Singapore’s 2018 Budget: Key Highlights for Businesses

Posted on by

By Dezan Shira & Associates
Editor: Vasundhara Rastogi

ASEAN Briefing-Singapores 2018 Budget

On February 19, Singapore’s finance minister Mr. Heng Swee Keat delivered the 2018 budget.

With an emphasis on Asia, emergence of new technologies, and an aging population, this year’s budget focused on helping businesses in Singapore prepare for future challenges and create new opportunities. As a result, much of the budget’s schemes and proposals are directed towards greater investment in and around the development of Singapore’s knowledge resources and the growth of domestic firms. At the same time, Singapore continues to strive to remain an attractive investment destination.

In this article, we present key highlights from the budget with important implications for businesses.  

Professional Service_CB icons_2015 RELATED: Corporate Establishment Services from Dezan Shira & Associates

Measures to help businesses overcome near-term pressures

  • Wage Credit Scheme

Rising wage costs remain a key concern for businesses in Singapore, and the 2018 budget will extend the Wage Credit Scheme (WCS) for three more years to 2020, to help business cope with near-term cost pressure and save big while hiring local talent.

The WCS, which co-funds wage increases for Singaporean employees, up to a gross monthly wage of S$4,000 (US$3,031), will provide 20 percent co-funding for 2018, 15 percent for 2019, and 10 percent for 2020. The gradual lowering of the WCS contribution to wages is to help employers adapt to the eventual withdrawal of the scheme.

The scheme aims to encourage employers to share productivity gains with staff.

  • CIT rebate

Further, to help taxpaying companies, especially small ones, manage immediate cost challenges, the budget has announced the enhancement and extension of the corporate income tax (CIT) rebate.

The CIT rebate will be raised to 40 percent of the tax payable, capped at S$15,000 (US$11,368), for the year of assessment (YA) 2018 and will be extended to YA 2019 at a rate of 20 percent tax payable, capped at S$10,000 (US$7,579). Currently, companies can qualify for CIT rebate of 20 percent of tax payable, capped at S$10,000 (US$7,579) for YA 2018.

Changes to the Start-Up Tax Exemption (SUTE) scheme

Presently, a new company can qualify for the following exemptions in each of the first three YAs, subject to conditions:

  • 100 percent exemption on the first S$100,000 (US$75,785) of normal chargeable income; and
  • 50 percent exemption on the next S$200,000 (US$151,570) of normal chargeable income.

As per the 2018 budget, the tax exemption under the SUTE scheme will be adjusted to: 

  • 75 percent exemption on the first S$100,000 (US$75,785) of normal chargeable income; and
  • 50 percent exemption on the next S$100,000 (US$75,785) of normal chargeable income.

All other conditions of the scheme will remain unchanged while the amendment will take effect on or after YA 2020 for all qualifying companies under the scheme.

Changes to the Partial Tax Exemption (PTE) scheme

Presently, except SUTE beneficiaries, all companies can qualify for the following, in each YA:

  • 75 percent exemption on the first S$10,000 (US$7579) of normal chargeable income; and
  • 50 percent exemption on the next S$290,000(US$219777) of normal chargeable income.

The tax exemption under the PTE scheme will be adjusted to:

  • 75 percent exemption on the first S$10,000 (US$7,579) of normal chargeable income; and
  • 50 percent exemption on the next S$190,000(US$143,992) of normal chargeable income.

This change will take effect on or after YA 2020 for all companies and bodies of persons, except those that qualify for the SUTE scheme. All other conditions of the scheme remain unchanged.

Related-Reading-Icon-Asean LinkRELATED: The Guide to Employment Permits for Foreign Workers in Singapore 

Measures to foster productivity, technology, and innovation
  • Enhanced tax deductions for qualifying R&D, IP, and licensing costs

To encourage and support businesses to build their own innovations, the budget has raised tax deduction for qualifying expenses incurred on research & development (R&D) projects from 150 percent to 250 percent from YA 2019 to 2025.

Similarly, the budget has raised the tax deduction for intellectual property (IP) registration fees from 100 percent to 200 percent for the first S$100,000 (US$75,785) of qualifying IP registration and IP in-licensing costs incurred for each YA. The change will take effect from YA 2019 to 2025.

