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2013 Singapore Budget To Provide Boost To SMEs

Mar. 1 – The Singaporean Government recently released its 2013 budget in which it revealed new measures totaling SG$5.9 billion aimed at helping businesses, facilitating investment and spurring further growth.

Corporate income tax was a targeted issue, with the Government announcing that it would provide a 30 percent tax rebate on tax assessments during 2013-2015. The rebate will be capped at SG$30,000 per annum per business, but is worth an extra SG$90,000 over the next three years.

Furthermore, the Productivity & Innovation Credit (PIC) scheme was revised so that it now entitles businesses that incur a minimum SG$5,000 of PIC qualifying expenditures to receive a matching cash grant from the Singaporean government of up to SG$15,000 per year until 2015. More importantly, the revision does not replace or lower the existing PIC benefits, but instead entitles companies to a 400 percent tax deduction/allowance (up to SG$400,000) or a cash payment of 60 percent of any PIC qualifying expenditures (up to SG $100,000).

The changes mean that companies will see a significant net cash gain upon undertaking certain PIC qualifying investments as the matching cash grant could amount to 160 percent of their total investments. PIC qualifying expenditures include the following activities: training of employees, acquisitions and in-licensing of IPR, registration of patents, trademarks, designs and plant varieties and R&D activities.

Also introduced was a “wage credit scheme” in which the Singaporean Government will pay 40 percent of pay raises that Singaporean workers may be entitled to from 2013 to 2015. The scheme applies to employees that earn up to SG$4,000 per month. This measure intends to increase productivity and reduce rising inequality in the country while also maintaining the competitiveness of Singaporean workers and reducing Singapore’s dependence on foreign labor.

Nathanael Susanto, business manager of Dezan Shira & Associates Singapore, stated that “we are seeing a wave of foreign investment coming into Singapore driven by light manufacturing moving into the ASEAN region, and the development of Singapore as a regional services hub. These budget moves are considered generous, and will help new businesses enormously in their plans for the next three years.”

The measures include various policies to help citizens cope with the rising living costs (which includes SG$1.7 billion in household transfers in 2013), the expansion of the anchor-operator scheme and various investments in healthcare, education and senior services.

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