Singapore Corporate Tax Rates: Budget 2016 announces higher tax rebates, increases from 30% to 50%
Finance Minister Heng Swee Keat announced Singapore’s 2016 Budget last Thursday. Below is a quick recap of announced supportive policies for SMEs amid a easing bias and challenging economic condition.
One key relief is an expected increase in corporate income tax rebate from the current 30% to 50% for YA2016 and YA2017, with the absolute cap remaining the same at SGD 20,000. Below we illustrate how much tax your entity is expected to pay for various taxable income bands with 30% tax rebate, vs a 50% rebate scenario.
In addition to IRAS tax rebate giving immediate relief for businesses, many other initiatives were announced to support long-term economic transformation. It’s clearly seen that the Government is keen to support enterprises with automation and innovative processes. Some of the key policies include:
- Introducing SME Working Capital Loan Scheme: Up to SGD $300,000 for SMEs. It will catalyze $2b of loans over 2 years. Encourage greater lending for SMEs. Government will co-share 50% of default risk with participating banks.
- Introducing Business Grants Portal in Q4-2016 to help ease the current confusing schemes around: Firms will not need to go from agency to agency to access incentives. Various support schemes will be reviewed.
- Foreign worker levy freeze for one year for manufacturing, marine and process sectors, while those for services and construction sectors to continue seeing levy.
- Special Employment Credit, which is due to expire this year, will be modified and extended to 2019. It will cover 340,000 workers.
- Trade Associations and Chambers (TACs) will reach out to firms, particularly SMEs. SMEs will get wider funding to attract talent, develop capabilities, and strengthen partnerships. SPRING will partner with TACs on 30 projects to reach 3,000 SMEs. The government will provide $30m over the next 5 years to support TACs.
- National robotics program: Solution providers will offer cheaper packages for SMEs. It can help create value added jobs in various sectors such as healthcare, construction, manufacturing, logistics. The government will provide $450m in support of the national robotics program over the next 3 years.
- In the coming years, Government will help SMEs looking to scale up their automation projects. It introduces the Automation Support Package for an initial period of 3 years. Currently, there are no incentives to promote automation. The government will shoulder up to 50% of the cost of qualified automation projects, with a maximum grant of $1m. Qualifying projects will also receive 100% allowance for automation equipment. Access to loans will also be improved.
For more details about initiatives announced during Singapore Budget 2016, please refer to more from the Government website and Singapore Business Review.