THE previously announced Tender Lite category for government tenders, which makes it easier for small and medium-sized enterprises (SMEs) to participate, will be launched in April 2024.

It is among moves to simplify companies’ transactions with the government, said Second Minister for Finance Chee Hong Tat during his ministry’s Committee of Supply debate on Wednesday (Feb 28).

The new category is for tenders valued at up to S$1 million for general goods and services. Together, quotations and Tender Lite will cover around 90 per cent of all government contracts.

After this new category was mooted last year, the Ministry of Finance (MOF) worked with the Association of Small and Medium Enterprises and the Singapore Business Federation to gather feedback on its design.

Some suggestions were taken up. First, clauses in government contracts will be streamlined, cutting contract conditions by about 20 per cent.

Second, by default, Tender Lite will have no requirements for security deposits and liquidated damages. “This will reduce the cost on businesses and the risk they bear,” said Chee, who is also transport minister.

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Tender Lite and other initiatives aim to “level the playing field and remove unnecessary obstacles that prevent competitive and innovative suppliers, including small and new businesses, from participating in and winning government contracts”, he added.

In Singapore, SMEs are awarded about 40 per cent of government procurement opportunities by value, he noted. This is higher than in other countries: in Australia, it is 20 per cent, and in China, 30 per cent.

Also announced last year was a supplier file repository for the government’s GeBIZ system. Suppliers can upload relevant documents once and use them for all quotations and tenders, instead of uploading them for each new tender.

This has been implemented, generating total time savings of up to 5,000 hours across the 100,000 bids submitted each year, said Chee.

To reduce the cost of transacting with the government, eGuarantee@Gov will be expanded to all relevant government agencies by end-2024, paving the way for businesses to provide guarantees to government agencies digitally.

Around 60 financial institutions and 45 government agencies are now on board, triple the number at the launch of the scheme in 2022.

For example, almost all guarantees from businesses registering for import or export permits are now submitted via eGuarantee@Gov. The entire lodgement process of guarantees with Singapore Customs now takes one working day, down from five, and businesses save on courier costs for delivering physical guarantees.

Over 120,000 eGuarantees have been issued to date, with expected cost savings of around S$600,000 a year. The expansion to all relevant government agencies will reap greater savings, said Chee.

Another upcoming move is a one-stop payroll initiative; the minister did not say when this would be launched.

Currently, companies must enter data into separate systems for submission to the Inland Revenue Authority of Singapore (Iras), the Central Provident Fund (CPF) Board and the Ministry of Manpower (MOM).

With the one-stop payroll solution, companies use the same software for all three: annual payroll data to Iras, monthly CPF contribution data to the CPF Board, and updates of employee details for MOM’s Occupational Employment Dataset. Iras announced the pilot for this solution last October.

Chee also addressed Leader of the Opposition Pritam Singh’s questions on how the government decides when to review thresholds for personal income tax, as well as goods and services tax (GST) registration.

For personal income tax, Singapore’s exemption threshold of S$20,000 is higher than in jurisdictions such as Malaysia, the UK and Australia, where thresholds range from around S$1,500 to S$16,000.

Taken together with tax rates, reliefs and rebates, Singapore’s threshold means that around 40 per cent of workers pay no personal income tax, Chee noted.

For those who do, 80 per cent have an effective tax rate of less than 6 per cent. The vast majority of income taxes are paid by the top 10 per cent of employees.

“MOF will continue to review the regime, including the exemption threshold, and ensure that it remains competitive, progressive and fiscally resilient,” said Chee.

As for GST registration, the S$1 million threshold dates back to GST’s introduction in 1994. “It was set very high to exempt most SMEs from the additional costs necessary to comply with GST collection requirements,” said Chee.

In 1994, around 90 per cent of businesses were exempted. That remains the case today, he said. About 70 per cent of businesses that register for GST today do so voluntarily, despite their turnover falling below the threshold.

Singapore’s GST registration threshold remains “significantly higher” than in most other jurisdictions, he added. The UK’s threshold is £85,000 (S$145,000) and Australia’s is A$75,000 (S$65,000).

“We will continue to assess the appropriateness of this threshold as part of our regular policy reviews,” said Chee.