Singapore budget 2017: Long term plans for Singapore businesses
On Monday, 20th February 24, 2017, the Singapore Government delivered the budget for the financial year of 2017. The focus of the new budget is to deliver policies that will prepare Singapore’s workforce and business environment to face future challenges.
According to the Finance Minister, Mr. Heng Swee Keat, “Singapore should develop strong capabilities in our firms and workers, so they can adapt to the changes in economic structures and technology”.
Singapore resident companies (SMEs) are one of the most benefited business entity types, from the 2017 Budget. With this new budget, the government is nurturing the environment for businesses to grow in Singapore, and to expand their operations overseas.
The policies will improve Singaporean companies’ competitiveness through technology. The government will help companies that are willing to invest in R&D (especially in IP) and those willing to make use of technology to boost growth. This is crucial for companies to thrive in the upcoming decades.
Although more details will be only available in the next few months, it is already possible to have an idea of how your company in Singapore can benefit from the 2017 Budget.
Following are the main programs impacts businesses in Singapore.
- For the year of assessment 2017, the Corporate Income Tax Rebate cap will be raised from SG$20,000 to SG$25,000, fixed at 50% tax rebate. This applies to all Singaporean tax resident companies. The Corporate Income Tax Rebate will be extended for another year, however for the YA 2018 both tax rate and tax rebate cap will be reduced. The rate will be fixed at 20%, while the cap at SG$10,000.
- The Singapore Agency for Science, Technology and Research (A*STAR) will offer access and training for small companies that wish to use advance machine tools to do prototyping. It will also assist 400 companies to identify technologies needed to innovate and compete over the next four years. Lastly, it will increase to 36 months the royalty-free and special license given to SMEs that co-develop IP with the agency.
- The new International Partnership Fund will count with a SG$600 million capital from the Singapore Government to co-invest with Singapore-based firms to help them scale-up and internationalize operations and take on more overseas projects. To qualify, companies must be based in Singapore and must have an annual return of up to US$800 million.
- Under the new SMEs Go Digital Program, companies will be able to get basic Info-Communications and Technology (ICT) advice at SME Centres. SME Technology Hub will offer them specialist advice. Furthermore, they will also provide founding support when plotting emerging ICT solutions.
- Lastly, Singapore will introduce an IP Development Incentive (IDI). The program will lower the tax rate for qualifying income to a rate below the prevailing corporate tax rate. The tax rate, as well as the regulation will be available in May 2017 and will take effect 1st July onwards.
Ongoing programs that will continue:
- The SME Working Capital Loan will continue for the next two years. Under this program the Government co-shares 50% of the default risk for leans of up to SG$300,000.
- Under the Wage Credit Scheme, over SG$600 million will be paid up in March 2017 to help companies cope with rising wages.
- Under the Special Employment Credit, over SG$300 million will be paid by the government, benefiting 370,000 workers. It will also be extended until 31st December to provide wage offset of up to 3%, costing about SG$160 million and benefiting 120,000 works and 55,000 employers.
- The Government will expand the Global Trader Program. Previously, only qualifying income derived from trade between approved global trading companies with qualifying counterparts were taxed at a reduced rate. Furthermore, physical trading income will also be taxed at concessionary tax rate for the purchase of commodity for consumption in Singapore or for the supply of fuel of aircrafts and vessels in the country; and for the storage or any activity in Singapore that adds value to the commodity. However, the requirements to qualify for such program will increase, as per instructions that will be released in May.
These are just the main changes affecting business in the country. More information is available on the Budget 2017 website