PERSONAL TAX

No changes. The highest marginal tax rate remains at 20%.

CORPORATE TAX

- Tax rate is reduced from 20% to 18% wef Year of Assessment 2008. Very competitive with Hong Kong which has a headline tax rate of 17.5%.

- No extension for utilizing Section 44A tax credit. The deadline is 31.12.2007.

- Good news for companies, especially small and medium size enterprises.

Partial tax exemption of chargeable income from Year of Assessment 2008 onwards is enhanced. On the first $10,000 of chargeable income, 75% remains exempt. On the next $290,000 of chargeable income, 50% is exempt. The effective tax rate works out to be 8.85% for a chargeable income of $300,000.

For first 3 years of operation for new companies which satisfy certain conditions, on the first $100,000 of chargeable income, it is fully exempt. On the next $200,000 of chargeable income, 50% is exempt. The effective tax rate works out to be 6% for a chargeable income of $300,000.

GST

Tax rate will increase from 5% to 7% from 1 July 2007.

CENTRAL PROVIDENT FUND

Changes from 1 July 2007:

Employer's contribution - Increase from 13% to 14.5%