ANNOUNCED AS TEMPORARYNo
FDI: Financial incentive
On 21 February 2014, the Singaporean Deputy Prime Minister presented the 2014 budget to the parliament.
Introduction of the PIC+ scheme
In his speech, he announced a further prolongation of the Productivity and Innovation Credit ("PIC") scheme for another three years beyong 2015 as well as the introduction of the PIC+ scheme for small and medium-sized enterprises (henceforth: SMEs).
The new scheme raises the maximum yearly expenditure cap from 400'000 to 600'000 SGD for each qualifying activity (to profit from 400% tax deductions/ allowances) and shall be in force from 2015 through 2018. This means that Singaporean SMEs seeking a substantial investment to transform their businesses between 2015 to 2018 may claim tax deduction for up to 1.8 million SGD. In an example presented by the Deputy Prime Minister, an SME with a turnover of 10-50 million USD making an investment worth 1.6 million SGD would obtain a tax deduction of 531'200 SGD (1.6 million x 400% x 8.3% (tax rate for companies with 10-50 million SGD turnover).
State aid to lure innovative companies
He also promised new companies moving to Singapore, "who can pilot emerging technology solutions that have the potential to transform businesses (These can, for example, include innovations in sensors, data analytics and robotics.)" to support 80% of their qualifying costs over the next three years with a cap per company of 1 million SGD.
Amended state aid programmes for SMEs
Furthermore, the Singaporean government would launch the second phase of its Co-Investment Programme investing 150 million SGD into Singaporean SMEs through direct equity investments and mezzanine financing.
It would also increase its risk share in the Micro-Loan Programme for young SMEs from 50 to 70% (loans below 100'000 SGD). The government expects this should create a further 32 million SGD in micro loans.
Changed Internationalisation Finance Scheme
The Singaporean government also announced it would increase the maximum loan quantum within the Internationalisation Finance Scheme from 15 to 30 million SGD. The scheme supports Singaporean firms trying to expand overseas through asset-based financing, structured loans and guarantees.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
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