30 gennaio 2013
Due to the global economic downturn and its possible impact on Singapore indigenous companies, particularly on Small Medium Enterprises (SME), the Inland revenue authority of Singapore(IRAS) and info-communications Development Authority of Singapore(IDA) have announced the following enhancements and grants for all businesses benefit, especially SMEs, to offset the high costs which may persist in the business slowdown.
Productivity and Innovation Credit
Productivity and Innovation Credit was introduced in Budget 2010 by IRAS singapore and enhanced in Budget 2011 and 2012 to encourage businesses to invest in productivity and innovation for all businesses benefit, especially SMEs.
The productivity improvement activities covered under PIC are:
- Acquisition or leasing of PIC Automation Equipment*;
- Training of employees;
- Acquisition of Intellectual Property Rights;
- Registration of patents, trademarks, designs and plant varieties;
- Research and development activities; and
- Design projects approved by DesignSingapore Council.
Businesses have to obtain prior approval from the DesignSingapore Council for their design projects. For the other five activities, no approval is required to claim the tax benefits under PIC.
* The PIC Automation Equipment means:
- Any automation equipment that is prescribed by the Minister for the purposes of PIC (refer to PIC Automation Equipment List); or
- Any automation equipment which the Minister or the Comptroller of Income Tax has approved as PIC automation equipment on a case-by-case basis.
Your business can enjoy 400% tax deduction or 60% cash payout for investments in innovation and productivity improvements under the Productivity and Innovation Credit (PIC) scheme. The tax benefits under PIC are available from Years of Assessment (YA) 2011 to 2015, on investments in any of the six qualifying activities.
400% tax deduction
Businesses can enjoy 400% tax deduction/allowances on up to $400,000 of their expenditure per year in each of the six qualifying activities, instead of the 100% deduction/allowances under the existing tax rules.
Subject to shareholding test and other relevant conditions under current rules, unutilised tax deduction/allowances are allowed to:
- Carry back - to offset income of immediate preceding YA
- Carry forward - to offset income of future YAs
- Transfer - Group Relief system (companies) or between spouses (individual)
Or 30% or 60% cash payout
Option 2 to convert expenditure of up to $100,000 in all 6 activities per YA at 30% (YAs 2011 & 2012) / 60%* (YAs 2013 to 2015) and expenditure converted is not tax deductible is non-taxable.
The annual expenditure cap of $400,000 may be combined as follows:
Conditions for cash payout
Businesses eligible to apply for the cash payout are sole-proprietorships, partnerships, companies (including registered business trusts) that have:
- incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA;
- active business operations in Singapore; and
- at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company.
A business is considered to have met the 3-local-employees condition if it contributes CPF on the payroll of at least 3 local employees in the relevant month.
What to note when applying for cash payout:
- Once the qualifying expenditure is converted to cash, it cannot be claimed as tax deduction/allowances.
- Election to convert qualifying expenditure to cash is irrevocable.
- The minimum qualifying expenditure for each application is $400.
- Qualifying expenditure to be converted to cash is the amount net of grant or subsidy by the Government or any statutory board, and includes grant or subsidy pending approval.
SME Cash Grant for Year of Assessment 2012
As announced in Budget 2012, for Year of Assessment (YA) 2012, companies (including registered business trusts) will receive a one-off, non-taxable SME Cash Grant. This Cash Grant is given to help companies offset the high costs which may persist in the business slowdown.
To be eligible for the SME Cash Grant, the company must have made CPF contributions for at least one employee who is not a shareholder of the company during the basis period for YA 2012.
The SME Cash Grant is pegged at 5% of total revenue for YA 2012*, subject to a cap of $5,000. The revenue refers to the main income source declared in the company’s YA 2012 income tax return.
* If the revenue as per the company's accounts is for a period that covers two YAs, one of which is YA 2012, please provide a breakdown of the revenue for the basis period relating to YA 2012 in the tax computation.
Tax rates & tax exemption scheme
Under this Tax rates & tax exemption scheme, a newly incorporated company that satisfies the qualifying conditions can claim for full tax exemption on the first $100,000 of normal chargeable income* (excluding Singapore franked dividends) and Starting from YA 2008, a further 50% exemption is given on the next $200,000 of the normal chargeable income* (excluding Singapore franked dividends) for each of the first three consecutive YAs.
To qualify for the full tax exemption for new start-up companies, your company must:
- be incorporated in Singapore (including a company limited by guarantee**);
- be a tax resident* in Singapore for that YA; and
- have no more than 20 shareholders throughout the basis period for that YA where:
- all of the shareholders are individuals beneficially and directly holding the shares in their own names; OR
- at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company.
Full exempt amount
First $100,000@ 100% = $100,000
Next $200,000@ 50% = $100,000
Total $300,000 = $200,000
First Three Years of Income Tax Filings:
After First Three Years of Income Tax Filings, all Singapore resident companies are eligible for partial tax exemption which effectively translates to about 8.5% tax rate on normal chargeable income* (excluding Singapore franked dividends) of up to $300,000 per annum. The taxable income above S$300,000 will be charged at the normal headline corporate tax rate of 17%.
Partial exempt amount
First $ 10,000 @ 75% = $7,500
Next $290,000 @ 50% = $145,000
Total $300,000 = $152,500
After First Three Years of Income Tax Filings:
For the other Singapore resident company who does not fulfill the abovementioned qualifying conditions, a partial tax exemption is given to them on normal chargeable income* (excluding Singapore franked dividends) of up to $300,000 at 17% tax rate since its incorporation date and for the subsequent years.
iSPRINT Funding For Customized Solutions
info-communications Development Authority of Singapore encourage SMEs to implement an infocomm solution to improve the business operations and they are giving the following grants: