Singapore’s Minister for Finance, Mr Heng Swee Keat has delivered his first Budget Statement, as well as the first Budget of the current term of government. This Budget 2016 comes at an important moment in Singapore’s development as it sets the direction towards SG100 and beyond. It also includes measures to ensure that risks are mitigated if not eliminated.
Budget 2016 broadly identified three key thrusts:
Budget 2016 has indeed charted the course for Singapore’s nation building for the next 50 years and beyond.
This article is based on our interpretation of both tax measures and some non-tax changes in Budget 2016. Our comments should not be considered definitive and can only be served as a guide. If you need further clarifications or advice, please get in touch with our tax advisors at IGS Consulting.
- Adoption of fiscal policies that are driven towards GDP growth to counter cyclical weaknesses;
- Development of structural environment for businesses to build deeper capabilities through innovation, while at the same time drives growth and;
- Supporting Singaporeans through funding the development of skills and employment opportunities.
Budget 2016 has indeed charted the course for Singapore’s nation building for the next 50 years and beyond.
This article is based on our interpretation of both tax measures and some non-tax changes in Budget 2016. Our comments should not be considered definitive and can only be served as a guide. If you need further clarifications or advice, please get in touch with our tax advisors at IGS Consulting.
 | Corporate Income Tax (CIT) Rebate |
Pre-Budget |
Post-Budget |
YA2016 and YA2017 All companies are granted a 30% CIT Rebate capped at S$20,000 per YA. |
YA2016 and YA2017 The CIT Rebate has been increased to 50% of chargeable income capped S$20,000 per YA. |
 | Personal Income Tax (PIT) Reliefs |
Pre-Budget |
Post-Budget |
No cap on personal relief claims |
Capped at S$80,000 per YA, effective from YA2018 |
 | Special Employment Credit |
Pre-Budget |
Post-Budget |
Aged 50 and above, up to 8% of monthly wage Aged 65 and above, up to 8% (+ additional 3%) of monthly wage |
Aged 55 to 59, up to 3% of monthly wage Aged 60 to 64, up to 5% of monthly wage Aged 65 and above, up to 8% (+ additional 3%) of monthly wage |
 | Wage Credit Scheme |
Pre-Budget |
Post-Budget |
YA2013, YA2014 and YA2015 Monthly wage less than S$4,000. Level of co-funding: 40% of qualifying wage increase |
YA2016 and YA2017 Monthly wage less than S$4,000. Level of co-funding: 20% of qualifying wage increase |
 | SME Working Capital Loan Scheme |
Pre-Budget |
Post-Budget |
- |
Provision of loans up to S$300,000. Government to co-share 50% of the default risks of these loans with participating financial institutions. These funds may be used in daily operations or for automation and upgrading of factory and equipment. Criteria: - Singapore Registered Businesses - Have at least 30% local shareholding - Sales turnover of not more than S$100 million or employment size of not more than 200. |
 | Productivity & Innovation Credit (PIC) |
Pre-Budget |
Post-Budget |
Businesses may choose to convert their incurred qualifying expenditure of up to S$100,000 in each YA for cash. The cash payout rate is 60% of the incurred qualifying expenditure. |
Lower cash payout from 60% to 40% for qualifying expenditure from 1 August 2016. PIC is still available between YA2016 to YA2018, thereafter it will expire on schedule. |
 | Foreign Worker Levy |
The increase in foreign worker levy will be deferred for a period of one (1) year in the Marine and Processes sectors due to challenging business conditions. However levy increases across all other sectors will proceed as planned.
 | Industry Transformation Programme |
- A centralised Business Grants Portal to ease the application of grants will be introduced.
- The Automation Support Package to offer grants up to $1million, full investment allowance and enhanced risk sharing
- Trade information can be now be shared through a new National Trade Platform
- Spending on Innovation will be increased as robotics and industry collaboration enhances
 | Financial Services Tax Incentives |
- Tax incentive scheme extended to 31 March 2021 and the concessionary tax rate to be lowered to 8%
- Enhancements & extensions to FSI-St and insurance incentives
Overall the Budget 2016 has clearly showed the Government’s desire to finely balance both social and business needs. It puts emphasis on two main groups – the Small and Medium Sized Enterprises (SMEs) and its people – highlighting the importance of partnerships between government agencies, enterprises, trade associations and chambers (TACs) and unions. Budget 2016 presented measures to help the economy restructure and grow domestically yet at the same time equipping it to compete internationally. This is very well aligned with the vision of Singapore’s economy as competitive and relevant in today’s highly connected and globalised world.