|SME Cash Grant for companies
Companies will be granted a one-off non-taxable SME cash grant pegged at 5% of the company’s revenue for YA2012, capped at $5,000. To enjoy the cash grant, the company must have made CPF contributions for at least one employee during the relevant accounting period for YA 2012.
|More information on SME Cash Grant
|Enhancement of the Productivity and Innovation Credit (PIC) Scheme
To provide more support for businesses to invest in innovation and productivity, the PIC scheme will be enhanced in 4 areas:
(i) Cash Payout
The cash payout rate will be increased from 30% to 60% for up to $100,000 of qualifying expenditure from YA2013 to YA2015. Businesses may also claim the cash payout any time after the end of each financial quarter, but no later than the due date for the filing of its income tax return for the relevant year.
(a) In-house training courses
Certification will not be required for qualifying in-house training expenditure incurred up to $10,000 per YA. The total training expenditure cap eligible for tax deduction remains unchanged at $400,000.
(b) Training of prescribed agents/ representatives
PIC may be claimed by certain businesses that incur training expenditure for the following categories of individuals, who are not employees:
• Real estate agents;
• Representatives of financial advisers or capital markets services licence holders; and
• Insurance agents.
(iii) Research & Development (“R&D”)
(a) R&D cost-sharing agreements
Expenditure incurred on R&D cost-sharing agreements may qualify as expenditure on R&D and enjoy PIC deduction. The qualifying expenditure will be deemed to be 60% of the shared costs.
(b) Software development
The multiple sales requirement will be removed to facilitate R&D in software development not intended for sale.
(iv) Investments in Automation Equipment
Qualifying automation equipment acquired on hire purchase with repayment schedule straddling two or more financial years will be eligible for the cash payout option.
|More information on Productivity and Innovation Credit (PIC)
Research & development (R&D) expenses
|Enhancing the Renovation and Refurbishment (“R&R”) deduction scheme
||To help businesses that need to renew and refresh their premises regularly to remain competitive, the R&R deduction scheme will become a permanent feature of the income tax regime. With effect from YA2013, the expenditure cap will be doubled to $300,000 for each three-year period.
||More information on Renovation and Refurbishment ("R&R") deduction scheme
|Enhancing the Merger & Acquisition (“M&A”) Scheme
||To further support companies carrying out M&A, 200% tax allowance will be granted on the transaction costs incurred on qualifying M&A, subject to an expenditure cap of $100,000 per YA. The allowance will be written down in 1 year.
The definition of qualifying M&A has been extended to include those where:
• The acquiring company acquires shares of the target company through multiple tiers of wholly-owned subsidiaries; and
• The qualifying conditions imposed on the target company are satisfied by any of the multiple tiers of wholly-owned subsidiaries of the target company
Extension of scheme
The M&A scheme will be available as an added feature for existing Headquarter incentive schemes, on a case-by-case basis. The condition that the acquiring company must be held by an ultimate holding company incorporated in, and a tax resident of, Singapore may be waived subject to conditions. EDB and MAS will administer this waiver.
These changes will take effect for qualifying M&A completed from 17 Feb 2012 to 31 Mar 2015.
|More information on Mergers & Acquisitions Allowance
|Simplifying capital allowance claims for low-value assets
||With effect from YA2013, the full cost of each asset that may be written down in one year will be increased to no more than $5,000 to further ease the claiming of capital allowances.
||More information on One year write-off for low-value assets
|Providing certainty of non-taxation of companies’ gains on disposal of equity investments
For companies’ disposal of shares on or after 1 Jun 2012, gains derived from the disposal of equity investments by companies will not be taxed, if:
(i) the divesting company holds a minimum shareholding of 20% in the company whose shares are being disposed; and
(ii) the divesting company maintains the minimum 20% shareholding for a minimum period of 24 months just prior to the disposal.
For share disposals in other scenarios, the tax treatment of the gains/ losses arising from share disposals will continue to be determined based on a consideration of the facts and circumstances of the case.
Excerpts from Budget 2012 Annex A-4
e-Tax Guide on Certainty of Non-taxation of Companies’ Gains on Disposal of Equity Investments
|Introducing the Integrated Investment Allowance (“IIA”) Scheme
||To keep pace with the evolving business environment, a new IIA scheme will be introduced to provide an additional allowance on fixed capital expenditure incurred for productive equipment placed overseas on approved projects with effect from YA2013. EDB will administer the scheme.
The existing Integrated Industrial Capital Allowance incentive will be withdrawn following the introduction of the IIA scheme on 17 Feb 2012.
|Excerpts from Budget 2012 Annex A-4
|Enhancing the Double Tax Deduction (“DTD”) for Internationalisation Scheme
||To further encourage our SMEs to venture abroad, and reduce administrative burden on businesses, tax deduction of up to 200% may be allowed on qualifying expenditure, up to $100,000 per YA, incurred on 4 specified activities on or after 1 Apr 2012, without the need for approval from IE Singapore or STB.
Further details are available on:
- IE Singapore website; and
- Singapore Tourism Board website
• DTD for Inbound Tourism Promotion
• DTD for Local Trade Exhibitions
|Excerpts from Budget 2012 Annex A-4
|Liberalising the cash distribution requirement for tax transparency for Real Estate Investment Trusts (REITs)
||REITs that make distributions to unit holders in the form of units can enjoy tax transparency, subject to certain conditions. Unit holders who elect to receive distributions in units will be taxed in the same manner as if they had received the distribution in cash. This change will take effect for distributions made on or after 1 Apr 2012.
||Excerpts from Budget 2012 Annex A-4