The Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA) rated Singapore as the most SME friendly government in the world in their recent Global SME Performance Review report. Singapore is followed by the UAE and the UK respectively. Singapore has scored highly on key aspects such as its attractive tax system, availability of grants and finance for overseas expansion, training and upgrading.
SMEs drive economic growth in Singapore and play a key role in job creation. Recognising this the Singapore government has rendered unwavering support and has committed a lot of resources to ensure the resilience of the SMEs. The Singapore government has various schemes in place to help SMEs and Micro Enterprises tackle the challenges of today and empower them to tap into the growth opportunities. There is a wide network of SME centres and satellite SME centres spread across the island to provide a one-stop solution and advisory services to the SMEs. The following is an overview of some of the schemes available for the SMEs to help save cost, upgrade capabilities, enhance manpower and internationalise for growth.
PRO SME TAX REGIME
Singapore has a very competitive corporate tax rate in the region. It is especially attractive for the SMEs. The headline corporate tax rate is 17% only but newly incorporated (in the first three tax filing years) companies enjoy full tax exemption on the first S$100,000 taxable income. All Singapore companies enjoy a partial tax exemption, therefore, they are subjected to only 8.5% tax on taxable income of S$300,000. Besides these tax exemptions, there are several industry-specific tax incentives resulting in substantial tax savings for enterprises operating in select sectors.
Corporate Income Tax Rebate
To help companies cope with rising business costs the Minister for Finance announced in the 2013 Budget that, for the Years of Assessment (YA) 2013, 2014 and 2015, companies will receive a 30% Corporate Income Tax (CIT) Rebate that is subject to a cap of $30,000 per YA. To learn more click here.
Productivity and Innovation Credit (PIC)
The tax discount scheme was launched in 2010 to encourage companies to undertake productivity enhancement initiatives. The scheme is available until 2018. Under the scheme, businesses can enjoy up to 400% deductions or allowances of up to $400,000 on expenditure incurred in each of the six qualifying activities. Alternatively, businesses can choose for cash payout comprising 60% of investment spending, capped at $100,000 per year across all six activities. From YA 2015, the expenditure cap for SMEs will be raised for each qualifying activity from $400,000 to $600,000. Under PIC Bonus scheme, dollar-for-dollar matching cash bonus, capped at S$15,000, is given on top of the existing 400% tax deductions/ allowances and/or 60% cash payout. To learn more click here.
FINANCE AND GRANTS FOR SMES
Micro Loan Programme (MLP)
SMEs are challenged by the rising costs of doing business, the increased competition for credit and the tightened credit market. The Singapore government has committed to support the SME segment in the form of Micro Loan Programme. In order to improve access to loans for SMEs the government shares the risk with participating financial institutions. In 2014 Budget the government’s risk share was increased from 50% to 70% for companies that are less than three years old. A maximum sum of S$100,000 is available towards daily operations or for automating and upgrading factory facilities and equipment. To learn more click here.
Co-Investment Programme Phase (CIP)
The CIP was envisaged to provide growth capital for Singapore-based enterprises through co-investment with the private sector. This programme is targeted to help enterprises that need more time to execute their growth and expansion plans. In its first phase out of the S$250 million set aside by the government S$160 million has been committed through two funds which have catalysed S$500 million seed capital into investee companies. Under the second phase launched last year another S$150 million has been set aside by the government to support equity capital and mezzanine capital.
Local Enterprise Finance Scheme (LEFS)
A government-assisted program administered by SPRING Singapore. The scheme offers machinery loans of up to S$15 million at a subsidised fixed interest of either 4.25% or 4.75% depending on the loan tenure. To learn more click here.
Loan Insurance Scheme (LIS)
The scheme insures loans against default risks. The government will co-share the insurance premium with the SME. There is no maximum loan quantum for the LIS and government provides premium support of 50%. The insurer based on the risk profile of borrower will determine the premium rate, interest rate, and loan tenure. To learn more click here.
Capability Development Grant (CDG)
The various grant programmes offered by SPRING have now been streamlined into one main Capability Development Grant (CDG). It helps SMEs in their capability upgrading initiatives across 10 development areas. It assists SMEs to take on large scale upgrading projects and defrays up to 70% of the cost of the qualifying projects. To learn more click here.
Innovation and Capability Voucher (ICV)
A voucher valued at S$5,000 is provided for SMEs to implement solutions or obtain consultancy services in the business areas including innovation, productivity, human resources and financial management. SMEs can also use the voucher for adopting and implementing solutions to improve business efficiency and productivity. Each SME is entitled to a maximum of eight vouchers. To learn more click here.
ICT for Productivity and Growth (IPG)
Under the scheme, 70% funding is provided for adoption of proven ICT-based solutions and 80% funding, capped at S$ 1 million, for the adoption of emerging solutions. 50% subsidy capped at S$120 per month for fibre subscription plans is also available under the scheme. The SMEs can also make use of a one-time subsidy of up to $2,400 to implement Wireless@SG services at their premises. To learn more click here.
Increase SME Productivity with infocomm Adoption & Transformation (iSPRINT)
SMEs are funded for adopting ICT in specific areas. The scheme allows for 70% funding towards the adoption of basic ICT solutions or customised advanced ICT solution and the funding is capped at $2,000 and $20,000 respectively. To learn more click here.
WORKFORCE SUPPORT FOR SME
To help the SMEs tackle the tight labour market and to ensure a ready talent pool of qualified locals the government has launched several schemes.
SME Talent Programme
This programme helps local SMEs attract local talent from the Polytechnics and Institutes of Technical Education (ITEs) by sponsoring a study award and a job opportunity upon graduation. Participating SMEs will be eligible for up to 70% funding support covering the student’s tuition fee, monthly allowance and a signed-on bonus for final year students. Successful students will be bonded to the sponsoring SMEs for two years after graduation. The SME will also get 70% funding for training costs in the first year of the employment. To learn more click here.
Market Readiness Assistance (MRA) Grant
Entering a foreign market can be very challenging for SMEs but nevertheless very essential for their growth. In their internationalisation projects, SMEs will have to inevitably engaging professional services. This grant is available for engaging the services of a qualified IE panel of partners to seek consultation on market assessment, market entry and business restructuring for internationalisation. International Enterprise (IE) Singapore co-funds 50% of the eligible cost for supportable activities, capped at S$20,000 per company per year in their internationalisation efforts. To learn more click here.
Internationalisation Finance Scheme (IFS)
The IFS helps Singapore-based companies to secure mid- to long-tenure capital facilities, of up to S$30 million, from Participating Financial Institutions (PFIs) for overseas assets acquisitions and projects. IE shares up to 70% risk under the IFS. Finance is available for securing fixed assets or lands and factories overseas, or structured loans for working capital for secured projects, or banker’s guarantee for secured overseas projects. To learn more click here.
PRODUCTIVITY & CAPABILITY ENHANCEMENT SUPPORT
Partnerships for Capability Transformation (PACT) scheme
This supports collaborative projects between SMEs and large enterprises in areas that involve co-innovation, technology test-bedding, knowledge transfer and sharing of best practices. Approved PACT projects will be eligible for up to 70% funding support for qualifying costs. To learn more click here.
Collaborative Industry Projects
Under this project, a consortia, comprising of industry players, trade association and chambers, solution providers and users, is established to identify productivity issues in specific industries and to come up with solutions that can be adopted to improve productivity within the sector. The Government will co-fund up to 70% of the development and adoption costs of these solutions. To learn more click here.
*Please note that the relevant terms & conditions must be fulfilled in order to qualify for the exemptions/grants. To see how we may be able to assist you, please contact us.
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Published by Hawksford Singapore