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In February 2013 when the Finance Minister of Singapore Mr. Tharman Shanmugaratnam presented the 2013 Budget to the nation he seemed to have put to rest the anxieties and apprehensions of both the set of people;
a) The people of Singapore and Singapore based local companies and
b) The foreign workers and the foreign companies based in Singapore.
It was indeed a great balancing act because
looking to the world status of Singapore as the best place to work, live and do business the budgetary decisions demanded a high level of intellectual input so that neither the local residents nor the foreigners are put to any loss nor should the business opportunities which the world is looking at in Singapore be put into jeopardy. The Finance Minister indeed played a master stroke when he announced in his 2013 budget that all Singapore Companies would receive a 30% Corporate Income Tax rebate. The rebate is subjected to a cap of S$30,000 per year of assessment (YA) and will be available for the YA 2013, 2014 and 2015.
How could the Finance Minister ignore the demand for a more equitable assistance for the local business men to tide over the rising costs? There was a need to reduce the dependence of the Singapore companies on foreign workers because in 2012 foreign manpower was Singapore’s most talked-about topic. The budget says that the levies on foreign manpower will be increased and will come into force in July 2014 and July 2015. Some sectors have been selected for cutting the Dependence Ratio Ceiling, particularly in the services sector it will be cut from 45% to 40%, while in the marine sector the ratio may get cut by a third. There was a strong need to restructure the economy and employment market to achieve quality growth and higher wages for Singaporeans. The budgetary provisions do favor more to the lower and middle income groups by tilting taxes and benefits more in their favor because the income gap was widening and currently it is largest among the developed countries. The Finance Minister also had in mind the welfare of the elderly citizens as far as their health and retirements benefits were considered.
The Corporate Income Tax rebate will definitely boost up the demand for Company formation in Singapore because all the companies before establishing themselves in Singapore would surely study the corporate tax structure and do the comparative and analytical study to find whether it is beneficial or not as compared to the tax laws in other nations. There is a direct relation of the tax laws to the growth and productivity of the company. Singapore has always been sensitive in this aspect as it has always cared to keep the Individual income tax and also the corporate tax to a very competitive level such that the quality work and productivity at individual or corporate level is not compromised. It always wanted to keep high the moral spirit of an individual worker as well as the company. Indeed full marks should be given to the Finance Ministers for his balanced act. Singapore will remain vibrant at the local level and also at the international level and its demand as the most preferred destination of the world to live and to do business will not decline even by a single count.
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