With the theme, ‘Partnering for the Future’; the speech, delivered by minister for finance Heng Swee Keat, outlined a higher corporate income tax rebate.
The rebate will increase from 30% to 50% of tax payable, with a cap of S$20,000 (£10,250, $14,640, €13,050) each year for 2016 and 2017, bringing it back to a level not seen since 2001.
The move, aimed at SMEs, is expected to cost an additional S$180m over the next two years, bringing the total support under the corporate income tax rebate close to S$1bn over that timeframe.
Loan scheme
In addition, an SME working capital loan scheme of up to S$300,000 per firm is being introduced, underwhich the Singaporean government will share 50% of the default risk of loans with certain participating financial institutions.
The move is aimed at encouraging lending to SMEs by as much as S$2bn over the next three years.
The SME Mezzanine Growth Fund is being expanded from its current S$100m to S$150m by matching up to S$25m of new private sector investment by a ratio of 1:1.
Heng believes this will encourage more SMEs to “scale up and internationalise”.
He said: “To support more mergers and acquisitions, I will grant the M&A allowance on up to S$40m of the value of the deal, instead of the current cap of S$20m.
“With the enhancement of the M&A allowance to 25% of the value of the deal as announced in budget 2015, companies can now enjoy up to S$10m of M&A tax allowances per year of assessment.”
He is also extending the period of tax-free gains on corporate disposals of equity investments until 31 May 2022, providing greater certainty regarding corporate restructuring.
Value creation
Elsewhere, the government is introducing an industry transformation programme to help create value and drive growth in four main ways: integrating restructuring efforts; taking a more targeted, sector-specific approach; deepening partnerships between government and industry; and placing a stronger emphasis on innovation and technology adoption.
Heng said: “Even as we provide immediate relief and support amid the current cyclical slowdown, we must press on with economic transformation. The global economic landscape is changing, and our challenges are pressing. We have a narrow window. We must find every opportunity to transform, to emerge stronger in the coming years.”
Double taxation
As the government seeks to encourage SMEs into international markets, the double taxation deduction for internationalisation is being extended until 31 March 2020, which covers qualifying expenses such as those pertaining to overseas business development and investment study trips.
