The majority of people in Singapore depend on a job as their primary source of income.
This means that if the company they work for run into financial difficulties, then a large portion of Singaporeans would also find themselves in a difficult situation – such as not being able to meet their loan obligations, not being able to afford daily essentials, and cutting their expenditure drastically.
This would create a vicious cycle in the economy. For example, banks suddenly being hit by a wave of non-payment of debt obligations, government resources being further strained from a large numbers requiring financial aid, and companies seeing their revenues hit further from tighter consumer purse strings.
In order to prevent this disastrous financial death spiral, the government has introduced the Stabilisation and Support Package in Budget 2020 – and further enhancing it in the two supplementary budgets. The aim is to stabilise the economy by supporting companies and helping them keep workers in their jobs in the near-term amid these uncertain times.
The Stabilisation and Support Package consists of the following:
- Jobs Support Scheme
- Enhanced Wage Credit Scheme
- Corporate Income Tax Relief and Deferment on Tax Payments
- Property Tax Rebates
- Temporary Bridging Loan Programme and Enhanced Working Capital Loan
- Retraining and Redeployment Programmes for Affected Sectors
- Government to Exercise Flexibility for Rental Payments and Other Fees
- Foreign Worker Levy Waiver And Rebate
We take a look at each of the components in the Stabilisation and Support Package, how much companies will receive, and how they help the larger Singapore community.
#1 Jobs Support Scheme (JSS)
The Jobs Support Scheme (JSS) was introduced to help companies offset wage costs and retain their local workers during this period of uncertainty, and enable businesses to resume operations quickly when economic activity recovers.
For the month of April, the wage subsidy paid to companies for each Singaporean and PR employee will be 75% of gross monthly wages for the first $4,600 of wages – which is the median wage in Singapore. This works out to a maximum of $3,450 per person.
For the remaining 8 months of 2020 (May to December), the wage subsidy for the first $4,600 of wages will be 25% for all sectors, while firms in the food services sector will receive 50% in wage subsidies and those in the aviation and tourism sectors will receive wage subsidies of 75%.
The Jobs Support Scheme is expected to cost $15.1 billion and benefit 1.9 million local employees and their companies.
There is no need to apply for the Jobs Support Scheme, since the grant amount will be calculated based on CPF contribution data. Payouts will be made in 3 tranches in May, July and October.
Companies that have questions or would like more information can submit an enquiry or call the hotline at 1800-352 4728.
#2 Enhanced Wage Credit Scheme (WCS)
First introduced in Budget 2013 and extended in Budget 2015 and Budget 2018, the Wage Credit Scheme (WCS) was introduced to support wage increases for Singaporean workers, with the government co-funding salary increments.
In this year’s Budget 2020, the qualifying wage ceiling was raised from $4,000 to $5,000 for qualifying wage increases given in 2019 and 2020. The co-funding levels were also increased to 20% (for 2019 wage increases) and 15% (for 2020 wage increases).
These enhancements are expected to benefit more than 700,000 Singaporean employees in 90,000 companies, at a cost of $1.1 billion.
There is no need to apply for WCS, since employers will receive payouts automatically in the month of March after the qualifying year in which the wage increases were given. For example, for wage increases given in 2019, the WCS payout to companies will be made in March 2020.
For companies with employees that newly-qualify as a result of Budget 2020, a separate supplementary payout in the second half of 2020 will be made. More information will be sent in letters to qualifying employers to inform them of this.
#3 Corporate Income Tax Relief And Deferment On Tax Payments
The government will grant a 25% Corporate Income Tax Rebate for Year of Assessment 2020 (YA2020), capped at $15,000 per company. This rebate will apply to all tax-paying companies at a cost of about $400 million.
To further ease the cashflow challenges for companies in the near-term, the government will grant an automatic deferment of income tax payments for companies and self-employed persons (SEP) for 3 months. This means that any income tax payments due in April, May and June 2020 will only be payable in July 2020.
