Singapore Government
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  1. Purpose
    1.1 Why is the Government introducing the SME Rebate Scheme?
    1.2 How much will the SME Rebate Scheme cost?
    1.3 Why is the length of the Scheme set at two years?
    1.4 Why are the rebates pegged to total CPF contribution?

  2. Eligibility
    2.1 Who will qualify for the SME Rebate Scheme?
    2.2 What is Fixed Asset Investment (FAI)?
    2.3 Do I use the net book value or the purchase price of the assets for the computation of the value of the Fixed Asset Investment (FAI)?
    2.4 In translating the foreign currency denominated value of the fixed asset to a Singapore dollar value, can I apply the latest in-house exchange rate? If not, what exchange rates could I use?
    2.5 How is the number of employees determined? Does it include foreign employees and/or part-time employees?
    2.6 How can I determine whether my business is from the manufacturing or non-manufacturing sector?
    2.7 Is a company limited by guarantee eligible for the SME rebate scheme?
    2.8 Eligibility
    i) Is non-profitable organisation eligible for SME Rebate scheme?
    ii) Are entities registered with Registry of Society (or other organisation besides ACRA) eligible for the scheme)?
    2.9 How do I compute FAI and the total number of employees on a group basis?
    2.10 If the main firm does not qualify for the SME Rebate Scheme, can its subsidiary apply?

  3. Application
    3.1 What must a firm do to qualify for the SME Rebate Scheme?
    3.2 When should firms submit their applications for the SME Rebate Scheme?
    3.3 Who is authorised to submit the application?
    3.4 Will CPF Board verify the information submitted?
    3.5 Will my firm still be eligible if my firmís FAI or number of employees changes after the application?
    3.6 I have already submitted my application in the first year. Do I need to re-submit an application in the second year?
    3.7 Will I be notified of the status of my application?
    3.8 I did not receive any acknowledgement letter. How do I check the status of my application?

  4. Payment
    4.1 What is the amount of rebates my firm will be eligible for?
  5. 4.2 Does the total CPF contributions used in the computation of rebates include levies and funds?
    4.3 When will the rebates be paid to qualified SMEs?
    4.4 How will my firm receive the rebates?
    4.5 Is there a deadline to encash the cheque?
    4.6 Will the employer of an eligible firm still receive the rebates if the firm closes down before the point of payment?

  6. Others
    5.1 Are the rebates paid to firms under the SME Rebate Scheme taxable?

1. Purpose

1.1 Why is the Government introducing the SME Rebate Scheme?

The Government recognises that SMEs will typically face greater difficulties in meeting higher costs due to the CPF employer contribution increase. Thus the government is introducing the SME Rebate Scheme as a 2-year assistance scheme to help locally registered SMEs adjust to rising business costs.

1.2 How much will the SME Rebate Scheme cost?

The scheme is expected to cost the government about $100 million over 2 years.

1.3 Why is the length of the Scheme set at two years?

The scheme is meant to help SMEs adjust to rising business costs and is not a permanent rebate scheme. Two years is a reasonable period for an assistance scheme.

1.4 Why are the rebates pegged to total CPF contribution?

The scheme is meant to provide SMEs with a rebate on labour expenses. Total (employer and employee) CPF contribution is an appropriate proxy for total labour costs. Therefore, it was chosen as the basis for the rebates to help SMEs cope with their business costs.

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2. Eligibility

2.1 Who will qualify for the SME Rebate Scheme?

The rebates will be granted only to SME businesses. To ensure that the rebates are targeted at SMEs, the government will grant the rebates to businesses (including corporate entities, partnerships and sole proprietorships) that meet the following criteria:

a) For a non-manufacturing firm:

  • Business must be registered in Singapore.
  • Fixed Asset Investment (FAI) of less than S$15 million.
  • Not more than 200 employees.

b) For a manufacturing firm:

  • Business must be registered in Singapore.
  • FAI of less than S$15 million.

Note: SME businesses which have corporate shareholders (both local and foreign commercial entities) or are themselves majority shareholders of other companies (both local and foreign commercial entities) should compute their FAI and the number of employees on a group basis.

