1. Wage Credit Scheme
The Wage Credit Scheme (WCS), launched in 2013 and later extended in 2015 to help businesses cope with wage increases, will be lengthened to 2020 though the level of co-funding will be tapered.
It will provide co-funding of 20 per cent for 2018, 15 per cent for 2019 and 10 per cent for 2020. To be eligible, Singapore employees must be earning a gross monthly wage of up to S$4,000 and receive monthly pay rises of at least S$50.
2. Corporate Income Tax Rebate
The Corporate Income Tax (CIT) rebate will go up to 40 per cent of tax payable and capped at S$15,000 for the Year of Assessment 2018. This is a rise from the current 20 percent of tax payable, capped at S$10,000.
The rebate will also be extended for another year at a rate of 20 per cent of tax payable and capped at S$10,000.
3. Productivity Solutions Grant (PSG)
To help businesses buy and use new solutions, existing grants supporting the adoption of pre-scoped, off-the shelf technologies will be streamlined into a single Productivity Solutions Grant (PSG).
The PSG will provide funding support of up to 70 per cent of qualifying costs. Businesses can apply for the new grant through the Business Grants Portal (BGP), which will provide a list of supportable equipment and technology solutions relevant for their sectors, from April this year.
4. Intellectual property (IP)
The tax deduction on licensing payments for the commercial use of intellectual property (IP) will also be raised to 200 per cent, capped at S$100,000 of licensing payments per year.
Next, to support businesses to build their own innovation, the tax deduction for IP registrations fees will be doubled to 200 per cent. This will be capped at S$100,000 of IP registration fees per year.
The tax deduction for qualifying expenses incurred on research and development (R&D) done in Singapore will also be raised to 250 per cent, from 150 per cent. The change will take effect from YA2019 to YA2025.
5. Open Innovation Platform
To help businesses find partners to co-create solutions, a virtual crowd-sourcing platform called the Open Innovation Platform will be piloted this year.
This will be a platform for companies to list specific challenges that can be addressed by digital solutions, said Mr Heng. They will then be matched with info-communications and technology (ICT) firms and research institutes to co-develop solutions.
6. Aviation Transformation Programme (ATP) and a Maritime Transformation Programme (MTP)
An Aviation Transformation Programme (ATP) and a Maritime Transformation Programme (MTP) will also be launched this year to strengthen Singapore’s status as an air and sea hub.
The Government will provide support of up to S$500 million for the two programmes, with additional matching investments expected from industry partners.
7. National Robotics Programme
In addition, the National Robotics Programme, first launched in 2016, will be expanded to encourage wider use of robotics in the built environment sector, particularly in construction.
“We have built a strong research and knowledge base in our universities and A*STAR institutes, which provides a solid foundation for an innovative economy,” said Mr Heng, who added that public sector R&D spending has been sustained at 1 percent of GDP annually to maintain this competitive edge.
“We have various programmes to translate our public sector research efforts into commercially viable applications, and we will build on these,” he added.
The fostering of pervasive innovation in the economy was mentioned by Mr Heng in his Budget statement as one of the three key enablers that lay the foundation for all Industry Transformation Maps (ITMs) and must be strengthened.
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
9. Double Tax Deduction for Internationalisation (DTDi)
To support firms in internationalising, the Double Tax Deduction for Internationalisation (DTDi) will be further enhanced.
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.
10. Start-up Tax Exemption (SUTE) and the Partial Tax Exemption (PTE)
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.
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.