For SEPs, the tax payment cycle typically starts in May. Thus, any income tax payments due in May, June and July 2020 will only be payable in August 2020.
#4 Property Tax Waiver And Rebates
Qualifying commercial properties that have been badly affected by the COVID-19 outbreak, such as hotels, serviced apartments, tourist attractions, shops, and restaurants, will receive a complete waiver of Property Tax for 2020.
Businesses in other non-residential properties such as offices and industrial properties will receive a Property Tax Rebate of 30% for 2020.
Landlords are required by law to pass on these savings to their tenants by reducing rentals accordingly.
#5 Temporary Bridging Loan Programme And Enhanced Working Capital Loan
To ease cashflow constraints and provide companies across sectors with continued access to credit, a Temporary Bridging Loan (TBL) Programme has been introduced for a year, with a loan quantum of up to $5 million and interest rate capped at 5%.
Furthermore, the existing Enterprise Financing Scheme – Working Capital Loan will be enhanced for one year. The maximum loan quantum will be increased from $300,000 to $1 million. This is available to SMEs across all industries.
To support these efforts, MAS has established a new Singapore Dollar facility for banks and finance companies to receive low-cost funding, and they will be required to pass on savings to borrowers.
For both the Temporary Bridging Loan and Enterprise Financing Scheme – SME Working Capital Loan, the government will be taking on 90% of the risk share for loans taken from 8 April 2020 to 31 March 2021.
Interested companies can apply directly to participating financial institutions, such as OCBC, DBS and UOB. For more information on the schemes, companies can contact Enterprise Singapore.
#6 Retraining And Redeployment Programmes For Affected Sectors
Five sectors have been identified as particularly hard-hit by the COVID-19 outbreak, namely, tourism, aviation, retail, food services, and point-to-point transport services.
Specific packages have been announced for each of these sectors, but across the board, workers can take advantage of enhanced support under Workforce Singapore’s Adapt and Grow initiative.
For those employed in these affected sectors who wish to make use of the downtime to train and upskill, the funding period for reskilling has been increased from 3 months to 6 months. These include Job Redesign programmes, Place-and-Train (PnT) programmes, and Professional Conversion Programmes (PCP).
For more information, companies and employees can contact Workforce Singapore.
#7 Government To Exercise Flexibility For Rental Payments And Other Fees
DPM Heng also announced that the government will take the lead in providing more flexibility to tenants and lessees of government-managed properties, including those under NEA, JTC, HDB, People’s Association, NParks, Urban Redevelopment Authority, Singapore Land Authority, Singapore Tourism Board, and Sentosa Development Corporation.
In particular, NEA will provide rental waivers of 3-months to stallholders in NEA-managed hawker centres and markets, while other agencies will provide between 0.5 to 2 months of rental waiver to commercial tenants who are on leases not exceeding three years, and do not pay Property Tax.
DPM Heng said that companies that still face difficulties with rental payments even after the waivers can approach individual agencies to discuss flexible rental payments such as instalment plans, which will be assessed on a case-by-case basis.
DPM Heng had previously announced that across the board, government fees and charges will be frozen for one year, from 1 April 2020 to 31 March 2021, which applies to fees payable by companies as well.
#8 Foreign Worker Levy Waiver And Rebate
Mandatory stay-home notices and stop-work orders that have been implemented to curb the COVID-19 infection among foreign workers have been particularly devastating on companies and industries that employ a large portion of staff on work permits and S-Passes.
To ease the labour costs for these companies, the monthly Foreign Worker Levy will be waived completely in April 2020.
Furthermore, employers will receive a Foreign Worker Levy Rebate of $750 for each work permit or S-Pass employee, based on previous levies paid in 2020. This rebate will be disbursed from 21 April 2020.
These measures will allow companies to preserve their business structure and quickly resume operations with minimal disruption once the “Circuit Breaker” is lifted.
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.