These measures are designed to keep Singapore attractive to entrepreneurs and businesses for the long haul. Although many of the measures introduced in Budget 2012 are focused on stronger social development.
(PRWEB) February 20, 2012
In spite of a stronger focus on inclusive societal growth in the 2012 Budget, Singapore company incorporation specialists Rikvin is optimistic that the Budget will also lay the ground for long-term economic and productivity growth that will in turn, enhance the economic pie for businesses too.
As communicated by Deputy Prime Minister Tharman Shanmugaratnam, Singapore has enjoyed a healthy rebound from the 2008 - 2009 crisis in 2010 and has earned a larger-than-expected budget surplus of S$2.3 billion from the Financial Year (FY) 2011. In light of the slower growth projection for this year and with the budget surplus in hand, FY 2012 marks an opportune time to restructure the economy so as to achieve higher incomes and social mobility for lower to middle-income Singaporeans as well as to build a more inclusive society. To this end, more schemes aimed at assisting the elderly, disabled and lower-income families in Singapore were announced during the Budget Statement.
Commenting on the observation, Mr. Satish Bakha, Head of Rikvin’s Operations said, “Singapore’s commitment to increasing social mobility for lower-income families and inclusive growth for the elderly, disabled and vulnerable is a positive and holistic approach that could come at no better time. The inevitably slow growth climate is the best time to sow the seeds for greater social harmony in the years to come. We are optimistic that more happiness would mean more productivity as well. On the other hand, measures such as reducing the inflow of lower-skilled foreign workers and building an economy driven by higher skills, innovation and productivity are not new and are in fact, on pulse with new realities of living and doing business in Singapore.”
Rikvin has nonetheless recognized six salient features of the Budget that will grow the economic pie for businesses, especially entrepreneurs wishing to form a Singapore company or small to medium-sized firm. i.e. 1) Enhanced Productivity and Innovation Credit Scheme, 2) Simplifying capital allowance for low value assets, 3) Enhancing the Double Tax Deduction (“DTD”) for Internationalisation Scheme, 4) Providing Tax Certainty 5) SME Cash grants, and 6) Special Employment Credit.
ENHANCED PRODUCTIVITY AND INNOVATION CREDIT SCHEME
To help businesses invest in innovation and productivity and adapt to the permanent reality of a tight labour market, the PIC scheme will be enhanced in four main areas - cash payouts, training, research and development expenditure and investments in automation equipment.
First of all, the PIC cash payout has been doubled from 30% to 60% for up to S$100,000 of qualifying expenditure, from YA 2013 to YA 2015. Furthermore, businesses may claim the cash payout quarterly rather than annually. Secondly, qualifying in-house training expenditure of up to $10,000 per YA will not require certification. Additionally, the expenses incurred by training agents may qualify for PIC claims if they meet stated conditions.
Thirdly, expenditure incurred on R&D cost-sharing agreements will be eligible for PIC claims and multiple sales criteria will be removed to facilitate R&D in software development that is not intended for sale. Lastly, automation equipment that are bought on hire purchase and are to be repaid over 2 year-installments or more will be eligible for PIC cash payouts.
SIMPLIFYING CAPITAL ALLOWANCES FOR LOW VALUE ASSETS
To allow businesses to claim capital allowances more easily, the maximum full cost of each asset that may be written down in one year has been increased to S$5,000. This change will take effect from YA 2013 and IRAS will release further details by 30 June 2012.
ENHANCING DOUBLE TAX DEDUCTION FOR INTERNATIONALIZATION SCHEME
In order to encourage Singapore SMEs to explore markets and internationalize, a tax deduction of up to 200% on qualifying expenditure of up to S$100,000 per YA, may be granted for four activities without approval from IE Singapore or Singapore Tourism Board (STB) namely 1) overseas business development trips, 2) overseas investment study trips, 3) participation in overseas trade fairs, and 4) participation in approved local trade fairs.
IE Singapore or STB will continue to approve claims, on a case-by-case basis, made by
businesses that require larger funding support in excess of S$100,000 on other qualifying activities.
PROVIDING TAX CERTAINTY
To minimize compliance costs and enhance Singapore’s competitiveness, the Budget has clarified the tax treatment of companies’ share disposal gains. In gist, gains derived from the disposal of equity investments are tax exempt if 1) the divesting company holds at least 20% shareholding in the company whose shares are being disposed; and 2) the divesting company maintains at least 20% shareholding for a minimum period of 24 months prior to the disposal.
This change will take effect on or after 1 June 2012 and this scheme will be reviewed after five years.
SME CASH GRANTS
To help SMEs offset increasing business costs, a one-off cash grant - pegged at 5% of the company’s revenue for YA 2012, capped at S$5,000 - will be provided for all companies. SMEs need only make CPF contributions to at least one staff to qualify for this grant. The grant will be issued automatically after the YA 2012 Form C has been filed and assessed.
SPECIAL EMPLOYMENT CREDIT FOR SILVER GENERATION WORKERS
To aid the tight labor market, the Singapore government will incentivize companies to attract and retain silver generation workers through the Special Employment Credit (SEC). Companies which hire or keep Singaporean workers who are over 50 years old and earning up to S$3,000 monthly will enjoy an SEC of 8% of the employee’s wages. Firms also enjoy a lower SEC for workers with a monthly wage of between S$3,000 and S$4,000. Altogether, the SEC scheme will cover 80% (up to 350,000) of older Singaporean workers and will run for the next five years.
“These measures are designed to keep Singapore attractive to entrepreneurs and businesses for the long haul. Although many of the measures introduced in Budget 2012 are focused on stronger social development, Rikvin is optimistic that the measures targeted at business will help them adjust to the new realities of doing business in Singapore and enhance the economic pie for all in the coming years. ” added Mr. Bakhda.
Rikvin is a Singapore-based consultancy that offers business solutions for both local and foreign professionals, investors and entrepreneurs. Rikvin’s areas of expertise include Singapore company registration, incorporation, offshore company setup, accounting, taxation and other related corporate services. Rikvin also provides Singapore work visa and immigration services for foreign professionals wishing to relocate to Singapore.
Rikvin Pte Ltd
20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
(65) 6438 8887