MEASURES FOR BUSINESSES
(A) Tightening Foreign Worker Policies
(A1) Increase in Foreign Worker Levies
Foreign Worker Levies for Work Permit and S Pass holders will be increased for all sectors in 2014 and 2015.
(A2) Reduction in Dependency Ratio Ceiling (DRC)
(A3) Increase in S Pass Qualifying Salary
The S Pass qualifying salary criteria will be increased from $2,000 to $2,200. Older and more experienced S Pass applicants will need to qualify at higher salaries, commensurate with their work experience.
Further details will be released by the Ministry of Manpower on 26 February 2013.
(B) 3-Year Transition Support Package
(B1) Wage Credit Scheme (WCS) ($3.6 billion over 3 years)
Under the WCS, the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage2 of up to $4,000. Wage increases that are given in 2013 to 2015 will be eligible for WCS.
Eligible employers will receive a payout automatically annually. The first payout will be in the second quarter of 2014, and the last payout will be in 2016.
(B2) Productivity and Innovation Credit (PIC) Bonus ($450 million over 3 years)
Businesses3 that incur a minimum of $5,000 in PIC qualifying expenditure per year will enjoy a dollar-for-dollar matching cash bonus of up to $15,000 over three Years of Assessment (YA2013 to YA2015). The PIC Bonus seeks to assist businesses to defray rising operating costs such as wages and rentals in response to business feedback, and to encourage businesses to undertake improvement in productivity and innovation.
This is in addition to existing PIC benefits of:
- 400% PIC tax deductions of up to $400,000 in qualifying expenditure for each PIC activity; or
- In-lieu of tax deductions, cash conversion of 60% on qualifying expenditure of up to $100,000.
(B3) Corporate Income Tax (CIT) Rebate ($1.3 billion over 3 years)
To help companies alleviate rising business costs over the medium-term, a three-year CIT rebate of 30% capped at $30,000 per Year of Assessment (“YA”) from YA 2013 to YA 2015 will be given.
Cost Savings for Commercial Vehicles
(B4) Further Five-year COE Renewal for Commercial Vehicles
Currently, when commercial vehicles reach the end of their ten-year COE, the owners can only renew their COE for five years with no further extension or pay more for a ten-year COE renewal. We will allow owners who choose to renew their COEs for five years in the first instance to extend their COEs further for another five years. This will ease their cashflow and provide flexibility.
More details will be provided during the Ministry of Transport’s Committee of Supply.
(B5) Road Tax Rebate ($46 million for 1 year)
To relieve business costs, a 30% road tax rebate will be granted for goods vehicles (including goods-cum-passenger vehicles), buses and taxis for one year. The rebate will take effect on 1 July 2013.
More details are available at www.lta.gov.sg.
(C) Strengthening of Productivity Incentives
Initiatives for Industry-wide Collaboration
(C1) Collaborative Industry Projects ($100 million over 3 years)
Government agencies will work with industry players and trade associations to encourage solution providers and users to develop scalable solutions with potential for mass adoption. The Government will co-fund the development and adoption costs.
(C2) Partnerships for Capability Transformation (PACT) ($60 million over 3 years)
PACT will be expanded to include additional manufacturing sectors4 as well as non-manufacturing sectors5. Beyond supplier qualification, PACT will support initiatives that improve SMEs’ productivity and capabilities. We will do so by supporting deeper collaboration between SMEs and Large Enterprises (LEs)6. EDB, SPRING, IDA and BCA will lead PACT for their respective sectors.
More details will be provided during the Ministry of Trade and Industry Committee of Supply.
Support for Individual Firms
(C3) Enhancements to the PIC Scheme
To provide more support for businesses investing in innovation and productivity, the PIC scheme will be enhanced as follows:
- The prescribed equipment list will be updated regularly to take into account feedback from businesses.
- For equipment that are not in the prescribed list, IRAS will qualify the equipment for PIC benefits based on the following liberalised conditions:
- The equipment automates or mechanises, whether in whole or in part, the work processes, whether core or non-core of the business; and
- The equipment enhances productivity of the business.
- Equipment that is a basic tool will be allowed, so long as:
- It increases productivity compared with the existing equipment used in the business; or
- It has not been used in the business before.
