ANNOUNCEMENT 18 Feb 2011In February 2011, the government of Singapore announced a targeted tax change.
NUMBER OF INTERVENTIONS
On 18 February 2011, the Singaporean Finance Minister presented the annual budget to the parliament.
Amended PIC scheme
The 2010 introduced Production and Innovation Credit scheme (cf. Related Measures) was amended to allow businesses to deduct from their taxable income 400% of their expenditures in each of six specified categories. Previously, companies could deduct 250% of their costs. The cap of expenditure in each category per year was also raised from 300'000 to 400'000 SGD.
The cash payout for the first 100'000 SGD investment by SMEs was increased from 21'000 to 30'000 SGD. Furthermore, Singaporean companies may now include R&D expenditure conducted abroad.
According to the government, the PIC programme will cost annually 520 million SGD.
Cash grant for SMEs and CIT rebate
For the year 2011, Singaporean entities will receive a corporate income tax rebate of 20% up to 10'000 SGD. As SMEs pay low taxes anyway, they may instead receive a one-off cash grant worth 5% of their revenues with a maximum of 5'000 SGD per SME.
Introduction of the Special Employment Credit
Companies may further benefit from a Special Employment Credit of 50% (for Singaporean employees aged 50-59) or 80% (for Singaporean workers over the age of 60) of the employer's social security fund contributions over the next three years. As this measure increases the competitiveness of local workers, it shall be classified as a migration measure.
The Finance Minister also promised to reduce the taxation of foreign income. A rate decrease was not mentioned but the tax reduction should cost the government 22 million SGD.
Since all three schemes were either planned only for the year 2011 or were amended by the budget in the following year (cf. Related Measure), this measure is no longer classified as implemented.
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.