Budget 2016

Budget 2016 sees a shift from broad-based support to more targeted measures designed to help SMEs increase productivity, scale up and internationalize.

While certain measures like the Corporate Income Tax rebate increment from 30% to 50% will benefit SMEs across the board, other new additions are more suited for businesses in specific stages of growth. Find out what budget initiatives best suit your business needs, whether you’re just starting up or looking into expansion.

According to SBF chief executive Ho Meng Kit, startups need access to a single agency that helps them leverage on intellectual properties that are already developed by Singapore’s research institutes.

Those new to the world of entrepreneurship can count on the SG-Innovate initiative to pair them up with seasoned mentors and introduce them to venture capital firms. The scheme also aims to give entrepreneurs access to talents like students and researchers, who can assist them in expanding their findings and broadening their reach into new markets.

If your business is in its budding stages, your primary concern is most likely to be capital and cashflow. A new SME Working Capital Loan (WCL) will be introduced for loans up to $300,000, to help support SMEs through cashflow concerns or expansion.

50% of the default risk of the loans will be co-shared by the government, and the funds can be used for daily operations, automation and upgrading of factory and equipment. Businesses considered to be bigger risks are now more likely to be eligible for loans from local banks and other financial institutions.

If you’re wary about loans and the red tape involved, try volunteering instead. Under the Business and Institute of a Public Character (IPC) partnership scheme, businesses that volunteer at IPCs get a 250% tax deduction on wages and incidental expenses. Though it doesn’t increase your cash flow as much as a loan would, it still eases your financial burden, and is a fulfilling way to foster better relationships within your team as you embark on a new venture.

To find out if the charity of your choice is a registered IPC, visit the Charity Portal.

Businesses that have successfully gotten off the ground will find their client list expanding. With less time on your hands, automation becomes not just a luxury but a necessity. Whether you’re planning on simply automating employee attendance or looking into larger-scale projects, SPRING’s Automation Support Package (ASP) can cover up to 50% of the cost, at a maximum cap of $1 million.

More customers also means higher expectations. You need heavy-duty equipment to keep up with the increase in demand, and to provide better quality services or products. The Local Enterprise Finance Scheme gives you better access to equipment loans, with the government now assuming 70% of the risk involved from PFIs. With a loan cap of $15 million, the scheme offers you sufficient improved equipment to conduct your business more efficiently.

Once your business has taken flight within the domestic market, venturing into foreign markets is often the next logical step. Budget 2016 has extended the two-prong Double Tax Deduction (DTD) initiative till March 2020 to cover qualifying expenses incurred for activities such as participation in overseas business development and investment study trips.

The DTD for Approved International Fairs (AIF) scheme lets businesses deduct against their taxable income twice the eligible expenses incurred when participating in AIFs. Such expenses include booth rental costs and the cost of inviting up to 2 potential overseas buyers, from airfare to accommodation.

Those who want to take it a step further and build their presence overseas will find the DTD for Internationalisation useful. It lets you automatically claim a 200% tax deduction on qualifying expenses. This encompasses everything from market surveys to employee overseas posting¹. As this only applies to the first $100,000, excess expenditure requires approval from International Enterprise (IE) Singapore.

Between the extension of existing measures to the introduction of new initiatives, especially in attempt to give local productivity growth a boost, reception has been primarily positive. 

Different business have varying needs, regardless of what stage they are in. But it’s safe to say that even if you’re a startup beginning to automate or a growing SME in need of a loan, Budget 2016 offers enough measures to help any business grow.

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¹ http://www.iesingapore.gov.sg

*SG-Innovate, SME Working Capital Loan (WCL) and Automation Support Package (ASL) are not available yet.