How Budget 2019 can help technology companies thrive

Building on the themes laid out in the previous years’ Budgets, Finance Minister, Mr Heng Swee Keat, delivered the Singapore Government’s Budget for 2019 on 18 February 2019. Technology continues to be a key theme in strengthening Singapore’s economic competitiveness, increasing Singapore businesses’ productivity and enhancing Singaporeans’ lives.

With this backdrop, technology companies that are adopting technology to improve productivity or provide innovative solutions to other non-technology counterparts stand in good stead in growing their businesses to greater heights.

Some of the initiatives introduced in the 2019 Budget that may be relevant to technology companies at various business growth stages are summarised below:

Innovation Agents programme1 Technology companies, particularly in early stages of growth (e.g. start-ups) would stand to benefit from Innovation Agents’ advice, guidance and/or connections to grow their businesses to the next stage of growth.
Additional $100 million funding for SME Co-Investment Fund2 Singapore-based SME3  technology firms that require funding assistance to scale-up and internationalise may consider tapping on this funding programme.
SMEs Go Digital programme expansion of Industry Digital Plans (“IDPs”) to additional sectors and extending pre-approved digital solutions

Technology firms providing AI-infused solutions and cybersecurity solutions can now consider getting them pre-approved to gain a bigger market share.

In addition, technology firms with experience in applying their solutions to the identified sectors4  should collaborate with Info-communications Media Development Authority with the aim of getting their solutions incorporated into the IDPs 

Digital Services Lab (DSL)5 Technology firms that act as solutions providers for DSL can receive funding support of up to 70% of qualifying costs. DSL currently focuses its effort on services sectors such as Logistics, Retail and Media. 
Professional Conversion Programmes (PCPs) on new areas6 The Government has identified blockchain, embedded software and prefabrication as new areas for the PCPs application. Technology companies in need of skilled manpower in such areas can now tap on the PCPs to augment their existing manpower pool.
Writing Down Allowance (“WDA”) extension to Year of Assessment 2025 Technology companies that are looking to acquire intellectual properties (“IPs”) to augment or expand their existing technology portfolio would be tax incentivised for an additional five years on qualifying IP acquisitions7.
Automation Support Package (“ASP”) extension up to 31 Mar 20218 Technology companies with experience in deploying large-scale automation projects for their customers or are looking to deploy or scale-up automation projects internally, particularly on areas such as robotics, Internet of Things solutions and other Industry 4.0 technologies, would stand to benefit from this ASP extension.

 

Companies can seek advice or mentorship from Innovation Agents (individuals with deep expertise in technology, strong track record in growing businesses and access to global industry networks) on innovation opportunities and facilitate connection to valuable technology and business partners.

The Government launched the Co-Investment Programme in 2010 to catalyse patient growth capital for Singapore-based enterprises through co-investment with the private sector.

Qualifying investee companies must have their key management functions and headquarters activities based in Singapore, and have revenues of up to $500 million.

Environmental services, food services, logistics, media, retail, wholesale trade and security – additions in 2019 Budget: accountancy, sea transport and construction

DSL brings relevant parties together (i.e. Research Institutes, Institutes of Higher Learning, technology providers and industry and end-user companies) to address industry-level digitalisation challenges focusing on project with industry-wide impact and barriers to digitalisation.

Since 2007, PCPs have assisted mid-career professionals to undergo skills conversion and move into new occupations or sectors that have good prospects and opportunities for progression

Businesses are advised to consult tax advisers prior to acquisitions to secure the full benefits of this incentive.

ASP support come in the form of:

I.       Grant (up to 50% funding support on qualifying costs through Enterprise Development Grant);

II.      Tax incentive (Investment Allowance of 100% on top of existing capital allowance for plant and machinery); and

III.    Loan through enhanced Local Enterprise Finance Scheme.

Concluding Remark

With the Singapore Government’s aspiration for the country to be the Global-Asia Node of Technology, Innovation and Enterprise, the slew of technology-centric initiatives introduced in 2019 Budget should provide the much needed boost to Singapore businesses amidst industry transformation efforts and global economic uncertainty. These initiatives represent a bounty of business opportunities for innovative technology firms, particularly those dealing with digital technologies, to capitalise on.

As you focus your efforts and attention on seizing the right opportunities to chart your business growth, let us be your trusted business advisers to take care of all your other important support functions on this exciting journey.

For further assistance, please contact:

Adrian Tan
Partner & Industry Lead, Technology, Media & Telecommunications
T +65 6594 7876
[email protected]

Albert Fong
Director, Tax
T +65 6594 7856
[email protected]