The popular Productivity and Innovation Credit (PIC), which gives firms tax deductions or cash grants when they invest to boost their capabilities, will be extended and broadened, said Finance Minister Tharman Shanmugaratnam in Parliament on Friday.
Delivering the 2014 Budget statement, he said that the scheme, originally implemented in 2010 and due to expire this year, will be extended for another three years until 2018.
This will cost the Government $3.6 billion.
It will also be broadened for small and medium enterprises (SMEs) making substantial investments, in what Mr Tharman termed "PIC+". Currently, there is a cap of $400,000 on the eligible expenditure that firms make; this will be raised to $600,000 from the 2015 year of assessment.
"We are... seeing higher take-up rates for the existing PIC scheme," he said. Two of three small and medium-sized enterprises with turnover of more than $1 million have claimed benefits under this scheme.
To encourage private research and development, the Government will also be extending the 50 per cent additional tax deduction on such expenditure by firms for another ten years, until the 2025 year of assessment.
Mr Tharman also announced that the Land Intensification Allowance will be extended for another five years until June 30, 2020, to maximise land use.
Finally, the Lifelong Earning Endowment Fund, which subsidises continuing education and training for Singaporeans, will be topped up by $500 million to a total of $4.6 billion.
For more news and analysis on Singapore Budget 2014, click here for ST's Big Story coverage.