This year’s Singapore Budget 2023, which follows the full relaxation of COVID-19 pandemic restrictions implemented over the previous three years, is about “building our capabilities and seizing new opportunities in an era of global development,” according to Finance Minister Lawrence Wong.
He mentioned how the geopolitical context has shifted recently from one of openness in global commerce to one that is nationalism- and protectionism-centric. This, he claimed, would be less hospitable to small economies like Singapore, and it has to adjust to this new era by repositioning our economy and refreshing our social compact for the future.
Here are 9 things that business owners need to take note from the Budget 2023.
#1 Higher Monthly CPF Contribution From $6,000 To $8,000 By 2026
CPF contributions to employees will be raised from the monthly salary ceiling from $6,000 to $8,000 by 2026. This increase will be carried out over four years starting from this year, however, there will be no change to the CPF annual salary ceiling, which includes contributions from additional wages.
Read Also: Complete Guide To Employer’s CPF Contributions In Singapore (2022)
#2 Employers To Consider Flexi-Work Arrangements Fairly And Properly From 2024
The Tripartite Standard on Flexi-work arrangements will be implemented next year. This will require employers to consider staff requests for such arrangements fairly and properly.
#3 Increase Of Paternity Leave To 4 Weeks And Unpaid Infant Care Leave To 12 Days A Year
The current Government-Paid Paternity Leave (GPPL) will be increased from the current two weeks to four weeks for eligible working fathers of Singaporean children born on or after 1 January 2024. For now, the increased GPPL will be given on a voluntary basis, so that employers who are able to do so can grant the additional leaves to their employees and will be reimbursed by the Government.
Additionally, the Unpaid Infant Care Leave for each parent in the child’s first two years will also be increased from the current six days a year to 12 days a year with effect from 1 January 2024.
These enhancements will increase the parental leave for a working couple from 22 weeks to up to 26 weeks in the child’s first year.
Read Also: Guide To Understanding How Government-Paid Paternity Leave Works in Singapore
#4 Enterprise Financing Scheme Extended To 31 March 2024
The Government will extend the Enterprise Financing Scheme (EFS) and Energy Efficiency Scheme (EES) till 31 March 2024 to help businesses manage tighter financial conditions and higher energy prices.
The EFS will have a 70% government risk-share for trade loans and support project loans for domestic construction projects. As for the EES, it will continue to help businesses in the food services, food manufacturing and retail sectors adopt energy-efficient equipment and reduce impact of the higher electricity prices.
Read Also: How The Enterprise Financing Scheme (EFS) Can Help SMEs
#5 Extension Of Senior Worker Employment Support Until 2025
Employers of senior workers will continue to receive wage support under the Senior Employment Credit until 2025. Under the scheme, employers will receive wage offsets for hiring Singaporean senior workers aged 55 and above, and earning up to $4,000 a month.
Similarly, the Part-time Re-employment grant will also be extended to 2025 to encourage employers to offer part-time re-employment and other flexible work arrangements and structured career planning to senior workers.
The government will also top up the Progressive Wage Credit Scheme by $2.4 billion to co-fund the wage increase for lower-wage workers. This will enable the co-funding of up to 75% of pay increases for workers earning a gross wage of up to $2,500 a month this year, while slowly tapering off by 2026.
Read Also: Guide To Senior Employment Credit (SEC) Payouts For Employers Hiring Older Workers In Singapore
#6 Top Up Of $4 Billion To National Productivity Fund With An Expanded Scope
To attract more quality investments in Singapore, $4 billion will be added to the National Productivity Fund. The Fund, which currently provides grants for companies to invest in productivity, training and further education, will be expanded to include investment promotion.
This will include supporting companies to build new capabilities, add greater value to domestic ecosystems and upskill workers. These measures will benefit Singaporeans with better-paying jobs.
#7 Enhanced Business Tax Deduction Of Up To 400% For Key Innovation Activities
Businesses will be able to enjoy higher annual tax deductions of up to 400% (capped at $400,000) from the previous limit of 250%, of qualifying innovation expenditure under the new Enterprise Innovation Scheme.
These tax deductions will apply to five key activities in the innovation value chain:
- Research and development conducted in Singapore
- Registration of intellectual property (IP), including patents, trademarks and designs
- Acquisition and licensing of qualifying IP Rights, for taxpayers with a revenue less than $500 million
- Innovation carried out with polytechnics and ITE (capped at $50,000)
- Qualifying courses that are approved under the SkillsFuture Singapore and Skills Framework
These enhanced tax deductions will allow businesses that make full use of the scheme to enjoy tax savings of nearly 70% on their investments.
Read Also: Guide To Claiming Tax Deductible Donations For Businesses In Singapore
#8 Higher Financial Support To Both Large And Small Promising Local Businesses
$1 billion will be set aside under the Singapore Global Enterprise initiative to help large, promising local businesses scale up. The initiative, which provides customised assistance, includes working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline. Enterprise Singapore will also help these firms secure resources to execute their growth plans, and assist them in building research and innovation capabilities to stay competitive.
Additionally, another $150 million will be set aside under the SME Co-Investment Fund to support growth-oriented promising SMEs.
These schemes are part of a wider measure to help nurture and develop local companies, large and small, to develop new capabilities and scale beyond Singapore.
#9 Implementation Of Corporate Income Tax Under Base Erosion And Profit Shifting Initiative (BEPS 2.0)
From 1 January 2025, corporate income tax for large Multinational Enterprise (MNE) groups will be effected under the Global Anti-Base Erosion (GloBE) rules under BEPS Pillar 2 and domestic top-up tax (DTT).
Read Also: Complete Guide To Singapore Corporate Taxes: Tax Rates, Tax Rebates And Tax Exemptions
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