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More tax breaks for firms that anchor pioneering activities in Singapore
COMPANIES that anchor their "pioneering activities" in Singapore which bring significant benefits to the country will enjoy greater tax incentives, after Parliament passed amendments to the Economic Expansion Incentives Act on Monday.
Firms that are awarded the "pioneer certificate" by the government will be entitled to the maximum tax relief period of 15 years for each activity, instead of for the company as a whole.
Currently, a company is awarded multiple certificates when it anchors different qualifying economic activities in Singapore over time. It gets the maximum tax relief regardless of the number of certificates it owns.
The changes were outlined by Minister for Trade and Industry (Trade) Lim Hng Kiang during a short debate on the Bill.
He added that the government has awarded pioneer certificates to 239 companies over the past 10 years, with 71 of them getting the certificates between 2011 and 2015. Of this group of 71, two were small and medium-sized enterprises, of which one was a local firm.
"(Pioneer certificates) require companies to commit to economic contributions of substantive scale, and therefore it is quite natural that the bigger companies would tend to qualify," said Mr Lim.
The amended Bill also affects the existing Development and Expansion Incentive (DEI), which was introduced to encourage companies to expand by investing in technology as well as major upgrading of equipment and operations.
Under the Bill, the tax relief period under the DEI is generally capped at 20 years and currently applied on the company instead of the incentivised qualifying activities.
"These enhancements will encourage companies engaged in high value-added manufacturing or services activities, including existing ones, to continue to expand in Singapore," said Mr Lim.
The aim of both the pioneer certificate and the DEI is to encourage companies to undertake substantive economic activities in Singapore, which would in turn create good jobs for Singaporeans and bring spin-offs to the economy.
"The objective is to encourage 'queen bees' with regard to commerce to set up operations here and thereby help build a cluster around them," said Mr Lim.
"Applications are assessed based on the scale and the qualitative aspects of their economic contributions to Singapore. The exact level of support is thereafter calibrated to be commensurate with the level of economic contributions from the company," he added.
Separately, Parliament approved laws that will require stores to keep tobacco products such as cigarettes out of sight, and to sell them to customers only when requested. This will take effect from 2017.
Under approved amendments to the Tobacco (Control of Advertisements and Sale) Bill, retailers will be allowed to display only a standard format, text-only price list upon request. The appearance of this list will be prescribed by the Ministry of Health.
The ban on the point-of-sale display is meant to "de-normalise" tobacco use in Singapore and reduce the exposure of non-smokers to such products, said Senior Minister of State for Health Amy Khor.
Tobacco retailers will be given a one-year grace period before the point-of-sale display ban takes effect, she said, adding that the government has engaged retailers extensively since 2014.
Dr Khor shared that Singapore's smoking rate stood at 13.3 per cent in 2013. Worldwide, tobacco is the cause of about six million deaths every year. More than five million of those deaths are a result of direct tobacco use, while more than 600,000 are due to exposure to second-hand smoke.