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S$1.4b in near-term measures to support businesses

SINGAPORE — More than S$1.4 billion in support measures for businesses will be rolled out over the next year, including the enhancement of the Corporate Income Tax Rebate and the extension of the Additional Special Employment Credit, Mr Heng Swee Keat said in his Budget speech yesterday.

SINGAPORE — More than S$1.4 billion in support measures for businesses will be rolled out over the next year, including the enhancement of the Corporate Income Tax Rebate and the extension of the Additional Special Employment Credit, Mr Heng Swee Keat said in his Budget speech yesterday.

The Corporate Income Tax Rebate will be enhanced by raising the cap to S$25,000 for Year of Assessment (YA) 2017 from S$20,000 in the previous year while retaining it at 50 per cent of the tax payable. The rebate will be extended for another year to YA 2018, albeit at a reduced rate of 20 per cent of tax payable, capped at S$10,000.

The enhancement and extension of the Corporate Income Tax Rebate will cost an additional S$310 million over Years of Assessment 2017 and 2018.

Mr Alan Lau, tax partner at KPMG in Singapore, said: “The Government’s decision to increase the corporate tax rebate to S$25,000 will certainly be welcomed by corporates in Singapore. However, this may not sufficiently help businesses, as many are still grappling with rising business costs on all fronts.”

Mr Harvey Koenig, tax partner at KPMG in Singapore, added: “The extension of the corporate income tax rebate is welcome, but it does not provide any relief to loss-making businesses.”

The Government will also extend the Additional Special Employment credit until end-2019, enabling employers to receive wage offsets of up 3 per cent for workers earning less than S$4,000 per month and who are not covered by the new re-employment age of 67, which will kick in on July 1.

This is over and above the Special Employment Credit of up to 8 per cent for eligible Singaporeans aged 55 and above. Taken together, employers will receive support of up to 11 per cent for wages of their eligible older workforce.

The extension of the Additional Special Employment Credit, enhancing the employability of older Singaporeans, is expected to benefit about 120,000 workers and 55,000 employers, and will cost about S$160 million.

“Over the next two to three years, the different sectors of our economy will be in transition, repositioning ourselves for the future economy. Some firms may need help to manage cost or cash flow. They will continue to receive support from schemes announced previously,” the Finance Minister said, pointing to three such measures.

The existing Special Employment Credit will continue to provide employers with wage support for older workers till 2019. Over S$300 million, benefiting some 370,000 workers, will be paid out this year.

Meanwhile, more than S$600 million is expected to be paid out to businesses this March under the Wage Credit Scheme, which helps firms cope with rising wages. Roughly 70 per cent of this amount will go to small and medium enterprises (SMEs).

The SME Working Capital Loan will continue to be available for the next two years. Under this scheme, the Government co-shares 50 per cent of the default risk for loans of up to S$300,000 per SME. Since its launch in June 2016, the scheme has catalysed more than S$700 million of loans, Mr Heng said. RUMI HARDASMALANI

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