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Government Grants

To foster productivity and innovation, government agencies in Singapore have been providing several assistance schemes to small medium enterprises (SMEs) to adopt new technology and achieve that ultimate objective. One of those schemes are the Productivity and Innovation Credit Scheme, that lets small businesses receive up to 400% tax benefits/deduction or receive up to 60% cash payout in the YA year, 2012 – 2015.

The 2013 budget that was introduced back in February gave opportunities for small businesses in Singapore to increase their productivity and efficiency with the use of technologies as well as to deal with small number of foreign workforce. So how can small and medium businesses make the most of all these schemes that are available for them?

Well, we got few tips from expert consultants on how three types of SMEs will benefit from PIC schemes.

Just take an example of a manufacturing firm like Rotating Offshore Solutions. The company is specializing in marine engineering and build customized modules particularly for clients that are involved in the oil and gas industry.

The firm was launched in 2004 and is one of the fastest developing companies in Singapore with revenue more than $35 million each year and its profits are around $5 million per year. In 2010, Rotating Offshore Solutions won an Enterprise 50 award. Like so many companies in Singapore operating in manufacturing sector, most of the firm’s workers are foreigners.

About half the firm’s hundred strong work force are foreign workers. This is mostly because of the fact that the company could not find enough Singaporeans to work for them.

“For now, we are focusing their efforts on increasing its market share as well as driving its business sales,” says Chia Kuan Wee, the executive director of Rotating Offshore, “Because of this, we don’t expend much on research and development activities in Singapore, but send our engineers to foreign countries for regular training.”

Mr. Chia says that sending their engineers overseas cost their company almost 5 percent of their total revenue. But for now, the company wants to expand their local operations but don’t have any immediate plans to enlarge their business overseas.

No matter what their plan is, most consultants agree that manufacturing companies like Rotating Offshore will greatly benefit from the Productivity and Innovation Credit, or PIC scheme.

The PIC scheme is specially aimed to encourage small and medium companies to be more innovating and productive by giving them up to 400% tax benefits/deductions and annual funding up to $400,000 on each of the six qualifying activities.

Harvey Koenig, a tax partner at KPMG, thinks that the Rotating Offshore need explore the PIC scheme because their main business of designing customized modules may be regarded as the R&D activity under the scheme.

Given the fact that the company annually spends $1.75 million each year for sending their engineers for overseas training, Mr. Koenig also thinks that Rotating Offshore can claim the tax benefits/deductions available through PIC for training.

If the company goes for the cash payout option, that could mean at least maximum $60,000 fund under the new improved scheme.

And if the firm also decide to replace its foreign workers by hiring older Singaporeans, Yong Jiunn Run, the CIMB head of commercial banking, says that the company could also save on salary costs, too. This could mean the company will save at least $14,400 in wage for every five foreigners it replaces because the government gives at least 8 percent wage subsidy.

Additionally, if the company decides to train their staff in-house, it can claim the training costs of almost $10,000 under the PIC training staff activity, which also equates to tax deductions worth up to $40,000.

Here’s the reaction from Mr. Chia!

Mr. Chia now agrees that this awesome PIC scheme could be useful boost for his company, however, also notices that the cash payout option really doesn’t help his company.

“Recently, we have applied for the PIC scheme and found it useful for the income tax deductions, which is more beneficial than the other option – the cash payout option,” says Mr. Chia.

He concludes that the overall budget program was neutral to them and their company were not quite affected by lowering the dependency ratio. Although he thinks it’s not great, but he still considers it’s a  good option for many other small businesses out there, particularly to those one who are starting out.

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If you have already set up a business but want to take it to the next step, then you may be thinking about what to do to help grow your business to the next level, right? Well, there are several ways to do this, and some of them are laid out for you, below.

There are several government grants available for your business to grow and choosing the proper one depends upon the type of your business, what available resources you use, and how much time, money, and resources are you willing to put out to invest all over again.

Small and medium business owners can always use a little money to get started. That’s why Government has created several grant programs to help small business like you to take it to the next level.

Successful businesses know the importance of having a strong Information Technology (IT) system that will help support their business processes. But for many, the cost involved in the implementing such system is always an issue. It is probably because of tight budgets some company has as compared with their larger counterparts and this ultimately limits their adoption of IT.

