To help business cash-flow and strengthen Singapore's competitiveness, the government will lighten the tax burden of businesses in the coming year. Businesses in various industries can look forward to these business-friendly measures:

Easing cash-flow

The government will enhance the current loss carry-back relief system for this year and the next (YA2009 and YA2010). This allows businesses to get a cash refund on taxes that they had paid in previous years.

In addition, the government will increase the cap on losses that can be claimed against past taxable income to $200,000, up from $100,000 currently.

Businesses will also be able to claim losses against their preceding three years of taxable income, instead of just the immediate preceding year under the current scheme.

In addition, IRAS will allow provisional claims for the tax refund to be based on estimated losses to allow businesses to obtain their refunds much earlier - by six to 18 months in most cases.

Corporate income tax cut

Corporate income tax will be cut from 18% to 17% effective from YA2010. This will cost the government $400 million to $500 million a year over the medium term.

Foreign-sourced income exemption

Introduced in 2003, the Foreign-Sourced Income Exemption scheme will be extended to cover all foreign-sourced income.

All foreign incomes, earned before today, will be exempted from tax when they are remitted, with immediate effect for one year.

Transport-related taxes

First, a 30% road tax rebate for goods vehicles, buses and taxis for one year. The rebate will take effect on July 1 and will yield savings of about $40 million for businesses. (For more details, please click here.)

Second, special tax exemption for CNG (Compressed Natural Gas) vehicles will continue for two years till Dec 31, 2011. However, from January 2012, a CNG unit duty will be introduced at $0.20 per kg, which will be significantly below the equivalent duty currently levied on petrol.

Third, a 20% concession in port dues will be granted to all harbour craft engaged in commercial activities to lower the business cost of port service providers. This is in addition to the increased rebates on aircraft landing fees announced in December.

Encouraging investment in equipment and business renovation

To help businesses further, the government grant an accelerated capital allowance for equipment acquired this year as well as in 2010. Such investments can be written down within two years with 75% of the write-down taking place in the first year.

Currently, businesses can write down the costs incurred for acquisition of plant and machinery on a 3-year straight-line basis.

In addition, the government will also accelerate the writing down of renovation and refurbishment expenses to allow businesses to write down these expenses fully within one year, from the current three years. This concession likewise applies to expenses incurred this year and the next.

Simplify tax framework for corporate amalgamations

The government will make it easier for companies to restructure and rationalise by simplifying the tax framework.

Property market

There will be a 40% property tax rebate for industrial and commercial properties for 2009. This will cost the Government about $800 million.

In addition, JTC, Housing & Development Board (HDB) and Singapore Land Authority (SLA) will provide a 15% rental rebate to their tenants and land lessees. Rental rebate will also be extended to stall holders paying market rents in markets and food centres managed by National Environment Agency (NEA).

IRAS will be bring forward its property tax assessments for 2009, providing additional help for property owners, besides savings from the property tax rebate. The assessed Annual Values of properties went up last year, in line with actual market rentals, resulting in increased tax bills for many property owners.

To help developers, property tax for land which is approved for development will be deferred. The deferral will be for up to two years from today until Jan 21, 2011, or the TOP date of the development, whichever is earlier. This measure will cost the government $290 million per year for 2009 and 2010.

To give further flexibility to developers to phase out their projects, the Government will allow a one-year extension of the project completion period for private residential projects.

The government will also extend the period - from two to four years - for developers with qualifying certificates to dispose of all residential units in their developments and allow developers to rent out unsold residential units during this period. In addition, it will also allow the reassignment of government sale sites and private land owned by foreign developers.

Maintenance, Repair and Overhaul (MRO)

To further enhance competitiveness, the government will expand the scope of GST zero-rating for the industry and help to facilitate the import of qualifying aircraft components and systems.

Auction, exhibition and wine-trading

To encourage the growth of the auction and exhibition industry, the government will suspend duty and GST on goods temporarily removed from Zero-GST or licensed warehouses for auctions or exhibitions.

In addition, there will also be a range of grants in the Budget to develop new capabilities and spur innovation amongst enterprises. In total, the government will commit $900 million in the next few years towards this effort and will also widen the scope of activities that qualify for grants.

To encourage the media and digital entertainment businesses to exploit intellectual property (IP) from Singapore, the government will allow them to write down the cost of acquiring qualifying IP rights in two years instead of five years currently.

Test-bedding ideas

A Test-Bedding Fund will get $200 million to make Singapore a 'living lab' for companies and entrepreneurs to nurture new ideas, test innovative solutions and develop future global businesses.

According to the Finance Minister, the first wave of test-bedding will be based on areas where Singapore has key strengths, such as urban planning and traffic management, water management and lifestyle products and services. Economic Development Board (EDB) and other agencies will invite and support private sector players to test, develop and implement new solutions in Singapore before exporting them elsewhere.

The government will continue to expand R&D funding for local universities and research institutes by topping up the National Research Fund by $400 million this year to support Singapore's continuing push forward in R&D.