MEASURES FOR BUSINESSES
(A) Managing Our Dependence on Foreign Workers
(A1) Reduction in Dependency Ratio Ceilings (DRCs)
To manage our foreign worker inflow, DRCs will be reduced from 1 Jul 2012 as follows:
- Manufacturing: from 65% to 60%.
- Services: from 50% to 45%.
- S Pass Sub-DRC: from 25% to 20% for all sectors.
Companies will have to comply with the new DRCs/Sub-DRCs for new foreign workers from 1 Jul 2012. For existing workers, companies will be given until 30 Jun 2014 to comply.
(A2) Reduction in Man-Year Entitlement (MYE) Quota
The MYE quota for new projects in the construction sector will be further reduced by 5% in Jul 2012. Foreign worker levies for basic skilled workers hired outside these MYE quotas will be raised.
More details can be found on the Ministry of Manpower website at www.mom.gov.sg.
(B) Measures for SMEs
(B1) Higher CPF Contribution Rates for Older Workers
The CPF contribution rates for workers aged above 50 years will be increased from 1 Sep 2012. The CPF contribution rates for those aged above 50 years to 55 years will eventually be raised to reach the full CPF contribution rate of 36%.
(B2) Enhanced Special Employment Credit (SEC)
The SEC is enhanced to encourage employers to engage older Singaporean workers aged above 50. It will more than offset the increase in employer CPF contribution rates for older workers.
The SEC scheme will be in place for the next five years (2012-2016). This will cost $470 million per annum. The Government will set aside $2.4 billion for the SEC payouts for the next five years. More details are available on the SEC website at www.sec.gov.sg.
(B3) SME Cash Grant
The Government will provide companies with a one-off cash grant, pegged at 5% of their revenues in YA2012, capped at a payout of $5,000. To qualify, the companies must have made CPF contributions to at least one employee. The scheme will cost around $320 million in FY2012.
(B4) Enhancements to Productivity and Innovation Credit (PIC) Scheme
The PIC scheme will be enhanced to benefit smaller companies:
- Increase in cash payout from 30% to 60% for up to $100,000 of firms’ PIC expenditures per YA. This will apply for YA2013 to YA2015.
- Companies can claim cash payouts on a quarterly basis instead of at the end of the financial year. This will apply from 1 Jul 2012.
- Claims for in-house training costs of up to $10,000 a year will not require external certification. This will apply from YA2012.
(B5) Enhanced Training Support for SMEs and Self-Employed Persons (SEPs)
Enhanced support for training for SMEs for three years, starting from Jul 2012:
- Course subsidy: 90% for WDA-certified courses and Academic Continuing Education and Training (CET) programmes at polytechnics and ITE.
- Absentee payroll cap: Increased from $4.50 to $7.50 an hour.
Similar training benefits will be provided for self-employed persons. WDA will work with industry associates and agencies, such as the National Taxi Association and MDA, so that individuals such as taxi drivers and freelancers in the creative sector can benefit.
More details will be provided during the Ministry of Manpower and Ministry of Education Committee of Supply debates.
(B6) Grants to Support SME Upgrading and Productivity
Grants for capability development will be raised from 50% to 70% over the next three years under schemes managed by SPRING and IE Singapore. This will provide a $200 million boost over the next three years.
(B7) Renovation and Refurbishment Deduction Scheme
From YA2013, the amount of expenditure that may be claimed under the Renovation and Refurbishment Deduction Scheme will be raised from $150,000 to $300,000 for each three-year period.
(B8) Mergers and Acquisitions (M&A) Scheme
A 200% tax allowance (to be written down in 1 year) will be given on the transaction costs incurred in M&A, subject to an expenditure cap of $100,000. This will apply for M&A completed between 17 Feb 2012 and 31 Mar 2015.
(C) Capturing Opportunities for Growth
(C1) Helping Companies Internationalise
A project finance company (PFC) will be established by a consortium of financial institutions led by Temasek Holdings to plug gaps in financing for larger, long-tenure cross-border projects. The Government will guarantee the debt instruments issued by the PFC. At steady state, the PFC is expected to provide about $400 million of financing every year, in turn catalysing about $2-$3 billion of projects annually.
Trade Financing and Political Risk Insurance
The current suite of trade financing schemes under IE Singapore will be expanded to support Singapore companies in cross-border trade, including helping companies with the cost of political risk insurance.
More details will be provided during the Ministry of Trade and Industry Committee of Supply.
Double Tax Deduction for Internationalisation
Double tax deduction may be given automatically, instead of on an approval basis, on qualifying expenses incurred on key overseas expansion activities. This will apply for up to $100,000 of expenses incurred for each YA, from 1 Apr 2012.
The Government will inject an additional $905 million into the Tourism Development Fund to grow the tourism sector by attracting higher-spending tourists.
The GST Tourist Refund Scheme will be extended to international cruise passengers departing from the existing Singapore Cruise Centre and the upcoming International Cruise Terminal. The scheme will be implemented in Jan 2013.
(C3) Marine and Offshore
The Government will allocate $150 million from the National Research Fund to A*STAR and EDB to build our R&D capabilities to develop solutions for deepwater oil production.
(C4) Gold Trading Hub
The supply of investment-grade gold and other precious metals will be exempt from GST from 1 Oct 2012.
(C5) Providing Tax Certainty
To provide upfront tax certainty, clear guidelines will be provided specifying when a company will not be taxed on their gains from disposal of equity investments.
(C6) Excise Taxes on Non-Cigarette Tobacco Products
The excise duties on (a) beedies, “ang hoon” and smokeless tobacco; and (b) unmanufactured tobacco will be raised by 20% and 10% respectively with effect from 17 Feb 2012.
(D) Enhancing our Transport System
(D1) Carbon Emissions-based Vehicle Scheme (CEVS)
The current Green Vehicle Rebate (GVR) scheme will be replaced with a new CEVS in Jan 2013. This will cost the Government $34 million per year.
CEVS is based on carbon efficiency and will be applicable to all new passenger cars. Cars with low carbon emissions will enjoy rebates on their ARF of up to $20,000, while those with high carbon emissions will have to pay a registration surcharge of up to $20,000.
For commercial vehicles and motorcycles, the Government will extend the GVR scheme till end-2014.
More details will be provided during the Ministry of Transport Committee of Supply.
(D2) Lowering of Special Diesel Tax for Euro V Vehicles
The Special Tax for Euro V-compliant diesel cars will be lowered from $1.25 per cc to $0.40 per cc from 1 Jan 2013.
(D3) Removal of Additional Transfer Fee (ATF)
The ATF, levied on used-vehicle transactions, will be removed with effect from 18 Feb 2012. This amounts to $70 million per year in revenue forgone.
More details on measures (D2) and (D3) can be found on the Land Transport Authority (LTA) website at www.lta.gov.sg.