SINGAPORE BUDGET HIGHLIGHTS 2015
The Minister for Finance presented the Budget 2015 on 23 February 2015. Though much anticipated by Singaporeans as the “Jubilee Budget” on account of Singapore’s 50th year of independence, the Minister has avoided any overly generous handouts and presented a considerably measured response to the global and domestic issues facing the nation. The budget announcement is directed to a more permanent, far-reaching policy shift in
Singapore’s economic and social narrative. Continuing the trend set in previous years, this year’s budget remains focused on transforming Singapore’s future by encouraging innovation and deepening skills and expertise. Social fabric will be strengthened to build a fair and inclusive society with stronger collective responsibility. The Budget 2015 aims to achieve this goal by taking steps in four key areas:-
i. Fostering the development of skills and capabilities;
ii. Supporting businesses by promoting innovation and internationalization;
iii. Investing in economic and social infrastructure; and
iv. Strengthening assurance in retirement building on a fair and just society.
SMEs, which formed the backbone of the Singapore’s economy, remain in the spotlight. In addition to the existing PIC and R&D tax measures, several non-tax and tax initiatives have been introduced or enhanced to assist them to scale up and move forward to the next stage of development. Non-tax initiatives include the availability of enhanced capability development grants; tax initiatives include the introduction of a new incentive, the International Growth Scheme, to provide greater and targeted support for expansion outside Singapore.
On the social front, retirement adequacy needs of the middle class and the less fortunate and older Singaporeans have also been further strengthened with a host of measures including the introduction of the Silver Support Scheme and adjustments to the CPF system.
The Budget 2015 will also be remembered for the increase of the top marginal tax rate from 20% to 22% for individual taxpayer and the inclusion of Temasek Holdings (“Temasek”) in the Net Investment Return (“NIR”) framework. These initiatives will assist the Government in bolstering fiscal resources to meet anticipated rising Government expenditure.
The NIR framework allows the Government to spend up to 50% of the expected long-term returns on her net assets, including both realised and unrealised capital gain, managed by the three investment entities, GIC, MAS and Temasek. This would provide additional fiscal resources for the Government. Notwithstanding this, some clarity and maybe considered conservation on the methodology of estimating unrealized capital gain may be wise.
As part of the SG50 celebration, various incentives and enhancements are provided such as enhanced subsidies for partner childcare operators, topping-up of child development, Edusave and post-secondary education accounts, enhancing financial assistance for students and service and conservancy charges rebates.
Finally, as we are entering the second half of the 10-year restructuring journey, consideration should be made to determine if changes should be made in our productive narrative and strategies. Despite the Government’s spending on the array of schemes to support economic restructuring in recent years, these have served only to subsidise equipment, wage increase and training for workers. Companies have not, for various reasons, achieved the objectives of improving their competitiveness and productivity significantly.
In all, the Government should be very prudent over the fiscal sustainability of this Budget and stress that the nation would require the collective responsibility of each and every Singaporean in exercising their personal responsibilities so as not to place excessive fiscal obligations upon our future generations.
At Acutus, we are pleased to present you with this exclusive highlight to assist you in understanding the changes and initiatives that was unveiled in Budget 2015. As these proposals are yet to be enacted, our comments should not be considered definitive and readers are advised that they should not rely or use this as a basis for formulating business decisions.
Happy 50th Birthday, Singapore!
9 March 2015
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© 2015. This publication is contributed by Acutus Tax Services Pte. Ltd. All rights reserved.
Click here to view the Singapore Budget Highlights 2015.