With the above, more equipment will qualify for the enhanced capital allowance under the PIC scheme.
- IP in-licensing will now be a qualifying activity under the PIC scheme. IP acquisition and IP in-licensing costs will be eligible for enhanced tax allowance/deductions under the PIC scheme, up to a combined cap of $400,000 per YA. This will help businesses, especially SMEs, that obtain IP rights under licensing arrangements rather than acquire the IP for innovation or productivity improvements.
These changes will take effect from YA 2013.
(C4) Land Productivity Grant ($60 million over 5 years)
The Government will provide a Land Productivity Grant to support consultancy fees and/or domestic or overseas relocation costs for companies restructuring their operations which result in land intensification or savings of at least 0.1 hectares in Singapore. The scheme is open for applications and runs till 31 March 2017.
(C5) Technology Adoption Programme ($51 million over 3 years)
The Government will link up SMEs with public sector Research Institutes and private sector technology providers to identify and develop productivity solutions that give them a competitive advantage.
More details will be provided during the Ministry of Trade and Industry’s Committee of Supply.
(C6) Promoting Technology Adoption in Construction
- Tighten regulatory measures on the use of productive designs and building methods. The Government will mandate the use of more manpower efficient designs and technologies in building projects. This will be implemented through increases in the minimum Buildability score7 for all developers in July 2013 and in July 2014. The Government will take the lead and adopt even higher standards of buildability and constructability for public sector projects.8
- Step up assistance to small, progressive firms. We will enhance the Mechanisation Credit (MechC) scheme to give more support to smaller equipment typically used by small firms, as well as increase the finding support under the Productivity Improvement Project (PIP) scheme for firm-level, prefabricator-level and group level projects. This enhancement will cost $10 million over 3 years.
More details will be provided during the Ministry of National Development’s Committee of Supply
Training for Singaporeans at All Levels of the Workforce
(C7) Workfare Income Supplement (WIS) ($650 million per year)
The WIS Scheme will be enhanced to further supplement the income and savings of low-wage workers, as well as encourage them to remain in the workforce. With these enhancements, WIS will benefit 480,000 workers. The key enhancements are as follows:
- Extension to more workers. Employees earning up to $1,900 per month will now be eligible for WIS, up from the current limit of $1,700 per month.
- Higher payouts. Maximum WIS payouts for employees will be increased by up to $700, with more going to older workers aged 45 years and above. Those aged 35 to 44 years will get a smaller increase. The increase in the maximum WIS payout will be 25% to 50%.
- Increase WIS cash payouts. Employees will now receive 40% of WIS in cash and 60% in CPF payments. Previously they received 29% of WIS in cash.
- Increase WIS payouts to CPF-Medisave Account (MA) and Special Account (SA). For WIS payouts that go into the CPF, more will be channelled into the CPF Medisave and Special Accounts.
- More targeted WIS. To ensure that WIS is focussed on low-income households, the following additional eligibility criteria for WIS will be implemented:
- The individual must not own two or more properties.
- If married,
- He and his spouse together do not own two or more properties.
- The annual Assessable Income of his spouse does not exceed $70,000, which is above the 80th percentile income of full-time employed Singapore Citizens.
(C8) Enhancements to the Workfare Training Scheme (WTS)
More details on the WTS will be announced at the Ministry of Manpower’s Committee of Supply.
(C9) Higher CPF Contribution Rates for Low-Wage Workers
The CPF contribution rates for employees earning above $50 to $1,500 will be increased from 1 January 2014 as follows:
(C10) Higher CPF Contribution Rates for Self-Employed Persons
Starting from 1 January 2014, self-employed persons earning an annual Net Trade Income (NTI) of above $6,000 to $12,000 will be required to contribute half (instead of the current one-third) of the full Medisave contribution rate relevant to their age group. For self-employed persons who earn NTI of above $12,000 to $18,000, the contribution rate will increase with income, from half of the full rate (at NTI of $12,000) to the full contribution rate (at NTI of $18,000).
Further details on the changes to CPF contribution rates at (C9) and (C10) can be found on the Ministry of Manpower’s website at www.mom.gov.sg, and the Central Provident Fund Board’s website at www.cpf.gov.sg.
(C11) SME Talent Programme
SPRING will launch an SME Talent Programme to attract polytechnic and ITE students over the next five years to join SMEs upon graduation.
