How Budget 2018 affects your business

HELPING BUSINESSES INNOVATE AND BECOME MORE COMPETITIVE

Finance Minister Heng Swee Keat announced a slew of initiatives to help businesses cope with near-term cost pressures and continue to grow.

The corporate income tax rebate for year of assessment (YA) 2018 will be raised to 40 per cent of tax payable, with a cap of $15,000.

For YA2019, the rebate will be 20 per cent of tax payable, capped at $10,000.

There will be a corporate tax exemption, restricted to the first $200,000 of chargeable income, from YA2020.

For start-ups specifically, 75 per cent of their first $100,000 chargeable income will be exempt from corporate tax from YA2020, down from 100 per cent currently.

This is a "sound and equitable" measure to help companies develop capabilities and to make sure every profitable company pays some taxes, said Mr Heng.

To encourage innovation, the Government will pilot the Open Innovation Platform, where businesses can list their specific challenges and then be matched with ones that help co-develop solutions.

To facilitate businesses in accessing support to adopt technologies and productivity solutions, existing grant schemes that support off the shelf productivity solutions will be streamlined into one Productivity Solutions Grant (PSG).

The PSG will provide funding support for up to 70 per cent of qualifying costs.

There will also be tax deductions for businesses who buy, build or co-innovate new solutions and engage in research and development.

The tax deduction for intellectual property (IP) registration fees will double to 200 per cent, to "help firms protect their intangible assets", said Mr Heng.

The amount of expenses that can qualify for the Double Tax Deduction for Internationalisation without prior appraisal will also be increased from $100,000 to $150,000 for each year of assessment, from YA2019.

Businesses in Singapore can also expect more support for internationalisation and partnerships.

Several existing grant schemes that support partnerships between companies will be combined under a single Pact scheme, or Partnerships for Capability Transformation, through which companies can apply for up to 70 per cent of funding for collaborations in areas including capability upgrading, business development and internationalisation.

Two grants - one from IE Singapore and one from Spring Singapore - will be combined to form the Enterprise Development Grant (EDG).

It will provide up to 70 per cent co-funding for businesses seeking to build deep capabilities, scale up and internationalise.

Businesses can apply for the EDG from the fourth quarter of this year.

HELP FOR WORKERS

Employees can expect more help with wages and training.

The Wage Credit Scheme, which co-funds wage increases for Singaporean employees up to a gross monthly wage of $4,000, will be extended for three years.

To help more Singaporeans get trained in digital skills like data analytics, artificial intelligence and the Internet of Things, the TechSkills Accelerator, launched in 2016, will be expanded into new sectors like manufacturing and professional services.

The current Work Trial scheme will be upgraded into a Career Trial programme which will help job seekers try out new jobs and access new careers.

ENCOURAGING CORPORATE GIVING

Corporations and businesses will also see further encouragement to engage in charity and staff volunteerism.

The Business and IPC Partnership Scheme (BIPS) will be extended for an additional three years until December 2021.

The partnership allows businesses that support their staff to volunteer and provide services to IPCs (Institutions of a Public Character) to receive a 250 per cent tax deduction on associated costs incurred.

Corporates will be further encouraged to give to the Community Chest through the Share programme, as the Government will extend the dollar-for-dollar matching on donations until 2021.

It was also announced that the Government will provide dollar-for-dollar matching on donations received by the Empowering for Life Fund - which helps fund programmes in skills upgrading and employment for vulnerable groups - under the President's Challenge, for the next five years.

In all, enhancements to all initiatives supporting philanthropy and volunteerism are set to cost the Government around $190 million a year.

INFRASTRUCTURE AND BORROWING

Investments into new infrastructure, including healthcare, security and transport will see a considerable uptick.

Some of the large-scale investments over the next decade include an expansion in the rail network, a new terminal for Changi Airport and the Kuala Lumpur-Singapore High Speed Rail.

As such investments are often "lumpy", with hefty upfront investments, the Government will adopt a "save and borrow" approach.

Where possible, the Government will save for such investment, where funds will be put away to save for future development and infrastructure.

One example is the Changi Airport Development Fund, started in 2015 for Terminal 5.

There is now $4 billion in the fund.

This year, a new Rail Infrastructure Fund will be set up to save for major rail lines ahead.

The fund will see an initial injection of $5 billion in the 2018 financial year.

The Government is also looking into the possibility of statutory boards and government-owned companies borrowing to finance large-scale infrastructure projects.

For example, agencies like the National Environment Agency will look at borrowing to finance the upcoming Integrated Waste Management Facility.

To help with the financing costs, the Government will consider providing guarantees for some of these long-term borrowings.

This initiative will avoid the need to draw directly on the reserves, which can remain invested to generate returns, said Mr Heng.This initiative is currently being studied and discussed with President Halimah Yacob and the Council of Presidential Advisers.

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