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Budget 2018 – Summary for Businesses
While the widely anticipated increase in the GST will be raised by 2% points, from 7% to 9% from 2021 to 2025, the GST on imported services to be introduced from 1 Jan 2020 would impact many tech businesses who are also buyers of digital services. While the implications seem more apparent for consumers, in a globally interconnected digital marketplace today, this affects the entire value chain for Tech industry.
The introduction of the Carbon Tax has been anticipated to some degree by businesses. The carbon tax of $5 per tonne of greenhouse gas emission from 2019 gives time for companies to react. Tech industry is growing rapidly and hence also the commensurate growth in data hosting, cloud services etc. Whilst the carbon tax is relatively lower than other countries which have introduced it (Korea, UK, NZ, etc.), it will nevertheless still increase business cost, directly for our Data Centres and for tech industry as a whole.
On the whole, Budget 2018 provides support for businesses in overcoming some of the short-term challenges and prepare for future opportunities.
Here’s a brief summary:
To ease business costs:
1. The Wage Credit Scheme (WCS) which supports businesses embarking on transformation efforts will be extended for three more years to Singaporeans with gross monthly wages of up to $4000
To support restructuring by companies, the Corporate Income Tax (CIT) will be extended for another year to YA2019, at a rate of 20% of tax payable, capped at $10,000
To promote innovation:
Higher tax deductions from YA2019 to YA2025 to support businesses in their use and development of innovations
Productivity Solutions Grant will provide for up to 70% funding support for the adoption of pre-scoped, off-the-shelf solutions to make it easier for businesses to access support to adopt technologies and productivity solutions
Open Innovation Platform (OIP) aims to facilitate innovation and narrow the gap between research and commercialisation where companies can list challenges will be matched with ICT firms and research institutes to collaborate and develop innovative digital products.
National Research Foundation – Temasek IP Commercialisation vehicle is a new investment venture to support commercialisation of publicly-funded IP developed in Singapore
To build deep capabilities:
Tax exemptions for start-ups under the Start-up Tax Exemption (SUTE) although tax exemption on the first $100,000 of chargeable income under SUTE will be reduced from 100% to 75%
Enterprise Development Grant EDG) will offer up to 70% funding support for firms to build a range of capabilities including innovation, talent development and internationalization via the combined SPRING Singapore’s
Capability Development Grant (CDG) and IE Singapore’s (IE) Global Company Partnership (GCP) grant.
Double Tax Deduction for Internationalisation (DTDi) will be offered from YA2019 when expenses that can qualify for DTDi without prior approval will increase from $100,000 to $150,000 per YA
Tech Skills Accelerator (TeSA) has been scaled up to develop more ICT professionals in new sectors, and in emerging digital skills such as data analytics and artificial intelligence
To support Smart Nation drive:
Smart Nation Sensor Platform, National Digital Identity System, e-payments, and sharing of more data are some of the strategic projects businesses can expect
For the full Budget 2018 report, click here
For Support for SMEs report, click here
Published February 2018