April 2010 - Association of Dutch Businessmen

Singapore
Quick Overview of Latest
Singapore Budget Speech
Text Gene Kwee
The Budget Speech was announced by The Minister of
Finance last 22 February 2010. The overall sentiment of
the Budget was positive, though conservatively positive.
This is to be seen in light of the early signs of recovery
of Singapore’s economy at the backdrop of the global
economic crisis and worldwide recession. The government
has taken various measures to provide support for the
local economy to keep on going, i.e. to avoid massive
job losses/retrenchments, supporting banks to keep on
lending money to the public etc. In the end Singapore’s
economy contracted by 2% in 2009, which was less than
expected.
The prospects for 2010 are good, though the Budget
looks beyond the immediate rebound stage of the
economy. It focuses on building the capabilities and
foundations for growth in the coming decade. The basis for
realising growth is raising the quality of efforts rather than
increasing the efforts through expansion of manpower or
other resources. The measures announced in the Budget
aim at increasing productivity (attain higher skills for all,
shift companies to higher value activities and create quality
jobs in Singapore).
First, the Government will launch sustained initiatives
to assist companies and workers to raise productivity, by
increasing skills and expertise and innovating to create
more value. Second, the government will support the
growth of more globally competitive Singapore companies,
e.g. assist companies which are seeking to commercialise
Research & Development (R&D). Finally, the government
will provide more help for low wage workers to upgrade
themselves, and provide more help to families with
children and older citizens as to include everyone in the
growth.
The proposed tax changes as announced in the Budget
are to be seen as to realise the objectives as set out by
the Government. Due to the vast content of the total of
proposed tax changes in the Budget I have taken the liberty
to only provide a quick overview of the key tax changes.
Therefore this is not to be seen as a comprehensive
overview of the proposed changes. To increase the
readability, note that tax incentives or allowances
mentioned below are meant to ease the tax burden of
the (corporate or personal) tax payer by either allowing a
reduced tax rate by concession and/or by allowing a tax
deduction.
Corporation tax – Productivity and
Innovation Credit
• A new broad based tax incentive for investments in
six activities is introduced to promote innovation and
productivity, by providing an unprecedented level of tax
deductions. The relevant activities are R&D and design
work executed in Singapore, acquisition of Intellectual
Property (IP), registration of IP, automation through
technology or software and training of employees.
More details are to be released by June 2010.
Corporation tax – Merger and acquisition
allowance
• A new tax allowance is introduced to encourage
mergers and acquisitions. The allowance is also joined
by a remission of stamp duty on the transfer of shares
of unlisted companies. More details are to be released
by June 2010. Until then the release stamp duties will
remain to be payable and refund will be made subject
to meeting the relevant conditions.
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