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Budget 2005 for Small Business
Singapore

Before we look into the measures and the incentives in the Budget 2005 for small businesses, we feel it is important for us to read the direction the government is hinting towards for small businesses in the budget statement 2005 by our PM Lee.

In his speech, our PM Lee stated about creating opportunity and an environment conducive to business so that private enterprise could flourish and also "everyone should have the opportunity to contribute" and realise their aspirations.

For small and medium enterprises (SME), he mentioned that "small businesses are the backbone of many economies" ... and "are often key sources of innovation and buzz". He stressed the need to support them as "not only do SMEs employ many workers but start-up companies are also an important avenue for entrepreneurship".

The comprehensive package of measures that has been included for small businesses in Budget 2005 is as follows :

For Retailers in HDB Estates

The aim of the government is to help revitalise the retailers in HDB estates as many shop owners are struggling, due to an over-supply of shops coupled with competitions from big shopping malls and supermarket chains. PM Lee said that "HDB willl help them relocate, restructure and upgrade if they wish to stay in business, or facilitate their exit if they wish to retire"

Loss Carry-Back

The loss carry-back measure is to help small-businesses cope with cash-flow problems due to cylical downturn or other factors. Currently, the tax system allows losses for companies to carry forward in order to offset against future profits, but not the losses carry-back feature to ease cash flow for companies in Singapore.

For timely relief for small companies, the government will allow a one-year loss carry-back, and companies can claim refunds of up to S$20,000 per year based on a cap of chargeable losses of $100,000/- for taxes already paid on profits in the previous year. The claim back scheme is to ease cash-flow problem for small businesses with effect from YA 2006. We believe Form C will still be submitted in the normal way and the losses subject to finalization or agreement by the taxman. The carry-back scheme is also available to sole proprietors and partnerships in Singapore.

GeBIZ Suppliers

This measure is to help SMEs lower the cost of doing business with the Government. Currently, suppliers need to subscribe to GeBIZ at annual fee of $320 per account in order to quote or tender for government business. With effect from 1st April 2005, all suppliers will be given one free Government e-procurement account with GeBIZ. This measure will benefit about 88% GeBIZ suppliers, who have only one account and almost all of whom are SMEs.

For more information about Singapore Budget 2005, please visit website http://www.budget2005.gov.sg/