Singapore’s Finance Minister and Deputy Prime Minister, Lawrence Wong delivered the nation’s Budget for the 2023 financial year, pumping billions into the development and growth of innovative local companies.
The Minister has dedicated $1 billion to the Singapore Global Enterprises initiative introduced in Budget 2022, providing companies with “specialised capability building programmes” that address their specific needs ranging from boosting the core leadership team to realising growth goals.
The initiative also serves to maintain market competition by developing the research and innovation capabilities of local enterprises.
This is in addition to the extra $4 billion that will top up the National Productivity Fund and expand its scope to support the nation as a “leading international financial centre in Asia [and] global trading hub” as the international market continues to grow more competitive.
The fund seeks to back companies as they develop and implement new abilities, services and products while simultaneously upskilling Singaporean workers with ongoing education and training.
The Singaporean Government has also signalled a commitment of $25 billion across the five years from 2021 to 2025 to facilitate better and deeper research, innovation and enterprise through the new Enterprise Innovation Scheme.
The scheme will improve the tax deductions by 150 per cent for several activities along the “innovation value chain” including:
- R&D conducted in Singapore;
- Registration of intellectual property, including patents, trademarks, and designs;
- Acquisition and licensing of intellectual property rights;
- Innovation carried out with Polytechnics and ITE; and,
- Training via courses approved by SkillsFuture Singapore and aligned to the Skills Framework.
“Today, businesses can enjoy tax deductions of up to 250% of qualifying expenditure on some of these activities. I will raise the tax deductions to 400% of qualifying expenditure on each of these five activities,” Wong said.
“The qualifying expenditure will be capped at $400,000 for each activity, except for innovation carried out with Polytechnics and ITE, for which the expenditure will be capped at $50,000. With these enhancements, businesses that make full use of the scheme could enjoy tax savings of nearly 70% of their investment.
“Some firms have yet to turn profitable, or do not have sufficient profits to maximise the benefits from the tax deductions. To support these firms, I will allow businesses the option to convert 20% of their total qualifying expenditure per Year of Assessment into a cash payout of up to $20,000. This will help smaller firms defray the costs of their innovation activities, even if they pay little or no taxes.”