Singapore Budget 2007 - benefit for business

For all companies

1. The corporate tax rate had been reduced by two percentage points to 18% from Year of Assessment (YA) 2008 (For those whose accounting year ended in 2007).
2. The tax corporate tax exemption threshold increased from $100,000 to $300,000 from YA2008, with the following exemption rates:
3. 1. 75% exemption for the first $10,000 of chargeable income; and
   2. 50% exemption for the next $290,000 of chargeable income.

With the above changes, the effective tax rate will be:

Compared to previous year of assessment, there is a potential saving of $22,950 for chargeable income up to $300,000. This compared the current tax rate and exemption with the previous tax rate of 20% and partial exemption of $100,000.

For Start-ups and SMEs

1. Removal of the expiry date  of YA2009 for the corporate tax exemption scheme for start-ups, which exempts the first $100,000 of chargeable income. The exemption is available for new companies which are private exempt, those with no corporate shareholders during the tax year of assessment.
2. Grant SMEs cash rebates on the first $80,000 of total employer and employee CPF contributions over two years:
3. 1. In the first year (1 July 2007 – 30 June 2008), the rebate is 2% of the first $40,000 of total CPF contribution and 1% of the next $40,000 of total CPF contribution.
   2. In the second year (1 July 2008 – 30 June 2009), the rebate is 1% of the first $40,000 of total CPF contribution and 0.5 % of the next $40,000 of total CPF contribution.
   3. Provide a grant for SMEs voluntarily registering for GST (capped at $5,000 per SME) to support up to 50% of GST registration-related costs, such as hardware, software, Internet connection and IT implementation consultancy and training.

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