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SINGAPORE: A new Productivity and Innovation Credit scheme to support investments in innovation will also be introduced. It will cost the government some S$480 million annually.
Finance Minister Tharman Shanmugaratnam said this in his 2010 Budget Statement on Monday.
The scheme will provide tax deductions for investments in a wide range of activities, including R&D and design activities done in Singapore, automation via technology and training of employees.
The scheme will also cover registration and acquisition of intellectual property.
250 percent of expenditures on each of the activities can be deducted from the taxable income - with a cap of S$300,000 expenditure for each activity.
This will take effect from the year of assessment 2011.
Under this scheme, it is possible for a company to get a quarter of its investment back in additional tax benefits from the government.
Mr Tharman highlighted a Japanese food outlet - Ebisboshi Shotengai at Iluma Mall - which was able to cut down on a third of its staff and increase productivity by implementing a wireless self-ordering system from Japan.
It allows customers to send their food orders straight to the kitchen using a wireless stylus pen.
To complement this scheme, the minister also announced a National Productivity Fund - which aims to help with funding for initiatives customised for specific enterprises.
A target of S$2 billion will be injected into the fund - with the first billion being given this year.
The fund will provide grants to help enterprises in all sectors with a special emphasis on sectors with potential for more productivity.
S$250 million from the first S$1 billion will be used for raising productivity in the construction industry which Mr Tharman described as a "key sector which needs to improve."
- CNA/ir
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