Singapore: Small and medium enterprises (SMEs) keen to implement productivity and innovation investments do not have to rush to introduce them just yet in order to qualify for tax credit. They will be given time to plan, Finance Minister Tharman Shanmugaratnam revealed yesterday. SMEs will be able claim a 250-per-cent tax deduction for $600,000 worth of Productivity and Innovation Credit (PIC) over two financial years, instead of the previously announced $300,000 ceiling per year for the first two years.
The cap of $300,000 per activity will then kick in after 2012.
The announcement of this refinement comes after two parliamentarians - MP Ahmad Magad (Pasir Ris Punggol GRC) and NMP Mildred Tan - suggested during this week's Budget debate that SMEs may need some time to develop their innovation plans, including looking for suitable systems and weighing the costs and benefits.
Business associations had also raised such concerns after the Budget announcement last week.
Companies have also said they could benefit more from the PIC if it covered a wider range of in-house training programmes, besides those of the Workforce Development Authority.
Mr Shanmugaratnam yesterday said the Finance Ministry will work with the Manpower Ministry and other agencies to examine how a broader range of in-house programmes can be recognised for the PIC.
Some MPs had voiced concern that SMEs would be bogged down by the administration of the PIC. This will not be so, Mr Shanmugaratnam assured them: "Businesses will be able to ride on the existing tax filing system and will not need to fill out lengthy application forms."
The Budget debate saw many members wondering if all businesses will be able to benefit from the various innovation and productivity schemes.
For example, Nominated MP Teo Siong Seng had noted that the productivity measures might not be easily applicable to all sectors or be easily measurable, such as for the service industry.
Mr Shanmugaratnam noted the benefits "will not be spread out equally". "Dynamic companies - those which are investing in innovation and upgrading, including small enterprises - will benefit more than others."
As the Budget focuses on restructuring the Singapore economy, the Finance Minister said it would not be appropriate for the Government to extend the Jobs Credit Scheme to the year's end, or to extend the Special Risk Sharing Initiative Scheme beyond this year.
"Doing so would dilute and hamper the move that we have to make to restructure the economy and provide companies with incentive to upgrade productivity," Mr Shanmugaratnam explained.-TodayOnline
