data centres, storage of articles were all subject to taxation with the proposed amendment.

 

These were previously exempted from annual value assessment from 1 Jan 2016. Proposed change was to take effect from 1 Jan 2018.

 

Industry Feedback

SiTF quickly rallied its member companies within a short period and a dialogue between IRAS and the industry ensued.  Member companies from both local and MNCs attended the session to give their views on the impact of the proposed amendment on their businesses.

 

Key Findings

The proposed amendment not being congruent to Smart Nation initiative and the downstream impact on the National digitalization agenda were the key findings from the dialogue session.

 

Amendment Delayed

Following the feedback, MOF had agreed to study further the proposed amendment relating to the exemption of machinery from property tax.