It was announced that the Singapore’s FY2015 Budget Statement will be delivered by Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam, in Parliament on Monday, 23 February 2015. For sure local businesses are waiting with bated breath what will be in store for them. It will be a challenging year ahead indeed as the local economy struggles against higher labour cost, elusive productivity growth, limits on foreign labour and falling oil prices.
One of the wish list this time around is for the government to do more to help local SMEs restructure. The refinement of the popular PIC scheme is one of them. Instead of limiting the amount that businesses can convert to cash payout up to $100,000, this may be increased. Some equipments are very expensive and can easily cost a few hundred thousand dollars. Furthermore, the government can consider doing away with the rule that once the expenditure is converted to cash payout, it cannot be claimed as tax deduction any more. In this case, allowance may be given to small SMEs who can benefit the most.
There are also suggestions to increase the partial tax exemption scheme from the current first $300,000 of chargeable income to the first $600,000 of chargeable income. This may effectively bring down the effective tax rates from 12.7 per cent to 8.4 per cent. As with the refinement to the PIC scheme, this measure can be targeted to smaller SMEs too instead of across the board. This is to make sure that the government’s revenue will not be overly affected by this proposed changes.
Let us hope that DPM Tharman will take in our feedback when he delivers the Singapore’s Budget 2015 next month. Local businesses will need all the support that the government can gives as we continue our efforts to reform and restructure the local economy.