  • Tech Skills Accelerator (TeSA) to encourage digital skills

With digital technologies gaining importance, the 2018 budget has set aside an additional S$145 million (US$109 million) for the TechSkills Accelerator (TeSA) program. TeSA aims to equip the Singapore workforce with digital skills and to enhance employability outcomes for individuals in the information and communications technology (ICT) sector.

  • Productivity Solutions Grant

The 2018 budget will also streamline existing grants that support the adoption of pre-scoped, off-the-shelf technologies into a Productivity Solutions Grant (PSG). The grant will provide funding support for up to 70 percent of qualifying costs, starting from April 1, 2018. Businesses can apply for the grant through the business grant portal.

Besides the schemes discussed above, the budget also announced a National Robotics Program (NRP) to encourage the wider use of robotics in sectors like construction; a National Wide E-Invoicing Framework to improve productivity and enhance cash flow; and an Open Innovation Platform – a crowd-sourcing platform, that will help businesses find partners to co-create solutions.

Related-Reading-Icon-Asean LinkRELATED: Singapore’s Chairmanship: Prospects for ASEAN in 2018 

Measures to help businesses scale up globally
  • Double tax deduction for internationalization (DTDi)

The DTDi scheme incentivizes businesses and companies to internationalize. Presently, businesses under the scheme are allowed a tax deduction of 200 percent on qualifying market expansion and investment development expenses, subject to approval. The amount of expense that can qualify for the DTDi without approval will be raised from S$100,000 (US$75,786) to S$150,000 (US$113,678) per YA.

  • Enterprise Singapore

A composite of two existing grants – SPRING Singapore’s Capability Development Grant (CDG) and IE Singapore’s Global Company Partnership Grant (GCP) – the Enterprise Singapore grant will provide integrated support to companies to help them compete at both domestic as well as international level.

  • Enterprise Development Grant (EDG)

The EDG will provide funding support to the business for up to 70 percent of qualifying costs from YA 2018 to 2019 to help them build a range of capabilities.

  • PACT scheme

An integration of various partnership support measures, the PACT scheme will allow companies to receive up to 70 percent of qualifying costs for collaborations between companies in areas, including capability upgrading, business development, and internationalization. 

About Us

ASEAN Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ChinaIndiaIndonesiaRussiathe Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

 
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the ASEAN and Asia. We maintain offices in Singapore, as well as Hanoi & Ho Chi Minh City, and maintain Alliance offices in Bangkok, Jakarta, Kuala Lumpur and Manila as well as throughout China, South-East Asia, India and Russia. For assistance with ASEAN investments into any of the featured countries, please contact us at asean@dezshira.com or visit us at www.dezshira.com

Related-Reading-Asean Book Title

dsa brochureDezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

an_introduction_to_doing_business_in_asean_2017_-_imageAn Introduction to Doing Business in ASEAN 2017
An Introduction to Doing Business in ASEAN 2017 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment, and taxation. We also include the latest development news for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.

How to Set Up in Thailand

In this issue of ASEAN Briefing magazine, we analyze the various market entry options available for investors interested in expanding to Thailand. We also discuss the various tax and non-tax incentives on offer for foreign investors in the kingdom. Finally, we discuss the salient features of Thailand’s EEC development plan and highlight the key incentives on offer for overseas investors.

 



4 responses to “Singapore’s 2018 Budget: Key Highlights for Businesses”

  1. […] Singapore’s 2018 Budget: Key Highlights for Businesses On February 19, Singapore’s finance minister Mr. Heng Swee Kiat delivered the 2018 budget. With an emphasis on Asia, emergence of new technologies, and an aging population, this year’s budget focused on helping businesses in Singapore prepare for future challenges and create new opportunities. — Asean Briefing  […]

  2. […] Singapore’s 2018 Budget: Key Highlights for Businesses On February 19, Singapore’s finance minister Mr. Heng Swee Kiat delivered the 2018 budget. With an emphasis on Asia, emergence of new technologies, and an aging population, this year’s budget focused on helping businesses in Singapore prepare for future challenges and create new opportunities. — Asean Briefing  […]

  3. […] RELATED: Singapore’s 2018 Budget: Key Highlights for Businesses Conclusion […]

Leave a Reply

Your email address will not be published. Required fields are marked *

Never Miss an Update

Subscribe to gain even better insights into doing business in ASEAN. Subscribing also lets you to take full advantage of all our website features including customizable searches, favorite, wish list and gift functions and access to otherwise restricted content.

Scroll to top