In his Budget 2023 speech, deputy prime minister Lawrence Wong announced that economic competition is only going to be stiffer in today's era. With that, Singapore must adapt quickly to survive and prosper in a troubled world.
"We have to redouble our efforts to attract high quality investments," says Wong, adding that the government will be focusing on growth sectors where Singapore can be highly competitive in. He also points out that Singapore has successfully maintained its reputation as the leading international financial centre in Asia.
Singapore is also known for its vibrant manufacturing sector, namely in the electronics, chemicals and biomedical science space.
In Singapore's effort to boost the enterprise segment and to keep Singapore enterprises competitive, Wong announced several initiatives to help this segment.
A new Enterprise Innovation Scheme has been announced that will help to “significantly enhance” tax reductions for five key activities:
1. Research and development conducted in Singapore
2. Registration of intellectual property (IP), including patents
3. Acquisition and licensing of intellectual property rights
4. Innovation carried out with polytechnics and ITE
5. Training via courses approved by SkillsFuture and aligned to Skills Framework
For each of the five key activities, Wong said that tax deductions will be raised to 400% of qualifying expenditure, compared to up to 250% previously. The qualifying expenditure however will be capped at $400,000 for each activity, except for innovation carried out with polytechnics and ITE, of which this will be capped at $50,000.
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Meanwhile, smaller and unprofitable businesses will be eligible to receive support with innovation costs. Businesses will have the option to convert 20% of their total qualifying expenditure per year of assessment into a cash payout of up to $20,000.
Wong is hopeful that this move will help support firms that have yet to turn profitable or do not have sufficient profits to maximise the benefits from the tax deductions. This will also help SMEs defray the costs of their innovation activities, even if they pay little to no taxes.
For the local SMEs, Wong announced $150 million to be added to the SME Co-Investment Fund to support scaling. The government also intends to catalyse another $300 million of private investments to support these SMEs.
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The rest of the companies are also not forgotten. Wong announced a $1 billion scheme that will help boost "promising" local companies in their scaling-up efforts. The Singapore Global Enterprises initiative provides customised assistance to "promising" local enterprises, including working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline.
Enterprise Singapore will also step in to help firms secure resources to execute their growth plans and R&D capabilities to stay competitive.
