|
5.5 I spoke earlier about our intention to make Singapore the best location for companies to start, grow and globalise. Our tax regime for SMEs and start-ups is already attractive. We will make it more so.
5.6 I have decided to increase the Partial Tax Exemption threshold for companies from the current $100,000 to $300,000, with effect from YA2008. This will cost the Government $150 million. All companies will enjoy this exemption, but it will benefit SMEs the most. This will mean that almost 80% of taxable companies in Singapore will pay taxes at effective rates of less than 10%. It also means that a company with chargeable income of $500,000 will pay tax at an effective rate of 12.5%, equal to Ireland and significantly lower than comparable rates in Hong Kong.
5.7 I will also enhance our tax regime for start-ups. Start-ups currently enjoy full tax exemption on the first $100,000 of their chargeable income for each of their first three years of assessment between YA2005 and YA2009. I have decided to remove the YA2009 expiry date so that all start-ups will henceforth enjoy a full three years of exemption.
5.8 These moves, coupled with the reduction in corporate tax rate to 18%, will make Singapore one of the most competitive locations in the world for SMEs and start-ups.
5.9 We recognise that our SMEs will typically face greater difficulties in meeting the higher costs due to the CPF employer contribution increase. Therefore, I have decided to give them a rebate on their labour expenses for two years. In the first year, this will take the form of a 2% cash rebate on the first $40,000 of total employer and employee CPF contributions of a firm. On the next $40,000 of total CPF contributions, we will give a 1% rebate. These percentages will be halved in the second year. This rebate will effectively offset up to 45% of the additional CPF cost that SMEs face in the first year and cost the Government $100 million in total. Details can be found in Annex C.
|
