However, corporate income tax was reduced by 0.5 percent to 25.5 percent with effect from next year's assessment period.
On enhanced tax treatment for stock options, Hu said that although the government allowed tax payable for Employee Stock Options (ESOPs) to be deferred by up to five years last year, an enhanced scheme for high tech start-ups would only be announced by end-May.
He acknowledged that that was a modest first step. "We need to improve the tax treatment of ESOPs further, particularly for the high tech start-ups. As this may have significant implications for our tax system, we need a little more time to complete the study."
"Many developed countries have recognized the importance of employee stock options in helping high-growth companies to retain and motivate top talent. They have made significant changes to their tax systems to encourage employee stock options, or to introduce incentive schemes for stock options," Hu said.
He added that under the incentive schemes, tax treatment for ESOPs is more favorable than cash payments.
"We must move in the same direction. We need to act quickly to offer potential entrepreneurs that extra incentive to take the plunge, and to send a clear signal that we are strongly encouraging enterprise and wealth creation," he said.
Hu acknowledged that attractive tax treatment to encourage the use of ESOPs will also help Singapore companies to compete for global talent, which is highly mobile not only across companies but also across national boundaries.
"Talent will be attracted to places where opportunities and post-tax rewards are the greatest," he said.
In tabling the budget, Hu said that the Ministry of Communications and IT will receive a S$2.2 billion allocation for government expenditure.
"After a modest 0.8 percent growth in the first quarter last year, the economy rebounded strongly for three consecutive quarters, recording a high of 7.1 percent growth in the last quarter.
"For the whole year, we enjoyed a respectable 5.4 percent growth. The Asian economic crisis is largely behind us," Hu said.
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