The Singapore Budget 2018 speech took place on 19th February, Monday. During the speech, Finance Minister Heng Swee Keat highlighted some new and improved initiatives and government grants for SMEs. With the key theme of Singapore’s future plans focused on economy transformation, how exactly is the government going to support SMEs moving forward?
To help you get up to speed with what to expect, we’ve round up these new and improved grants and initiatives that will likely pique your interest:
Productivity Solutions Grant *New*
The move towards digital transformation sees existing grants that support businesses to buy and use pre-scoped, off-the-shelf technologies being merged into a single Productivity Solutions Grant (PSG). This follows the expired Productivity and Innovation Credit scheme which enabled smaller companies to tap cash and tax incentives for adopting technology or innovative processes that raised productivity. The new PSG is meant to streamline some of the government grants for SMEs. This means that the existing Innovation & Capability Voucher (ICV) by Spring Singapore, Landscape Productivity Grant by National Parks Board and SMEs Go Digital Programme by Infocomm and Media Development Authority will be collapsed under a single PSG from 1st April onwards. The grant application process will also be simplified through the Business Grants Portal. Under the PSG, funding support of up to 70% of qualifying costs will be provided.
Enterprise Development Grant *New*
Helmed under the new Enterprise Singapore from April onwards, the Enterprise Development Grant will be a marriage of International Enterprise (IE) Singapore’s Global Company Partnership grant with Spring Singapore’s Capability Development Grant. This is targeted towards larger organisations seeking to innovate and expand internationally. The grant will offer up to 70% of funding support for activities such as product development, innovation and internationalisation. Until the grant is fully launched in the 4th quarter of 2018, businesses can continue to apply to the two individual grants separately on the Business Grants Portal.
Career-Trial Scheme *Improved*
An upgraded version of the current Work-Trial programme. Through this scheme, lower and middle-income workers are encouraged to try out new jobs and assess new careers amid the fast-changing work environment. At the same time, it provides training and salary support for companies to try out job-seekers with short-term work stints. It pays rank-and-file workers a training allowance for up to three months and gives them a bonus if they stay at the job for at least three months after the trial. More information about this revised scheme will be available in April.
Internationalisation gets Double Tax Deduction
The amount of expenses that can qualify for the double tax deduction for internationalisation, without prior approval from IE Singapore or the Singapore Tourism Board, will be raised from S$100,000 to S$150,000 per year of assessment (YA). This will take effect from YA 2019. Qualifying expenses include overseas business development and study trips, as well as participation in approved trade fairs abroad and locally.
IP and R&D Expenses get Increased Tax Deduction Rates
Tax deductions for businesses who build or co-innovate new solutions and engage in research and development (R&D) will get a 200% tax deduction, capped at S$100,000 on licensing payments per year, with effect from YA 2019 to 2025. The tax deduction for qualifying R&D expenses, for R&D done in Singapore, will also be raised from 150% to 250%.
Corporate Income Tax Rebate – Extension
To help firms manage immediate cost challenges, the corporate income tax rebate will be raised to 40% of the corporate tax payable, subject to a cap of S$15,000, for the tax YA 2018. This is an increase from the previous rebate of 20% of tax payable, subject to a cap of S$10,000 for YA 2018. The rebate will also be extended to YA 2019, although it will be back to 20% of tax payable, capped at S$10,000. In other words, the short-term rebate hike and its extension are targeted at companies with smaller profits. This is given that the cap still remains relatively low at S$15,000.
Wage Credit Scheme – Extension
While not a particularly new or improved implementation, the extension of the wage credit scheme (WCS) until 2020 is still a welcomed measure for local businesses. However, it will be in gradually reduced levels of co-funding by the government over the 3 years. For 2018, there will be 20% of co-funding, 15% for 2019, and 10% for 2020. The WCS has been around since 2013, where it started with the government co-funding 40% of wage increases for Singaporean employees. This extension helps firms cope with near-term cost pressures alongside encouraging employers to share productivity gains with staff. Unlike government grants for SMEs, employers do not need to apply for WCS payouts and will receive notification from IRAS if they qualify.
While speech day has come and gone, the Budget’s full impact on businesses in Singapore has yet to be affirmed. With the Budget debate and Committee of Supply debates going on over these few weeks, businesses can look forward to more details on the government grants for SMEs and what it will mean to them in the coming weeks.
Nevertheless, as part of the move towards digitizing businesses, other existing grants which encourage technological adoption are available. One such government grant for SMEs to adopt technological solutions is Spring Singapore’s Innovation and Capability Voucher (ICV). Claim up to S$5000 on pre-approved integrated solutions, such as JustLogin’s JustClock and more. Find out more on how you can improve your HR productivity with JustLogin now.
Comments