| 2.34 Small businesses are the backbone
of many economies. They support the MNCs and larger
local companies as part of an integrated production
network and provide jobs for a large part of the population.
They are also often key sources of innovation and buzz.
We too must ensure that our SMEs thrive and grow in
our competitive economic landscape. I have announced
several measures in previous Budgets to help the SME
sector. This year, we will introduce further measures.
2.35 First, we will introduce a package of measures
to help revitalise the retailers in HDB estates. Many
of them are struggling because of an over-supply of
shops (especially in the older HDB estates), changes
in the shopping and dining-out habits of Singaporeans,
and growing competition from shopping malls and supermarket
chains. These trends are likely to persist and grow
stronger over time. To help these small businesses in
our HDB heartlands, the HDB will implement measures
that will help them relocate, restructure and upgrade
if they wish to stay in business, or facilitate their
exit if they wish to retire. Details of these measures
will be announced in the Committee of Supply.
2.36 Second, we will provide tax relief for small businesses
to help them cope with cash-flow problems, especially
in a cyclical downturn. Our corporate tax system already
allows companies to carry forward business losses to
offset future tax liabilities. In other words, if you
lose money this year, you can carry the loss forward
and you can offset it against the profit you make next
year. So next year, you can reduce the tax you have
to pay. For large companies, this is usually adequate
support as they have the reserves and the cash-flow
to weather a few years of losses. But for small businesses,
next year may be too late. Small businesses, however,
lack financial ballast and are likely to run into cash-flow
problems quite soon even if the businesses are viable
over the longer term. Loss carry-forward may not help
them in a timely way. Smaller companies have often asked
for a loss carry-back feature in our corporate tax system
to help them cope with downturns, and position them
for growth when the economy recovers. In other words,
if they paid tax last year, and they lose money this
year, can they recompute and claim back some of what
they paid last year? And we decided to agree to that.
2.37 To provide more timely relief for small companies,
I have decided to allow a one-year loss carry-back for
corporate taxes, subject to a cap of $100,000 in losses.
The losses can be carried back for one year, and any
losses that exceed this limit can still be carried forward.
This will take effect from YA2006. Details of the one-year
loss carry-back feature can be found in Annex
B.
2.38 Third, we will help SMEs by lowering the cost
of doing business with the Government. For example,
suppliers who currently quote or tender for government
business need to pay an annual fee of $320 per account
to subscribe to GeBIZ, the government's e-procurement
portal. Many SMEs have complained that this adds to
their cost. I am pleased to announce that with effect
from 1 April 05, all suppliers will have one account
free when they subscribe to GeBIZ. This will benefit
all GeBIZ suppliers, especially the 88% who only have
one account, practically all of whom are SMEs. I hope
to see more suppliers come forward to participate in
government procurement projects.
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