1. Mr Speaker, on behalf of the Minister for Trade and Industry, I beg to move, “That the Bill be now read a Second time.”
2. The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2022 amends the Act to provide for tax incentive changes which were introduced in Budget 2021. It also enables the Minister for Trade and Industry to assign various functions and powers to public bodies for the administration of tax incentives under the Act.
3. Let me now elaborate on the two key legislative changes contained in the Bill.
Extend and enhance the Investment Allowance for Energy Efficiency (“IA-EE”) scheme
4. The enhancement of the “Investment Allowance for Energy Efficiency” scheme, which is now renamed “Investment Allowance for Emissions Reduction” (“IA-ER”), was announced at Budget 2021. The scheme currently supports companies in improving their energy efficiency. This Bill expands the scope of support to also include investments in equipment that result in measurable and verifiable reductions in greenhouse gas emissions.
5. Specifically, the IA-ER grants a tax allowance on the qualifying fixed capital expenditure incurred within the qualifying period, which can be used to offset the company’s taxable income. The scheme’s validity period has also been extended from 31 March 2021 to 31 December 2026, to support companies adapting and transiting to a low-carbon economy.
6. This proposed change is in response to industry feedback on how such investment allowances will help them reduce their carbon footprint, especially for manufacturing companies and data centre operators.
7. To give legislative effect to these changes, Clauses 3 and 4 of the Bill amend Sections 41 and 43 of the Act respectively.
Assignment of functions or powers from Minister for Trade and Industry to public bodies
8. The second change concerns the internal administration of tax incentives. Clause 2 of the Bill inserts a new Section 3A into the Act, which allows the Minister for Trade and Industry to assign to public bodies various functions and powers of the administration of tax incentives under the Act. This amendment arises from our periodic review of the income tax system to improve tax administration, and is aligned with the Income Tax Act. There is no change in policy intent and no impact on tax incentive recipients.
9. Mr Speaker, I beg to move.