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SMALL and medium enterprises (SMEs) stand to gain another $150 million annually from key tax breaks in this year's Budget.
Finance Minister Tharman Shanmugaratnam said on Wednesday that a new tax allowance for fixtures and fittings in their buildings, together with research and development incentives, will cost the Government a total of $380 million every year.
Of this, about $150 million will go to SMEs, said Mr Tharman. This was much more than the $50 million Ang Mo Kio GRC MP Inderjit Singh had estimated.
'This year's further tax moves to promote productivity and innovation will complement the reduction in headline rates that we announced last year,' said Mr Tharman.
He added that the Government's focus is to provide 'a conducive and attractive tax environment for companies to build sustainable competitive advantages through innovation'.
For example, an SME with about $1 million of profits and R&D expenditure of 1.5 per cent of its turnover in Singapore would have an effective tax rate at 6.2 per cent.
This is comparable to that in Ireland, and much lower than that in Hong Kong, said Mr Tharman.
Singapore SMEs are in for other tax perks this year. Last year, Singapore cut its corporate tax rates to 18 per cent from 20 per cent.
This, together with a partial tax exemption change also announced at the same time, will take effect this year, and benefit SMEs by $160 million.
Mr Tharman noted that such measures are part of the Government's efforts to provide an 'attractive tax regime' so that 'Singapore remains the best place for businesses to start, grow and mature'.
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