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THE government can do more to help small and medium-sized enterprises (SMEs) restructure, said Deloitte Singapore in its 2015 Budget wish list released on Tuesday.
For one thing, the accounting firm believes the effectiveness of the Productivity & Innovation Credit (PIC) scheme can be improved. It recommends combining the PIC cash payout across the relevant assessment years and increasing the payout cap instead of limiting it to S$100,000 per year of assessment.
It also thinks a new scheme should be introduced to reward innovative activities that are not deemed research and development (R&D) activities under the current PIC scheme.
Said Low Hwee Chua, partner and head of tax services at Deloitte Singapore and South-east Asia: "Learning from the German Mittelstand, we should look to provide a stronger platform for our SMEs to operate given that they are the engine of growth for the Singapore economy. Widening the PIC scheme to include more innovative activities - which may not qualify as R&D - appropriately rewards firms that pursue innovative solutions to improve productivity."
Deloitte also said that one way to counter rising business costs is to increase the partial tax exemption from the first S$300,000 of normal chargeable income to the first S$600,000 of normal chargeable income for SMEs. Under this enhancement, the effective tax rate for SMEs with chargeable income of S$600,000 would drop to 8.4 per cent, from 12.7 per cent.
Deloitte has amended their press release to reflect that the effective tax rate for SMEs with chargeable income of S$600,000 would fall to 8.4 per cent, and not 7.8 per cent as it had originally stated.