Budget 2018: New fund, tax enhancements to support companies in building enterprise capabilities

Budget 2018: New fund, tax enhancements to support companies in building enterprise capabilities

Finance Minister Heng Swee Keat introduced new grants to help local firms looking to build up their capabilities and announced the expansion of initiatives like the Tech Skills Accelerator to bridge the gap in digital capabilities in new sectors.

SINGAPORE: Local enterprises looking to build deeper capabilities, scale up and internationalise can do so with a new Enterprise Development Grant (EDG) come April, Minister of Finance Heng Swee Keat said in his Budget 2018 speech on Monday (Feb 19).

The EDG is made up of two existing grants – SPRING Singapore’s Capability Development Grant (CDG) and IE Singapore’s Global Company Partnership Grant (GCP). It will provide funding support for up to 70 per cent of qualifying costs from financial year 2018 to 2019.

Businesses can apply for the EDG through the Business Grants Portal from the fourth quarter of 2018. Before then, businesses can continue to apply for the existing CDG and GCP grants through the portal.

SPRING and IE will also merge in April to form a new statutory board under the Ministry of Trade and Industry.

The new statutory board Enterprise Singapore will be administering the new grant.

“Enterprise Singapore will provide integrated support to companies, for internationalisation as well as the development of other capabilities, so as to help them compete better both locally and abroad,” said Mr Heng.


To support firms in internationalising, the Double Tax Deduction for Internationalisation (DTDi) will be further enhanced, Mr Heng announced.

The S$100,000 expenditure cap for claims without prior approval will be raised to S$150,000 per year of assessment (YA). The tax deduction is for eligible expenses for supported market expansion and investment development activities.

This change will apply to qualifying expenses incurred on or after YA2019.

More details of the changes can be expected in April this year from IE and Singapore Tourism Board.

Two other tax schemes will also see adjustments – the Start-up Tax Exemption (SUTE) and the Partial Tax Exemption (PTE).

“These schemes lower costs for smaller firms and start-ups, but do not directly help firms develop capabilities. In addition, every profitable company should pay some taxes. This is sound and equitable,” said Mr Heng.

To start, tax exemption for both schemes will be restricted to the first S$200,000 of chargeable income.

For SUTE, the 100 per cent exemption for the first S$100,000 of normal chargeable income will be adjusted downwards to 75 per cent.

The next chargeable income which qualifies for a 50 per cent exemption has been revised downwards from S$200,000 to S$100,000.

For PTE, the 75 per cent exemption on the first S$10,000 of normal chargeable income stays.

However, the next chargeable income that qualifies for a 50 per cent exemption has been lowered from S$290,000 to S$190,000.

These changes will take effect on or after YA2020 for all qualifying companies and bodies of persons under the schemes.

“Even with these adjustments, corporate tax will remain low for start-ups and smaller firms,” Mr Heng said.

“For a taxable income of S$100,000, the effective corporate tax rate is 4.3 per cent for start-ups and 8.1 per cent for older firms, as compared to the headline rate of 17 per cent,” he added.

Source: CNA/fs