SMEs could expect a reduction in their corporate regulatory and compliance burden in the near future. The Singapore Government is planning to make more companies eligible for audit exemption. Another estimated 25,000 companies is expected to join the current estimated 197,500 companies currently enjoying the exemption.

Tax filing is also simplified for qualifying small companies. They can file their returns electronically, reducing paperwork and also need not submit their financial statements and tax computation unless requested by IRAS for audit. 

The above are some of the Government measures being taken to support SMEs and discussed by our Senior Minister of State for Finance and Transport today in Parliament. 

Other initiatives discussed includes the change of PIC application form to an electronic one to reduce errors during submission, the extension of the PIC scheme till YA2018 and also the benefits of the M&A scheme introduced in Budget 2010.

Following the Budget 2014 announcement, here are some of the notable tax changes.

To give businesses more time and certainty to put in place productivity improvements, the PIC scheme will be extended for three years till YA 2018.

For enhanced tax deductions, the expenditure cap of $400,000 per qualifying activity per YA can be combined across YA 2016 to YA 2018 (i.e. $1.2 million per qualifying activity).  

For PIC cash payout, the expenditure cap of $100,000 per YA for all six qualifying activities cannot be combined across the three YAs, as is the case currently.  

The PIC+ Scheme is introduced to provide support to Small and Medium Enterprises (“SMEs”) who are making more substantial investments to transform their businesses.

Under the PIC+ scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per qualifying activity per YA. This means that these SMEs that invest beyond the current combined expenditure cap of $1.2 million for each qualifying activity can claim 400% enhanced tax deduction on an additional $200,000 of qualifying expenditure.

PIC+ will take effect for expenditure incurred in YA 2015 to YA2018. The combined expenditure cap will be up to $1.4 million for YA 2015, and up to $1.8 million for YA 2016 to YA 2018. 

The expenditure cap for PIC cash payout will remain at $100,000 of qualifying expenditure per YA.  

IRAS will release further details by end Mar 2014.

With effect from YA 2016, businesses applying for PIC cash payout will have to meet the three-local-employees condition for a consecutive period of at least three months prior to claiming the cash payout.

Stamp duty rates for share transfers and mortgages will also be streamlined for transactions executed on or after 22 Feb 2014

Transfer of stock or shares - 0.2% of the purchase price or market value of the stock or shares transferred, whichever is higher
Mortgage instruments - 0.2% or 0.4% of the relevant amount (depending on the type of mortgage instrument) subject to maximum duty of $500

Good news to all companies that plan to utilise the government's Productivity and Innovation Credit Scheme. Following the release of the Budget 2014, the Inland Revenue Authority of Singapore (IRAS), revised its Productivity and Innovation Credit (PIC) IT and Automation Equipment List to include Website, Automated cover system for open-top containers and Landscaping equipments. 

This means that businesses can now claim enhanced deduction for expenses incurred for the 3 items without the need to write in to apply.

Expenditure for these items incurred from YA 2014 will be eligible for the PIC. If you have already submitted your PIC Cash Payout Application for YA 2014, you could try to write in to IRAS to have any expenditure included.