Highlights of the Singapore Budget 2017

Singapore’s Budget statement for financial year 2017, which was delivered on 20 Feb by Finance Minister Heng Swee Keat, focused on achieving an innovative, connected economy.

Acknowledging changes in some of the most advanced economies as well as the rise of disruptive technologies, Minister Heng highlighted the need for Singapore to develop deep capabilities and partnerships in its economy to stay competitive and grow. To achieve this, businesses need to embrace digitization and innovation, as well as scale up. The following chart provides a quick round-up of what all companies and start-ups need to know.

Managing the Transition

The following initiatives are introduced to help companies adapt to structural shifts in the economy as the different sectors reposition themselves for the future. For companies that need help managing cost or cash flow, they will continue to receive support through the following schemes.

 

Existing New
Corporate Income Tax Rebate (CIT)
Companies received a 50% Corporate Income Tax (CIT) rebate that is subject to a cap of $20,000 for each year for Years of Assessment (YAs) 2016 to 2017.

 

 

 

Cap will be raised from $20,000 to $25,000 for YA 2017. The rebate will remain at 50% of tax payable.

 

 

To be extended one more year to YA2018, but at a reduced rate of 20% of tax payable, capped at $10,000.

 

Personal Income Tax
Did not exist.

 

 

 

A rebate of 20% of personal tax payable, capped at $500, will be granted to all resident individuals for YA 2017.
Re-employment Age
Re-employment age is 65 years.

 

 

Raised to 67 years with effect from 1 July 2017.

 

 

Special Employment Credit (SEC)
Under the Special Employment Credit (SEC), the government provides wage offsets to employers hiring Singaporean workers aged 55 and above earning up to S$4,000 a month.

 

 

The SEC was extended for another three years from 1 January 2017 to 31 December 2019.

 

The wage-offset rate will be tiered as per the age of the employee with the maximum rate of up to 8%.

 

SEC Offset Rate

Employee Age 55 – 59: 3%

Employee Age 60 – 64: 5%

Employee Age ≥ 65: 8% (+3% until re-employment age is raised)

 

Employers who hire Persons With Disabilities (PWDs), who earn up to $4,000 a month, will continue to receive a credit of up to 16% of the employee’s wages regardless of age.

The SEC will continue to provide employers support.

 

 

An Additional Special Employment Credit (ASEC) will be extended for two and a half years from 1 July 2017 to 31 December 2019.

 

Employers who hire eligible workers with monthly wages of not more than $3,000 per month will receive ASEC of 3% of their eligible employees’ monthly wages. A lower ASEC is provided for workers who earn between $3,000 and $4,000.

 

ASEC & SEC Offset Rate

Wages up to $3,000: 11% (i.e. 8% SEC + 3% ASEC)

Between $3,000 and $4,000: $1,320 – (0.33 x wage)

 

Employers who hire PWDs will receive double the combined monthly SEC and ASEC. The combined monthly SEC and ASEC will be capped at $330 per eligible PWD.

 

Wage Credit Scheme
The government has co-funded 20% of wage increases given to each Singaporean employee earning a gross monthly wage of up to $4,000.

 

 

The scheme will continue into YA 2017.
“Adapt and Grow” Initiative
To help Singaporeans affected by the economic slowdown and restructuring, the “Adapt and Grow” initiative was introduced for two groups – Professionals, Managers, Executives and Technicians (PMETs) and Rank and File (RnF) workers.

 

 

The following existing schemes saw an increase in wage and training support:
·         Career Support Programme (CSP), which provides wage support for employers hiring mature and retrenched, or long-term unemployed PMETs
·         Professional Conversion Programme (PCP), which helps PMET job seekers re-skill
·         Work Trial Programme, which helps RnF job seekers and prospective employers assess their job fit through a short-term work stint.

 

The CSP will be enhanced, for employers who hire mature PMETs, as well as to help more SMEs qualify for the support.

 

 

The PCP will be enhanced to enable more mid-level career conversions to take place.

 

The Work Trial Programme will be enhanced to enable a longer trial period, especially for long-term unemployed and persons with disabilities who may need more time to assimilate in their new jobs. Additional retention incentive and wage support will also be extended to those unemployed for more than 12 months to encourage hiring of these individuals.

 

A new “Attach and Train” initiative will be introduced for sectors with good growth prospects to re-skill jobseekers and facilitate more career conversions under the PCP.

 

SME Working Capital Loan
Since June 2016, the government has co-shared 50% of default risks for loans of up to $300,000 per SME.

 

 

The scheme will continue to be available for the next 2 years.
Foreign Worker Levy
Levy was increased for Work Permit Holders in Construction and Services sectors, and S Pass holders in all sectors.

 

 

Levy increases for both S Pass and Work Permit Holders in the Marine and Process sectors will be deferred by one year to 1 July 2016.

