Singapore Announces 2010 Budget

February 23, 2010 Taxation in Singapore

Singapore Supreme Court BuildingThe Singapore Minister of Finance has delivered the national budget for the 2010 financial year, proclaiming that the Government is setting its sights on creating a superior economy with higher skills, better jobs and rising incomes.

On February 22nd, Tharman Shanmugaratnam, Minister of Finance of Singapore, announced that the Government has accepted the recommendations of the Economic Strategies Committee (ESC) and set a course to foster the capabilities needed to positively transform the Singaporean economy over the next decade. The new Budget revolves around growing productivity levels by 3 percent annually for the next ten years and increasing real incomes by an estimated third over current levels.

The Singapore Government has announced several critical changes in the new Budget. One of them is an expansion of the education sector, with the introduction of a Continuing Education and Training (CET) system and the Workfare Training Scheme (WTS), which aim to provide more funding and supplements for those wishing to up-skill in almost any trade or work skill. The Workfare Income Supplement (WIS) will be expanded, both in payouts and scope of eligibility. Foreign worker levies will be increased over the next three years to an extra SGD100 (approximately USD71.05).

Research and development plays a key role in the Singaporean budget, with a Productivity and Innovation Credit (PIC) being created, which will provide firms with a 250 percent tax-credit on expenditure from incurred by carrying out research and development, acquiring or registering intellectual property, automating work through technology, design work or providing training to its employees. An extra SGD1.5 billion (approximately USD1.07 billion) will be given to the National Research Fund in order to see private sector R&D spending rise to 2.5 percent of the GDP.

Further, to support business restructuring, the Government of Singapore will institute a tax allowance to cover the costs incurred through merger and acquisition activity, equal to 5 percent of the qualifying acquisition. To support access to growth finance, a new scheme will allow qualifying angel investors who commit in excess of SGD100 000 (approximately USD71 048) to claim a 50 percent tax deduction, after a two year holding period.

Additionally, the Government has earmarked SGD100 million (approximately USD71.05 million) for use on fostering relationships and scaling-up its support for business associations, and SGD45 million (approximately USD31.97 million) has been set aside for the SPRING’s Business Leaders Initiative, to nurture young entrepreneurs and future managers.

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