How Singapore Budget 2020 will aid businesses

The Singapore Government has announced $8.3 billion dollars over the next three years to be allocated to spurring enterprises as well as the economy as a whole. Included in their spending is a series of optimistic tax rebates and other related measures — we take a look at what this means for doing business in Singapore.

2020 General Enterprise Investment — At a Glance

Deputy Prime Minister Heng Swee Keat (also Finance Minister) said on Tuesday, Feb 18 that the large pool of investment will be split under three main pillars — developing people, deepening the capabilities of enterprises, and enabling stronger partnerships. 

From Mr. Heng, “Within each industry, we need to strengthen partnerships to deepen industry-wide capabilities. Even as our enterprises compete to differentiate themselves, they must come together to solve common challenges.”

• The SME Working Capital Loan will have its maximum loan share raised from $300,000 to $600,000. The Singapore Government will increase its risk on these loans from 50-70% to 80%. 
• A Networked Trade Platform will allow for the exchange of international trade data.
• The Nationwide E-invoicing Network will let suppliers send electronic invoices to the Government to save on time and admin costs.
• The introduction of an Enterprise Transform Package, designed to support leaders of small to medium-sized enterprises (SMEs). It will aim to help 900 small companies over the next three years with mentorship and training. 
• The launch of GoBusiness, an online platform to help streamline business licence applications and government assistance.
• An Executive-in-Residence programme will be launched by Enterprise Singapore (ESG) to fund over 10 chambers and trade associations to attract highly experienced executives to boost their respective industries and services. 
• The Enterprise Development Grant has been expanded to give support to enterprises to both innovate and expand globally. It will aim to support around 3,000 projects in the next financial year, more than 10 percent more than last year. 
• A Heartland Enterprise Upgrading Programme to also be set up by ESG to encourage growth within heartland enterprises, including four-year precinct rejuvenation plans. 
• $300 million will be allocated to Startup SG Equity, which will focus on providing capital for early-stage start-ups, focusing on the tech sector. 
• SMEs Go Digital Programme has launched to help SMEs further adopt digital technology.

2020 Tax Measures for Enterprise Growth

As well as a raft of mechanisms to help businesses innovate and expand, there were also a series of tax measures announced to provide relief to encourage growth even further. 

First and perhaps most notably, Singapore businesses will get a rebate on their corporate tax. At a cost to the Singapore Government of around $400 million, companies will be given a rebate of 25% tax payable (with a maximum of $15,000) for 2020. 

There were other enhancements to tax treatments announced, including the allowance for companies to carry back any unabsorbed capital allowances and trade losses for up to three previous financial years.

Targeted at the likes of hotels and other tourist-centric industries, companies will be able to fast-forward the write-off for expenditure on machinery and renovations for 2021. The idea being that these tourism businesses can carry out upgrades during the current quiet period and be ready to go for when the tourists come back in force. 

An automatic two-month extension of interest-free instalments for corporate income tax payments has also been initiated. To qualify a company must file within three months of the end of their financial year.

The Mergers and Acquisitions (M&A) scheme was set to lapse on March 31 of this year but has been prolonged to December 31, 2025. While this will allow acquiring companies to be given an allowance (25% of the acquisition, capped at $10 million), the existing stamp duty relief will expire April 1, 2020. The ability to waive the requirement that the ultimate holding company must be incorporated and tax resident in Singapore will also no longer be available on or after 1 April 2020.

The Double Tax Deduction for Internalisation scheme was also set to expire on March 31 of this year but has been prolonged until December 31, 2025. This will add surety for enterprises with international operations, as it allows a tax deduction of 200% on expansion into qualified markets globally. The scheme will now also cover costs for consultancy and other new categories of expenses related to international expansion.

Finally, Singapore’s derivative market will get a Government assisted boost, with the scope of withholding tax exemption for interest on margin deposits to be extended to approved clearing houses. 

A Bright Three Years Ahead

Any minor quibbles aside, the Singapore Government has overall, showed maturity and foresight in its plan to encourage enterprises across the board. By encouraging business from SMEs up to global enterprise, there is something for everyone to utilise to encourage growth. A focus on technology both in terms of operations and innovation also bodes well for Singapore’s reputation as a global hub of technology. 

If you’d like any more information on how Singapore’s 2020 budget could improve your business, big or small, please do contact us. It’s both our job and our pleasure to assist Singapore businesses grow and prosperty.