Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC
at the Second Reading of the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill [Bill No. 9/2016].
Madam Speaker, I stand in support of this Bill and I applaud the government’s support for pioneer industries and pioneer service companies and provide them with tax benefits.
However, I would like to seek some brief clarifications and also make some suggestions.
Selection Criteria for Pioneer Service Companies and Industries
There are amendments to Section 17 of the Act but not to Section 17(2) specifically, which states “The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he thinks fit.”
Can the Minister provide more clarity on the criteria for the approval of the application and consider adding such information into Section 17(2)?
Can the Minister also consider this for Section 4(1) which states “The Minister may, if he considers it expedient in the public interest to do so, approve an industry, which is not being carried on in Singapore on a scale adequate to the economic needs of Singapore and for which in his opinion there are favourable prospects for development, to be a pioneer industry and any specific product of that industry to be a pioneer product.”
EDB does have some of this information and factors of consideration on their website but I hope we can provide more clarity in the legislation itself. We need a clear and unambiguous framework to select and admit companies who will enjoy the pioneer status.
I ask this so that companies can also better understand the considerations taken and hence can plan accordingly and make better plans to become pioneer industries and pioneer service companies.
With regard to the proposed amendments to Section 19J(d) where the Minister decides whether the concessionary tax rate for income from a qualifying activity is either 5% or 10%, can the Minister provide more details on the criteria for receiving either 5% or 10%?
This greater clarity will again allow companies to make better plans which will ultimately benefit Singapore.
The main aim of providing all these clarifications is so that companies have a higher chance of a successful application resulting in fewer resources wasted through failed and repeated applications.
Providing more help to SMEs and startups
My second concern is how we can help more SMEs and startups benefit from these tax relief. Can the Minister provide details on the total number of approved pioneer industries and pioneer service companies in the past decade and of those, how many are SMEs and startups?
SPRING Singapore is already helping startups with the ACE Startups Grant and all companies especially the SMEs with the Productivity and Innovation Credit scheme.
Will EDB be doing more to help them become pioneer industries and pioneer service companies? It does seem like a huge hurdle to overcome to become a pioneer industry and I hope we are not setting a hurdle too high for SMEs who with a bit of help, have the potential to be global game changers and make Singapore proud.
Lastly, many companies are aware of the PIC scheme but far fewer are aware of the Economic Expansion Incentives Act. I hope we can role out more initiatives to increase awareness and encourage more applications.
This will be in line with our overall goal of building up innovation, inspiring more creativity and driving more research and development in Singapore.
In conclusion, the Economic Expansion Incentives Act has provided important tax relief for companies in Singapore and help increase the growth of pioneer industries. I believe that with more clarity on the criteria for the approval of applications, more awareness and with the amendments proposed in this Bill, our efforts will be further strengthened.
Madam Speaker, my request for the government to review the above notwithstanding, I support the Bill.