Singapore’s recent Budget 2023 marks a paradigm shift from pandemic-focused budgets towards a clear long-term strategy for the nation. With a focus on innovation, enhancing the social compact, and supporting workforce development, it underscores the government’s commitment to the country’s continued growth.

For business owners looking to incorporate in Singapore, the new budget presents exciting opportunities for those ready to capitalize on them.In this article, we delve into the impact of these developments on your company incorporation in Singapore and the services to engage or preparations to make to take advantage of them.

1. Business Grants and Innovation Support for Companies in Singapore

Budget 2023 extends support to companies in Singapore by introducing new grants and financing options to assist businesses in investing in innovation, talent development, and productivity. Some notable schemes include:

i. Enterprise Innovation Scheme

Investing in research and development (R&D) and improving your business capacity can be costly and difficult to achieve. This is especially so for newly-incorporated companies, and Budget 2023’s Enterprise Innovation Scheme (EIS) can fill the gap.

Under the EIS, companies in Singapore can enjoy increased tax deductions from the current 250% to as high as 400% from 2024. This will apply to the qualifying expenditure for these activities:

• Training courses aligned with the Skills Framework
• Joint innovation projects with local polytechnics or the Institute of Technical Education (ITE)
• R&D in Singapore
• Intellectual property-related activities

As a bonus, the scheme offers the option of a non-taxable cash pay out for companies that pay little or no tax. Through incorporation in Singapore, you leverage these tax deductions, enabling you to strengthen your business capacity or services and better divert the savings from tax to other critical business functions that help your firm to stay ahead of the curve.

ii. National Productivity Fund (NPF)

Businesses can also take advantage of the S$4 billion top-up to the National Productivity Fund (NPF). With a widened scope of support, companies will stand to gain in areas of investment promotion and workforce development initiatives.

iii. Enterprise Financing Scheme

Meanwhile, small and medium-sized enterprises (SMEs) can benefit from the Enterprise Financing Scheme (EFS) to finance all stages of growth. Through Singapore incorporation, leverage financial support to enhance capabilities, empower your team, and explore growth avenues with minimal investment. These strategic investments and cost savings empower you to maximize returns and elevate your business.

2. Enhancing Singapore’s Workforce and Social Support

Budget 2023 also includes an extensive plan of handouts to defray the rising costs of living in Singapore. With the injection of capital into Singapore’s economy under the Assurance Package, consumption-related SMEs, such as businesses offering retail and food services, are expected to benefit.

On the other hand, the Central Provident Fund’s (CPF) salary ceiling has been raised to safeguard the long-term savings of local employees. This may drive up cost for companies, especially for firms with significant labour cost exposure.

However, entrepreneurs seeking incorporation in Singapore can look forward to benefiting from the Job-Skills Integrators scheme. Under this initiative, companies in precision engineering, retail, and wholesale trade can access a re-skilled or upskilled workforce, enabling growth and scalability in Singapore.

3. BEPS 2.0: Changes in Business Tax

As governments push for tax transparency globally to combat multinational tax avoidance, Singapore is also making changes. These are implemented under the Base Erosion and Profit Shifting Initiative (BEPS 2.0), a worldwide framework to reform international tax rules.

With the implementation of BEPS 2.0, the effects are expected to be far-reaching across Singapore’s economy. MNEs with €750M+ annual revenue face a 15% minimum tax rate, among other measures.

Stay informed about policy changes to ensure compliance, especially for SMEs dealing with MNEs.

Maximise Your Business Potential with Segovia

Budget 2023’s initiatives offer diverse support for Singaporean businesses, exciting prospects for entrepreneurs.

However, to ensure that your operations run smoothly, keeping abreast of local financial and tax policies is equally vital, and this is where Segovia comes in. With over 20 years of experience in providing accounting and company incorporation services in Singapore and globally, you can trust our dedicated team of consultants to take the burden off your shoulders.

We understand the business, tax, and finance complexities, guiding you seamlessly. Focus on growing your business with peace of mind. Speak to our team today to learn how to leverage our bespoke services to propel your business to greater heights.