 

There were no changes to Work Permit levies in the Manufacturing sector.

 

Levy rates for Work Permit Holders in the Construction sector will be raised from the current $650 to $700 on 1 July 2017.

 

 

Levy increases for both S Pass and Work Permit Holders in the Marine and Process sectors will be deferred by one more year to 1 July 2018.

 

There will be no changes to Work Permit levies in the Manufacturing and Services sector for 2017. There will also be no change to levy rates for S Pass Holders.

 

Strengthening Capabilities

Technology is quickly reshaping and disrupting industries and markets. The following section outlines three capabilities that many firms will need – being able to use digital technology, embracing innovation, and scaling up in a tech-savvy world.

Existing New
SMEs Go Digital Programme
Did not exist. A SMEs Go Digital Programme will be introduced to help SMEs build digital capabilities.

 

 

SMEs will get step-by-step advice on the technologies to use at each stage of their growth. Besides receiving in-person help at SME Centres and a new SME Technology Hub, SMEs that are ready to pilot emerging ICT solutions can receive advice and funding support.

 

Operation and Technology Road-Mapping
A*STAR currently works with firms to conduct operation and technology road-mapping, to identify how technology can help them innovate and compete.

 

 

A*STAR aims to support 400 companies over the next 4 years.
Headstart Programme
The Headstart Programme allows SMEs that co-develop intellectual property with A*STAR enjoy royalty-free and exclusive licenses for 18 months in the first instance.

 

 

With immediate effect, this will be extended to 36 months.
Tech Access Initiative
Did not exist. To support companies in the use of advanced machine tools for prototyping and testing, which may require costly specialised equipment, A*STAR will provide access to its installed base of specialised equipment under a new Tech Access Initiative.

 

 

These equipment include inspection tools and advanced equipment such as robotised 3D scanners and high pressure cold sprays for additive manufacturing. Firms will be trained to use the equipment.

International Partnership Fund
Did not exist. A new International Partnership Fund will be introduced to co-invest with Singapore-based firms to help them scale-up and internationalise.

 

 

$600 million in government capital will be set aside for this new fund.

 

Internationalisation Finance Scheme (IFS)
The IFS enables companies to access up to $30 million in credit facilities to support their overseas expansion. The government will co-share the default risk of lower quantum non-recourse loans to catalyse private cross-border project financing to smaller Singapore-based infrastructure developers.

 

 

In addition, the government will also catalyse financing for projects undertaken by larger firms in higher-risk developing markets, by providing a share of the needed sovereign risk insurance coverage.

 

Overall, these enhancements will enable more companies to take on more overseas projects.

 

Deepening Skillsets

To support businesses affected by economic restructuring, the government will be focusing on building capabilities for Singaporeans to operate overseas, and deepening skillsets for workers to remain relevant in jobs.

Existing New
Global Innovation Alliance
Did not exist. A new Global Innovation Alliance will be set up for Singaporeans to gain overseas experience, build networks, and collaborate with their counterparts in other cities.

 

 

It will include three programmes:

·         Innovators Academy, which connects tertiary students to capabilities overseas

·         Innovation Launchpads, which will create opportunities for Singapore’s entrepreneurs in selected overseas markets

·         Welcome Centres, which enable innovative foreign companies to link up with Singapore partners

 

SkillsFuture Leadership Development Initiative
Did not exist. The initiative will support companies in sending promising Singaporean leaders on specialised courses and overseas postings.

 

 

For a start, the programme targets to develop 800 potential leaders over the next three years.

 

Increased Accessibility of Training for All
Funding support for Singaporeans to take approved courses continue to be made available through SkillsFuture Singapore. SkillsFuture will continue into YA 2017.

 

 

To enhance training and make it more accessible, the Government will offer more short, modular courses, and expand the use of e-learning.

 

In addition, union members can get subsidies for selected courses through the NTUC-Education and Training Fund.

 

National Jobs Bank
Jobs Bank is a free service provided to all Singapore-registered companies and local individuals and helps to facilitate online job matching between local job seekers and employers. The Jobs Bank will be made more useful, and the government will work with private placement firms to deliver better job matching services for professionals.

 

 

Employers and Trade Associations and Chambers (TACs) are also encouraged to structure training programmes for their workers and industries. They will be able to receive funding support from SkillsFuture Singapore.

 

Industry Transformation Maps
Industry Transformation Maps brings together TACs, unions, and the Government to transform each sector.

 

 

23 sectors have been identified, covering 80% of the economy. Six have already been launched.

 

The remaining 17 will be launched in FY2017.
National Research Fund
The National Research Fund supports innovative research and efforts. The government will top up the fund by $500 million.

 

 

National Productivity Fund
The National Productivity Fund aids companies and industries in increasing productivity in their respective areas.

 

 

The government will top up the fund by $1 billion.

 

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