Speech by MOS Teo Ser Luck at the ISCA Budget 2014 Update And Its Tax Implications Seminar at the Fairmont Singapore, Padang & Collyer Ballroom

Dr Ernest Kan, President of the Institute of Singapore Chartered Accountants

Ladies and Gentlemen

Good morning.

1.             I am pleased to join you at the ISCA Budget 2014 Seminar today. The seminar is a useful platform for understanding the measures unveiled in the Budget and how it will impact businesses and individuals.

2.             The Singapore economy has performed well despite global uncertainty. Between 2007 and 2012, our economy grew by 4.7 per cent annually. However, downside risks from monetary tightening in the US and economic restructuring in China remain. Against this backdrop, the Ministry of Trade and Industry anticipates a moderate growth forecast for Singapore of between 2 to 4 per cent this year.

The government remains committed to supporting economic restructuring

3.             We need to ensure quality growth for the Singapore economy as it restructures towards higher productivity. The accountancy sector has been identified by the National Productivity and Continuing Education Council (NPCEC) as one of 16 priority sectors in Singapore’s national productivity drive. While the accountancy profession continues to tackle the challenges it faces

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, it is also important to keep an eye on the opportunities available as Singapore works towards its goal of becoming a global accountancy hub by 2020

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4.             The government remains strongly committed to supporting businesses in their restructuring journey. At last year’s budget, I announced several new initiatives arising from the SME Review in 2012, to support business in attracting talent and developing capabilities to support restructuring. The measures included the SME Talent Programme, Partnerships for Capability Transformation, Collaborative Industry Projects as well as the streamlined Capability Development Grant. There has been encouraging take-up of these schemes in 2013.

5.             In implementing the schemes, feedback from businesses was obtained through the SME Workgroup formed last year, which has been actively conducting outreach to businesses and collating feedback on the government schemes available for businesses. Many trade associations also submitted budget recommendations to government. Based on the feedback received, the Government has strengthened and introduced a number of initiatives to bolster our businesses’ efforts to achieve their productivity goals.

Scheme enhancements at Budget 2014

6.             Several tax-related incentives have been announced for this year’s budget. First, the Productivity and Innovation Credit (PIC) Scheme has been has been extended by three years to 2018. The PIC has also been enhanced with a new PIC+ Scheme for SMEs. Under the PIC+, the qualifying expenditure cap for SMEs will be raised from $400,000 to $600,000 per year with effect from year-of-assessment 2015, providing greater support to SMEs making large investments for productivity improvements and innovation.

7.             Second, to boost the level of R&D activity among our businesses, the Research & Development (R&D) Tax Deductions Scheme has been extended. The 50 per cent additional tax deduction on relevant R&D expenditure has been extended till 2025. Similarly, the tax deduction for EDB-approved R&D activities will be extended till 31 March 2020.

8.             Third, to support the R&D efforts of our businesses and to help protect their innovations, it was also announced that the Writing Down Allowance Scheme for Intellectual Property Rights will be extended for five years from 2015 to 2020.

9.             Apart from the tax related schemes, several other schemes were also announced this year to support businesses in their development. These include IDA’s ICT for Productivity and Growth Programme (IPG) which supports businesses to tap on ICT solutions and Phase 2 of the Co-Investment Programme which would provide growth capital for Singapore businesses.

Internationalisation for growth

10.        Given our small domestic market, our businesses need to embrace going overseas as part of their growth strategy.

11.        To help Singapore businesses expand beyond our shores, IE Singapore has enhanced its Internationalisation Finance Scheme by increasing the maximum loan quantum supported from $15 million to $30 million. This will provide stronger support to businesses that are funding capital expenses for secured overseas projects or making additional asset investments overseas.

12.        Additionally, the Global Company Partnership Programme will see an expansion in scope where support for overseas staff attachment is now included, and the level of support for test-bedding and pilot projects will be increased from 50 to 70 per cent for two years. 

Conclusion

13.        Singapore’s businesses, including accountancy firms, need to press on in their journey towards higher productivity and providing value added services. The Budget measures this year bolster current schemes to provide better support for this goal. I hope that employers and employees alike in the accountancy sector will tap on the government’s wide range of support to enhance productivity and strengthen your capabilities. 

14.        I wish all of you a fruitful seminar today. Thank you.

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The 2013 Accounting Sector Survey[1], undertaken by the Singapore Accountancy Commission with ISCA and ACCA, found that the top three productivity challenges faced by the profession are1) the ability to attract and retain talent; 2) the competency of finance staff; and 3) changes to the regulatory environment.

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This goal for Singapore to be an Accountancy Hub is outlined by the Committee to Develop the Accountancy Sector (convened by MOF) in a 2010 report.