Singapore’s Budget 2020 was introduced on 18 February 2020 by Deputy Prime Minister, Heng Swee Keat, and it revealed an array of measures to deal with short-term challenges such as the COVID-19 outbreak; as well as outlining long-term economic development plans. Here is a summary of several key business highlights that we can take-away from the announcement:
1. GST will not increase in 2021
While minister Heng reiterated the need for the goods and service tax (GST) increase from 7 percent to 9 percent to be implemented by 2025, he confirmed that the tax hike will not occur in 2021. A S$6 billion package will be introduced when the GST is raised in order to cushion the increase, with most Singaporean households getting offsets to cover around five years’ worth of extra GST expenses incurred.
2. Helping businesses defray wage costs
Companies will be receiving support to defray wage costs during this difficult economic climate. Two schemes, the new Jobs Support Scheme and the Wage Credit Scheme, which will be enhanced, will help support enterprises and also help workers stay employed as part of a larger S$4 billion Stabilisation and Support Package.
Under the Jobs Support Scheme, the government will support all active employers, except government organisations, in retaining local employees. Up to 8 percent of Singaporean and permanent resident wages will be offset; capped at S$3,600 per employee monthly for three months.
The Wage Credit Scheme, which supports enterprises embarking on transformation efforts and encourages employers to share productivity gains with workers by co-funding wage increases, will be enhanced.
3. Assisting businesses with cashflow
The aforementioned Stabilisation and Support Package includes economy-wide measures to help businesses with their cash flow during the difficult economic period and ongoing COVID-19 outbreak.
A corporate income tax rebate at the rate of 25 percent of tax payable, capped at S$15,000 per company, will be granted for the tax year assessment 2020. The rebate, which will cost the government about S$400 million, will benefit all tax-paying companies.
4. Extra support for sectors affected by COVID-19
Five sectors that were directly hit by the COVID-19 outbreak, tourism, aviation, retail, F&B, and point-to-point transportation services, will be receiving support under the Adapt and Grow Initiative for their operating costs and cash flow, as well as to retain and reskill workers.
Funding support duration for these sectors is being extended from three months to six. Additionally, property tax rebates between 10 – 30 percent will be given to commercial properties such as airports, hotels, Meetings, Incentives, Conventions and Exhibitions (MICE) spaces, and more.
5. Support for the economy’s transformation and growth
Over the next three years, a total of S$8.3 billion will be allocated to reinforce Singapore’s economic transformation and growth. Plans to support and enhance the growth of enterprises includes an enhancement of Startup SG Equity which will dedicate an additional S$300 million to catalyse private investment in key emerging sectors such as agri-food technology and advanced manufacturing.
Additionally, in order to support the growth of SMEs and enterprises, the government will be expanding the SMEs Go Digital programme. This grants enterprises pre-approved access to digital solutions across 23 ITM sectors.
In an attempt to help more enterprises and SMEs enter new markets, the government will also be enhancing the Market Readiness Assistance grant by expanding the funding support and coverage to include, for example, FTA consultancy.
6. Support and training for employees
With shorter technology cycles and more intense global competition, the government recognises the need to support and help current employees learn and develop new skills in order to remain employable. As such, the government will be making enhancements to the already successful SkilsFuture programme.
A new SkillsFuture Enterprise Credit will be introduced to encourage employers to transform their workforce and enterprise in tandem. Employers can use this enterprise credit to defray 90 percent of out-of-pocket costs of business transformation, job redesign, and skills training. Over 35,000 enterprises will benefit from this, the majority being SMEs.
7. Addressing climate change
In an effort to support global efforts to combat global climate change, Singapore will be taking steps to further manage carbon constraints. One such effort involves the slow but steady phasing out of ICE (internal combustion emission) vehicles in favour of vehicles that run on cleaner energy by 2040. To this end, the government will be enhancing incentives to encourage the adoption of cleaner and more environmentally friendly vehicles. Public charging infrastructure for EVs (electric vehicles) will also be expanded to 28,000 by 2030 to further incentivise the adoption of EVs.
More stock is also being placed into greener housing development. More programmes, such as the new Green Towns programme, focusing on constructing buildings that focus on reducing energy consumption, recycling rainwater, and cooling are also being planned.
For a more detailed look at the Singapore Budget 2020 announcement, you can visit the Singapore Ministry of Finance’s official Budget website, here.