The Singapore government has started several schemes, like SEEDS, iSPRINT, YES! Startups, TECS, and other to help small business accelerate their growth.

Under each of these grants, a business operating in Singapore can receive up to 40% to 70% qualifying expenditure in training, hiring IT equipment, acquiring and leasing of trademark and patent rights, design projects, among others. There are several types of projects that each new company operating in Singapore can qualify for, and there are pre-requisites to consider before even applying for those grants.

What types of projects your business will qualify to receive Grants?

1. Packaged Solutions

Package solution cover all the basic business functions such as accounting, finance, payroll, software-as-a-server, and point-of-sales with respect to the cost of software, subscription, and consultancy services, and training that falls into this category.

2. Customized Solutions

These solutions comprise of enterprise resource planning and customer relationship management solutions. Businesses can apply for the grant so that they can cover the cost related with training and consultancy service fees of this software.

Other customized solutions would include those solutions that are needed for business re-engineering and development efforts. This section includes cost incurred during supply chain management solutions. Small and medium companies can tap on to these types of solutions to cover manpower, consultancy, hardware, software, and training related costs.

Important Step to Take to Qualify For These Grants

  1. Your business must be incorporated or registered in Singapore
  2. At minimum, 30% of shareholders must be local citizens
  3. The annual sales turnover of your company’s group must be less than S$100 million OR
  4. The number of employees in your company should be less than 200

For customized solutions, the development must be carried out in Singapore, the development for the first time automation of different business functions, and the project must be started only after the grant is approved.

Here are Six Significant Tips to Know before proceeding to apply for Grant!

  1. If your business isn’t in a hurry to implement IT solutions, then you can apply for a grant approval from iDA, which usually takes about 2 to 6 months to obtain. But if your business require immediately use IT solutions, and you have plenty of IT funds, then you may want to skip applying for grants at first until the next project. The grant is available until March 31, 2016
  2. Business registered in Singapore has to fill and submit a 6-page business proposal to apply for government grants
  3. Businesses also have to present their quotations from 3 IT solution suppliers along with their application to iDA
  4. In addition to business proposal and quotation, businesses also have to submit their as well as the appointed IT solution providers’ latest ACRA business profile
  5. Business applying for the government grants also have to submit their financial statement of past two years

When we look at Singapore, the favoring conditions for business are not only the proficient infrastructure, being the coming up city, linked to other major towns but also the government policy affects or rather influences a greater deal. The programme introduced by the Board of Economic Development in Singapore has made it easy for investors to enter, develop and relocate their firms. This programme has actually made many people to invest in this city.

Find out more about GIP here.

The programmes stated above were initiated as a way of reviewing globalization for easy entry management for foreign people with interest in investing in Singapore.

The Board in Singapore aids in opening of chances in collaborations of different businesses including networking of local business. However, the programme had schemes which gave immigration options for business men and women. These were to acquire permanent residency, attain different journey Visa, and get an Entrepreneurs’ Pass Social Visit and lastly an Entrepass.

Like for the first scheme about residence, one is legible to carrying out a business if if he/she trade over 1 million dollars in a new business start up and the property of resident is acquired at less than 50% of the investment amount. Other investment routes that included undertaking capital funds, foundations are also qualifying factors for permanent residency.

The journey Visa is a relief to the people who have to travel away of Singapore and go to their other enterprises somewhere else. This enables the entry of executives involved in business countries requiring Visa to Singapore. The legality of the Visits may be allowed 30 days of the validity time of the Visa the statement under which is incorporated in the programme.

The Target market, proposals of the business, type of business, previous businesses you have run, Strategy of development, reasons for your stay and even your working experience are to be provided to the Board of Economic Development for the acquisition of the letter of support before setting up a business. This only takes few days.

An Entrepass so long as it is viable and productive can be renewed. It helps to manage and control operations of business by facilitating the entry of entrepreneurs in Singapore. The added advantage of an Entrepass is that a family member can live in Singapore and start or capitalize on your business. An Entrepass can be acquired in about 6 weeks after the date of application.

Singapore provides the top life and an investing option. The government has facilitated and encouraged investors to have their businesses in Singapore and that is a major factor as to why many want to invest in this heart of Asia called Singapore.