資訊
Feb-23-2010 Singapore Budget 2010 – A budget focused on SMEs
The Singapore Government released its budget for the year 2010 on February 22, 2010. It is an expansionary budget that builds on Budget 2009, focusing on SMEs and including tax measures that aim to enhance Singapore’s position as an attractive investment destination. Below, we highlight the key initiatives from Budget 2010 that we feel are particularly attractive for our clients.
Enhancement for tax deductions for qualifying expenditure incurred under the Productivity and Innovation Credit Scheme
Currently, Singapore tax-resident companies enjoy a deduction of up to 150% on Research and Development conducted in Singapore, and a 100% deduction on expenditure incurred on employee training, automation equipment, designs, IP acquisition and IP registration.
Under the Productivity and Innovation Credit Scheme introduced by the Singapore Budget 2010, all businesses will be allowed to deduct, from their taxable income, 250% of their first S$300,000 of expenditure and 100% of their subsequent expenditure on qualifying activities.
The qualifying activities include:
- Research & Development;
- Intellectual Property registration;
- Intellectual Property acquisition;
- Design activities, and
- Automation through technology or software; and training of employees.
Moreover, businesses with a low taxable income can choose to convert up to S$300,000 of the tax deductions and allowances credited to them into a cash grant, up to a maximum of S$21,000 each year. The Productivity and Innovation Credit will be available for all businesses from YA 2011 to YA 2015.
Providing seed capital for SMEs and start-ups
The Singapore Government has announced that, to provide a catalyst for SMEs, it will co-invest in private equity, venture capital and seeder funds. The intention is for the Singapore Government to mobilise up to S$1.5billion of growth capital by seeding a range of public-private co-investment funds over the next 10 years, for which the Government will contribute up to half the capital.
In addition, the Singapore Government confirmed that it was studying how best to set up a specialised financial institution to plug gaps in the supply of cross-border financing for Singapore firms, similar to the export credit agencies or export-import (Exim) banks elsewhere – as recommended by the Economic Strategies Committee (ESC) earlier this month.
Tax incentive for angel investors
Under a new scheme announced on February 22, private individuals “with appropriate investment and business expertise” who make an equity investment of S$100,000 or more in a qualifying start-up can now claim a 50% tax deduction on their investment at the end of a two-year holding period.
The amount of investment eligible for the tax deduction will be capped at S$500,000 a year.
Spring Singapore, the government agency charged with nurturing small and medium enterprises (SMEs), will administer the tax incentive scheme, which will be available for the next five years. The scheme is expected to cost the government S$60 million in total.