SINGAPORE - Small and medium enterprises (SMEs) will be getting some help from the Government to weather the economic slowdown, Finance Minister Heng Swee Keat said in his Budget address on Thursday (March 24).
Here are six key announcements:
1. Higher corporate income tax rebate
A tax rebate for corporate income will be raised from 30 per cent to 50 per cent of tax payable for 2016 and 2017, with a cap of $20,000 in rebates each year.
The last time a 50 per cent rebate was given was in 2001.
The increased support will cost the Government an additional $180 million over two years.
2. SME loan assistance
Under the new SME Working Capital Loan scheme, the Government will help businesses secure loans of up to $300,000 from banks by sharing 50 per cent of the default risk of such loans with banks.
The scheme is aimed at supporting viable SMEs that may have cash-flow concerns or wish to continue growing their business.
Starting from 2016, it will be available for three years, generating possibly $2 billion in loans.
3. Special employment credit (SEC) extended
The SEC scheme, slated to expire this year, will be extended for three years till 2019 - but with some changes.
The scheme was introduced in 2011 for employers who hire older workers.
The eligible age limit will be raised from 50 to 55, and those under 65 will see a lower offset percentage of 3 to 5 per cent.
Those 65 and above will continue to get an offset of 8 per cent, with an additional 3 per cent until the re-employment age is raised.
The scheme also extends to firms hiring workers with disabilities.
To do so, the Government will top up the SEC Fund by $1.1 billion.
4. Revitalisation of shops scheme
This scheme that targets heartland shops will be enhanced.
Support for promotional activities and upgrading projects in HDB town centres and neighbourhood centres is expected to cost about $15 million a year.
5. Defer foreign worker levy raise for marine and process sectors
Levy increases for Work Permit holders in the two sectors will be deferred for a year due to the challenges faced by the sectors.
The process sector includes plants in the manufacturing of petroleum, petrochemicals, speciality chemicals and pharmaceutical products.
Work Permit levies for the manufacturing sector will remain unchanged this year, as announced at Budget 2015.
The Government will proceed with levy increases for services and construction Work Permit holders, as well as S Pass holders in every sector, as announced last year.
6. Construction projects
Public infrastructure projects are expected to increase slightly, offsetting a decline in private sector construction demand.
Public sector contracts for smaller projects are expected to total more than $2.5 billion, benefiting smaller construction firms.