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Singapore Budget 2016: Recap on changes in 2015
With the Singapore Budget 2016 to be announced on 24 March, it's time for SME owners to take stock of last year's highlights, which included measures to boost innovation, expansion and training. Here's a recap to prepare for this year's budget announcement.
Further Restructuring Support
We first saw the Transition Support Package (TSP) introduced in 2013. It was due to expire in 2015, but last year the government extended the scheme until Year of Assessment (YA) 2017 to give businesses more time to adjust to rising costs and a tight labour market. This package included:
- The Wage Credit Scheme (WCS) - which was extended to YA 2017, with co-funding reduced to 20 per cent of the wage increase for employees earning S$4,000 per month or less.
- The Corporate Income Tax (CIT) Rebate of 30 percent was extended to YA 2017, with the cap reduced to S$20,000.
- The Productivity and Innovation Credit (PIC) scheme and PIC plus were extended to YA 2018, while PIC Bonus has ended.
Business owners would be wise to note this rollback, as PwC says it signals the end of a restructuring journey and means businesses need to factor in less support.
The Singapore Budget 2015 also enhanced support for businesses to adjust to Central Provident Fund (CPF) changes, which saw the salary ceiling and contributions for older workers increase in January. The Temporary Employment Credit (TEC) was raised to one percent of wages in 2015 and extended for two years.
Breathing Space for Foreign Labour
Small businesses have seen Singapore's labour policies tightening since 2010. Last year the government said it would give SMEs breathing space to adjust to changes by deferring planned levy increases for foreign workers.
For S Pass holders across all sectors and Work Permit Holders in services, marine and process, increases were deferred to July 2016. Levies were also frozen at 2014 levels for manufacturing workers, and reduced for higher skilled (R1) construction workers for 2015 and 2016, but raised for basic skilled (R2) workers over 2015 to 2017.
Assistance for Innovation and Growth
Keen to scale? The Singapore Budget 2015 included enhanced grants, incentives and initiatives to help SMEs internationalise and grow in the world economy.
It's easier to apply for SPRING Capability Development Grants (CDG) for projects below S$30,000, thanks to a simplified application process, with enhanced funding covering 70 percent of costs extended until YA 2018. The Collaborative Industry Projects (CIP) scheme was also expanded, and Partnerships for Capability Transformation (PACT) was extended and enhanced.
The National Research Fund received a S$1 billion top-up to help more companies develop products. And there was good news for entrepreneurs seeking funding, with the co-investment cap increased for SPRING's Startup Enterprise Development Scheme (SEEDS) and Business Angel Scheme (BAS).
The government also introduced a pilot venture debt programme to help high-growth companies secure financing, where SPRING provides 50 percent risk sharing with financial institutions.
To help SMEs expand internationally, International Enterprise (IE) Singapore grant schemes were increased to 70 percent for three years. Double tax deduction for internationalisation (DTDi) was enhanced to include salaries of Singaporeans posted overseas. And for high-growth companies, the International Growth Scheme (IGS) was introduced, providing a 10 percent concessionary tax rate on incremental income from qualifying activities.
Help to Hone Employee Skills
The final highlight concerns your workforce, with exciting new measures to help employees improve skills throughout their careers.
You can encourage workers to undergo training as part of SkillsFuture. Each Singaporean over the age of 25 has an initial S$500 credit for courses supported by government agencies, like the Workforce Development Authority (WDA).
Employees can build occupational and industry competencies with WDA's Workforce Skills Qualifications. Managerial staff can learn to use tools to boost your productivity through PRISM programmes. And you can consider the Skills Training for Excellence (STEP) programme to up-skill Professionals, Managers and Executives (PMEs).
For more details on the measures introduced last year, see the Singapore Budget 2015 announcement.
What Can We Expect for 2016?
The Singapore Budget 2016 is expected to be delivered on 24 March. The process begins on 1 April each year and ends the following year on 31 March. The government also takes into account feedback – the Ministry of Finance received 3,000 suggestions for the Singapore Budget 2015.
This year there are more calls for measures supporting small businesses. The Singapore Business Federation-led SME Committee (SMEC) urged the government to reduce business costs and invest further in training.
The public, individuals and businesses alike, has been invited to provide their feedback via the REACH Pre-Budget 2016 site to help the government devise new ways to support local companies to grow through innovation and internationalisation.
After recapping last year's budget highlights, the next step is to take stock. How do the changes impact your goals and can you benefit from initiatives? Consider the changes made last year and look out for any new developments on these initiatives as you plan ahead for the year.