For an explanation on the computation of FAI and the number of employees on a group basis, please refer to FAQ 2.9.

2.2 What is Fixed Asset Investment (FAI)?

Fixed Asset Investment (FAI) is a standard accounting term that refers to the value of a company’s assets and properties that are not readily convertible into cash. Fixed assets normally include items such as land and buildings, motor vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery.

2.3 Do I use the net book value or the purchase price of the assets for the computation of the value of the Fixed Asset Investment (FAI) ?

You should use the net book value of the assets for the computation of FAI.

2.4 In translating the foreign currency denominated value of the fixed asset to a Singapore dollar value, can I apply the latest in-house exchange rate? If not, what exchange rates could I use?

You should use the Exchange Rates Service available at MAS' Financial Database webpage to obtain the relevant exchange rate. Attached below is the link to MAS' Financial Database on the Exchange Rate Service:

https://secure.sgs.gov.sg/apps/msbs/exchangeRatesForm.jsp

2.5 How is the number of employees determined? Does it include foreign employees and/or part-time employees?

The number of employees includes both local and foreign employees, as well as any part-time employees.

2.6 How can I determine whether my business is from the manufacturing or non-manufacturing sector?

You should determine whether your business is in the manufacturing or non-manufacturing sector, based on the business activities under which your business is registered with the Accounting and Corporate Regulatory Authority (ACRA).

2.7 Is a company limited by guarantee eligible for the SME rebate scheme?

Companies limited by guarantee will not be eligible for the SME Rebate Scheme.

2.8 Eligibility

i) Is non-profitable organisation eligible for SME Rebate scheme?

ii) Are entities registered with Registry of Society (or other organisation besides ACRA) eligible for the scheme)?

Non-profitable organisations and entities registered with the Registry of Society will not be eligible for the SME Rebate Scheme as the scheme is meant to help SMEs adjust to the increase in business cost.

2.9 How do I compute FAI and the total number of employees on a group basis?

When a firm is computing its FAI and number of employees for the purpose of the SME Rebate Scheme, it should include the FAI and number of employees from:

(i) corporate shareholders (both local and foreign commercial entities) up to three levels, that hold 20% or more of the total shareholding of the firm, and

(ii) subsidiaries (both local and foreign commercial entities) one level downwards, of which the firm holds 50% or more of the total shareholding.

Individual shareholders need not be included in the computation.

For an example of computation of FAI and number of employees on a group basis, please click here.

2.10 If the main firm does not qualify for the SME Rebate Scheme, can its subsidiary apply?

The subsidiary firm can apply for the SME Rebate Scheme if the firm meets the qualifying criteria.

Note: SME businesses which have corporate shareholders (both local and foreign commercial entities) or are themselves majority shareholders of other companies (both local and foreign commercial entities) should compute their FAI and the number of employees on a group basis.

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3. Application

3.1 What must a firm do to qualify for the SME Rebate Scheme?

Firms that meet the criteria will have to submit an online application to CPF Board for the rebates.

3.2 When should firms submit their applications for the SME Rebate Scheme?

There will be two application periods:

1st Application Period: 1 July 2007 – 31 July 2008
2nd Application Period: 1 August 2008 – 31 July 2009

Firms that apply in the 1st Application Period will qualify for the rebates in both years of the scheme. They need not reapply in the 2nd Application Period.

Firms that only apply in the 2nd Application Period will only be eligible for the rebates paid out for the Second Year of the scheme.

3.3 Who is authorised to submit the application?

Any CPF member aged 21 and above with a SingPass account will be able to submit the application on behalf of a firm.

CPF Board reserves the right to audit all submitted applications and declarations. Any firm that is found to have made false or misleading declarations may be prosecuted under the Penal Code. In addition, CPF Board may, at its discretion, withhold the rebates or recover any amount of rebates that may have been disbursed to the firm.

3.4 Will CPF Board verify the information submitted?

CPF Board will deem the information provided by the firm accurate and reliable at the point of submission.

