Singapore’s Finance Minister Heng Swee Keat unveiled a Singapore Budget 2018 that was visionary and forward looking and with an eye in the long run. The total expenditure is expected to be S$80.0 billion, or 8.3 per cent, higher than in FY2017. Budget 2018 is about laying the foundation for the nation’s development in the next decade, helping business to transform to ensure Singapore companies remain competitive. The budget delivers a suite of measures aimed at businesses to transform, innovate, build capabilities and expand overseas.
There is a “visible shift away from overly generous and broad-based” subsidy programmes, such as the Productivity and Innovation Credit (PIC) scheme, towards “more specific and innovation-focused measures”.
It encourages businesses to move away from cost competition and differentiate through innovation.
The Minister also announced a GST tax increase from 7% to 9% as of 2021 onwards. This early announcement is to allow businesses to plan ahead and soften the eventual impact.
SME Support – Singapore Budget 2018
Singapore Budget 2018 Tax & Rebates
1. Corporate Income Tax rebate
To ease business costs and support restructuring by companies, this year 2018 Singapore Budget will enhance and extend the CIT rebate as follows:
a) For YA2018, the CIT rebate will be enhanced to 40% of the tax payable, subject to a cap of $15,000. This is an increase from the previously announced rebate of 20% of tax payable, subject to a cap of $10,000; and
b) The CIT rebate will be extended for another year to YA2019, at a rate of 20% of the tax payable, capped at $10,000.
2. Double Tax Deduction for Internationalisation (DTDi)
Business can automatically claim 200% tax deduction on the first S$100,000 of eligible expenses for these four activities below
- Overseas business development trips and missions
- Overseas investment study trips and missions
- Overseas trade fairs
- Local trade fairs approved by IE Singapore or STB
Any expenditure above $100,000 will need an approval from IE Singapore.
3. Tax Deduction for R&D Project To Support Innovation
SMEs engaged in research to build their innovation are entitled to tax deductions from 150% to 250% to support businesses in their use and development of innovations. This change will take effect from YA2019 to YA2025. Read more here.
4. Special Employment Credit (SEC) and Additional SEC
SEC was set up to providing employers with continued support to hire older Singaporean workers aged 55 and above, and earning up to $4,000. This year Singapore Budget offer a wage offset of up to 11% of eligible workers’ wages.
Financial Support & Grant for Singapore Businesses
1. Productivity Solutions Grant (PSG)
A streamline Productivity Solution Grant to assist businesses in purchasing and use off the shelf new technology. The PSG will provide funding support for up to 70% of qualifying costs. Businesses can apply for the PSG through the Business Grants Portal (BGP), with effect from 1st April 2018. More details about the grant will be available from March 2018.
2. Wage Credit Scheme (WCS)
The WCS scheme is now being extended until 2020. Businesses can receive co-funding for qualifying wage increases to your Singaporean employees earning a gross monthly wage of up to $4,000. Government co-funding will be maintained at 20% in 2018. Subsequently, the co-funding ratio will be stepped down to 15% in 2019 and 10% in 2020.
3. Enterprise Development Grant (EDG)
EDG grant is a combined grant between SPRING Singapore’s (SPRING) Capability Development Grant (CDG) and IE Singapore’s (IE) Global Company Partnership (GCP). The EDG will provide funding support for up to 70% of qualifying costs from FY2018 to FY2019. Businesses can apply for the EDG through the BGP, with effect from Q4 2018.
4. SME Working Capital Loan
Businesses can apply for SME working capital loan with Participating Financial Institutions (PFIs). Government co-shares 50% of the default risk, for loans up to $300,000. Find out more here.
5. Market Readiness Assistance Grant (MRA)
MRA grant provide support to businesses who are planning to expand business oversea. SMEs can get up to 70% funding support for pre-scoped activities of eligible third-party costs, e.g. overseas market set-up.
6. Capabilities Transfer Programme (CTP)
The CTP aims to improve local-foreign workforce complementarity, by facilitating transfer of capabilities from foreign specialists to local. It is being managed by the Ministry of Manpower (MOM) and Workforce Singapore (WSG).
Funding support for CTP can include salary and training support for foreign and local specialists, as well as Singaporean trainees on overseas attachments to acquire new capabilities. Funding for costs of equipment may be considered case by case if the project is an industry-wide project.
WSG will determine support levels on co-funding basis to ensure that businesses involved in the projects remain committed in their efforts to drive capability transfer at the company or industry level.
Technology Support for Singapore Businesses
Singapore Budget 2018 also aims in enhancing technology and innovation capability for Singapore businesses through both financial and business support.
1. TechSkills Accelerator (TeSA) programme
TeSA offers various programmes to support current information and communications technology (ICT) professionals and non-ICT professionals to upgrade and acquire new skills and domain knowledge that are in demand, and to stay competitive and meet the challenges of a fast-moving digital landscape.
Businesses will receive the below support:
- Receive funding support from IMDA, WSG or SSG to implement the respective training programme.
- Be able to employ ICT professionals who undergo/have undergone training and be equipped with the relevant skills and aptitude to meet the needs of your company.
- Be able to upskill and deepen the skills of existing employees who are mid-level ICT professionals.
Over the next three years TeSA will be expanded into new sectors like manufacturing and professional services to equip more people with emerging digital skills.
2. SMEs Go Digital Programme
Continuation from 2017, SMEs Go Digital Programme will continue to focus on supporting SMES’s adoption of technologies to build stronger digital capabilities. SMEs will be supported with step-by-step advice on the digital technologies to use through the Industry Digital Plans (IDPs) for SMEs.
3. Startup SG schemes
Singapore Budget 2018 will continue to support startup by offering access suite of schemes, including early stage funding for commercialisation of proprietary technology, programmes to catalyse private sector funding, and manpower and infrastructure support.
4. SME Digital Tech Hub
The SME Digital Tech Hub is a dedicated hub to complement the SME Centres and provide specialised advice on areas such as data analytics, data protection, cybersecurity and internet-of-things (IOTs).