Provide tax incentives for SMEs’ overseas expansion in 2015 budget, government urged

Both EY and SMEC are echoing this sentiment.

It’s high time for SMEs to expand overseas, but doing so requires help from the government. Both EY and the Singapore Business Federation’s SME Committe are urging the government to provide incentives to help small businesses explore opportunities abroad.

According to EY, the process of expanding overseas usually presents significant financial uncertainty due to significant set up costs and the lack of experience in the new market. Going abroad usually requires a relatively long-term commitment by the company.

“Tax incentive support during the early- to-mid stages of overseas expansion can help to cushion some of the risks associated with the costs of entry into new markets and enable faster market expansion. The introduction of such a tax incentive needs to be supported by a smooth and simple application process. As local SMEs may not have the resources to undertake complex discussions, the tax incentive should be kept simple and the conditions transparent,” said Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP.

Meanwhile, the SMEC urged the government to raise SMEs’ knowledge and awareness to tap on ASEAN Economic Community (AEC) opportunities and to enhance government’s overseas expansion assistance programmes.

SMEC stated that IE Singapore’s Global Company Partnership (GCP) programme should raise the in-market turnover ceiling on GCP grant eligibility for in-market sales support to $200,000 and allow multiple claims for new businesses within the same country with a large market. It also urged the removal of the requirement for companies to take controlling stake in target companies for M&A, and lower the requirement to 30% stake instead.

SMEC also noted that the government should extend support under iMAP to include participants’ travel and accommodation costs, and ;ower the threshold for IRAS’ M&A Tax Allowance eligibility to 30%.