CPF Board reserves the right to audit all submitted applications and declarations. Any firm that is found to have made false or misleading declarations may be prosecuted under the Penal Code. In addition, CPF Board may, at its discretion, withhold the rebates or recover any amount of rebates that may have been disbursed to the firm.

3.5 Will my firm still be eligible if my firm’s FAI or number of employees changes after the application?

In determining the eligibility of a firm, CPF Board will only refer to the status of the firm at the point of application. Subsequent changes in the firm’s FAI or number of employees will not disqualify the firm from receiving the rebates.

3.6 I have already submitted my application in the first year. Do I need to re-submit an application in the second year?

No. If you apply for the rebates in the 1st Application Period, you will qualify for the rebates for both years of the scheme. You need not reapply in the 2nd Application Period.

3.7 Will I be notified of the status of my application?

Yes. Within one week of submitting the application, you will receive an acknowledgment letter from CPF Board.

The letter will be sent to the firm’s registered address maintained in CPF’s records.

3.8 I did not receive any acknowledgement letter. How do I check the status of my application?

You can check the status of your application here. Your SingPass and CPF Submission Number is required.

 

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4. Payment

4.1 What is the amount of rebates my firm will be eligible for?

The rebate is pegged to the total (employer and employee) CPF contributions paid by your firm over 2 years (01 July 2007 – 30 June 2009).

First Year (01 July 2007 – 30 June 2008)

Total
CPF Paid in
First Year
Quanta
First $40,000
2% of CPF paid (up to the maximum of $800)
Next $40,000
1% of the total CPF paid (up to the maximum of $400)

Second Year (01 July 2008 – 30 June 2009)

Total
CPF Paid in
Second Year
Quanta
First $40,000
1% of the total CPF paid (up to the maximum of $400)
Next $40,000
0.5% of the total CPF paid (up to the maximum of $200)

For examples on the computation of the SME Rebates, please click here.

4.2 Does the total CPF contributions used in the computation of rebates include levies and funds?

No. The rebates are pegged to the total employer and employee CPF contributions excluding levies and funds such as Skill Development Levy (SDL) and Chinese Development Assistance (CDAC) Fund.

4.3 When will the rebates be paid to qualified SMEs?

The payment of the rebates will be on an annual reimbursement basis. Please refer to the table below for the payment details.

Table 1: Application Periods and Payment Dates

Date of Submission of
Application
Payment Period of SME Rebates
First Year
(01 July 2007 - 30 June 2008)
Payment Period of SME Rebates
Second Year
(01 July 2008 - 30 June 2009)
From
1 July 2007 to 31 May 2008
inclusive

August 2008


August 2009
From
1 June 2008 to 31 July 2008
inclusive

September 2008


August 2009

From
1 August 2008 to 31 May 2009
inclusive
Not Applicable
August 2009

From
1 June 2009 to 31 July 2009
inclusive
Not Applicable
September 2009

4.4 How will my firm receive the rebates?

The rebates will be credited directly to your firm’s registered GIRO account with CPF Board. It is the same account which you have registered for deduction of CPF contributions.

If you have not registered for a GIRO account, a cheque will be issued to you later. To receive your rebates earlier, please click here to register for GIRO payment of your CPF contributions.

4.5 Is there a deadline to encash the cheque?

Your cheque will expire if you do not encash it within 6 months from the date of issue.

4.6 Will the employer of an eligible firm still receive the rebates if the firm closes down before the point of payment?

If a firm that has successfully applied for the SME Rebate Scheme closes down before receiving the rebates, CPFB will still make payment of the rebates to the employer based on the total employer and employee CPF contributions that the firm has made during the 2-year period of the Scheme. If the firm's GIRO account is closed, the employer must provide CPFB with an updated mailing address for CPFB to send a cheque.

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5. Others

5.1 Are the rebates paid to firms under the SME Rebate Scheme taxable?

Yes, the rebates paid to firms under the SME Rebate Scheme are taxable income in the year of receipt of the rebates.

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