(C12) Top-up to Lifelong Learning Endowment Fund ($500 million)
The Lifelong Learning Endowment Fund will receive a $500 million top-up.
Improving accessibility of schemes and enhancing service delivery
(C13) Improving Accessibility to Government Support Schemes for SMEs
We will improve the accessibility of government support schemes for our SMEs. SPRING will also set up more SME centres to increase their outreach to SME clients.
(D) Capabilities for New Growth Industries
Charting new frontiers in manufacturing
(D1) Future of Manufacturing ($500 million over 5 years)
EDB will set aside $500 million over 5 years to support a Future of Manufacturing plan. EDB is working with industry partners, our universities, polytechnics and research institutes to build new capabilities and test-bed technologies that can be tapped on by our firms, including manufacturing SMEs.
(D2) Satellite Industry Development ($90 million)
EDB will support the emerging satellite industry in Singapore through a $90 million Satellite Industry Development Fund. This will enable our companies and workers to grow new high value activities in this area by leveraging existing pockets of satellite capabilities, as well as adjacent expertise in electronics and complex equipment manufacturing.
Seizing Growth Opportunities in Services
(D3) Data Analytics
To support the data analytics industry cluster, the Government will develop a pool of 2,500 analytics professionals over the next five years.
Tapping Regional Export Markets
(D4) Asian Development Bank (ADB) Trade Finance Programme
IE Singapore is working with ADB and private insurers to expand the capacity of ADB’s Trade Finance Programme, so as to increase the availability of credit guarantees to facilitate exports by our companies.
(E) Further Tax Measures
(E1) Financial Sector Incentive (FSI)
To continue growing high-value financial sector activities, the FSI scheme9 will be refined and renewed for five years from 1 January 2014 to 31 December 2018.
(E2) Maritime Sector Incentive
To support the growth of our maritime sector, the maximum incentive tenure for international shipping enterprises under the Maritime Sector (Tax) Incentive will be extended from 30 years to 40 years.
(E3) Start-Up Tax Exemption (SUTE) scheme
The SUTE scheme will not be available to property developers and investment holding companies incorporated after 25 February 2013. Property developers and investment holding companies will still be able to enjoy the partial tax exemption generally available to all companies.
(E4) Taxation of Employment Perquisites – Housing, Hotel and Furniture and Fittings Benefits
From YA 2015, housing and hotel accommodation provided to employees will be taxed based on the Annual Value of the premises, less rent paid by the employee and the actual cost of the hotel accommodation incurred by employers respectively. The taxable value of furniture and fittings provided to employees will be based on a percentage (to be determined by IRAS in consultation with the industry) of the annual value of the housing accommodation.
(E5) Removing the Property Tax Refund Concession for Vacant Properties
For consistency and equity in tax treatment, the concession of allowing property tax refunds on vacant properties will be removed with effect from 1 January 2014. This is in line with the principle that property tax is a tax on ownership of properties, whether occupied or otherwise.
(E6) Tobacco Tax
To harmonise the tax rates between cigarette and non-cigarette tobacco products, the excise duties for Beedies, Ang Hoon and smokeless tobacco will be raised by 25% from $239/kg to $299/kg, and unmanufactured tobacco by 1.5%, from $347/kg to $352/kg.
2 Gross monthly wage is defined as the total wages paid by the employer to the employee in the calendar year, divided by the number of months in which CPF contributions were made. Total wages paid to an employee is computed from the CPF contributions that the employer makes for the employee in the year. Total wages includes basic salary and additional wages like overtime pay and bonuses, and excludes employer CPF contributions.
3 Businesses that have made CPF contributions to at least 3 local employees (excluding shareholders cum directors) will be eligible for the PIC Bonus.
4 Such as Food Manufacturing, Printing, and Furniture Manufacturing.
5 Such as the Retail, Food Services, ICT, and Construction sectors.
6 LEs encompass both large local enterprises as well as the MNCs.
7 The Buildability score requires labour saving elements to be taken into consideration in the design of a project and this increase is expected to yield significant gains in productivity.
8 Constructability scores mandate the use of better construction methods and technology at the building stage of a construction project.
9 Excluding the FSI-Islamic Finance award.