Yesterday, Singapore’s Finance Minister Heng Swee Keat delivered the eagerly anticipated Budget 2020 Statement. In it, he announced a slew of measures to help tide Singaporeans and Singapore companies through the near-term economic fallout from the ongoing COVID-19 situation, as well as strategic initiatives that will help put Singapore workers and businesses in the best position to succeed in the rapidly changing economy of the future.
Here are 10 key announcements that will have the greatest impact on business owners and companies in Singapore.
#1 $4 Billion Stabilisation And Support Package
In order to help companies retain their workers, and be ready for the uptick once the COVID-19 crisis has passed, a new jobs support scheme was announced, in which the government will offset 8% of Singapore employees’ wages (with a salary cap of $3,600), over 3 months.
Businesses would get up to $864 in wage rebates per employee. This payout will be disbursed to companies by the end of July 2020, and cover more than 1.9 million Singapore workers.
The qualifying wage for the existing Enhanced Wage Credit Scheme, in which the government co-funds salary increments, will be raised to $5,000 to benefit more Singaporean employees. The co-funding percentage will also be increased from 15% to 20%.
#2 Sectors Directly Affected By COVID-19 To Get Additional Support
Five sectors identified as most directly hit by the COVID-19 outbreak include tourism, aviation, retail, food services, and point-to-point transport services.
Targeted help will be provided to help employers retain and retrain some 330,000 afffected workers under Workforce Singapore’s the Adapt and Grow initiative and Jobs Support Scheme, such as redeployment programmes.
For the tourism sector, a Property Tax Rebate of 30% was announced for the Year of Assessment 2020, covering accommodation and function room components of licensed hotels and serviced apartments, and prescribed MICE venues. International cruise and regional ferry terminals will receive a 15% Property Tax Rebate, and the Integrated Resorts will receive a 10% Property Tax Rebate.
Changi Airport will receive a 15% Property Tax Rebate, while commercial establishments in the food services and retail business receive 15% Property Tax Rebate, which they are encouraged (but not obliged) to pass on to tenants by reducing rentals.
Commenting on the tax reductions, Gordon Lawson, Partner and Head of International Tax at KPMG in Singapore said: “The quantum of the Stabilisation and Support Package with additional support for five specific sectors is generous. Various measures such as property tax rebates of up to 30% for the tourism sector are also very timely.”
#3 Corporates To Receive Income Tax Rebate Of 25% Plus Other Tax Treatment Changes
A corporate tax rebate of 25% was announced for the Year of Assessment 2020, capped at $15,000 per company. This will help companies retain more of their profits, and be in the best position to grow their capabilities.
Existing corporate tax treatments will also be enhanced for a year, such as allowing faster write-down of investments in plant, machinery, renovation and refurbishment incurred for Year of Assessment 2021.
Mr Lawson highlighted that companies should be aware that further tax deductions allowed for R&D expenditure will lapse after 31 March 2020 (Clause 18 of the Budget 2020 Annex D-1), and instead “tap on non-tax schemes for R&D and innovation, which goes alongside the additional measures announced today, such as the enhancements to the Enterprise Development Grants and the Stabilisation and Support Package”.
Mr Lawson continued: “The various measures encourages businesses to press on with their transformation efforts during this time in order to ready themselves to pivot and grow once the economy recovers.”
#4 Quantum For SME Working Capital Loan Doubled To $600,000
The SME Working Capital Loan is a collateral-free, government-assisted loan scheme administered by local banks. In return for lower interest rates for companies, the government take on a portion of the risk for the loans, which can be used for working capital needs and to support companies’ growth plans.
Minister Heng announced that the maximum quantum loan doubled from $300,000 to $600,000, while the government’s risk-share on loans increased from 50% to 80%.
Updated 31 March 2020: The SME Working Capital Loan quantum has been raised to $1 million.
#5 More Flexible Rental Arrangements For Tenants Of Government-Managed Properties
The National Environment Agency will provide a full month’s rental waiver to stallholders in NEA-managed hawker centres. Other government agencies, like HDB, will provide half a month of rental waiver.
Tenants and lessees of government-managed properties, specifically JTC, HDB, SLA, STB, and SDC would have options to make arrangements for more flexible rental payments, such as instalment plans. Each request will be assessed on a case-by-case basis.
#6 Greater Support For Enterprises Via Enterprise Grow Package
An Enterprise Grow Package will be launched to help enterprises identify business needs, adopt pre- approved digital technologies, and take the first steps to enter new markets.
As part of the package, the GoBusiness platform will be launched, which serves as a central platform for businesses to transact with the government digitally.
The SMEs Go Digital programme will also be enhanced to give companies easier access to pre-approved digital solutions, in line with Industry Digital Plans across all 23 ITM sectors.
Lastly, the Market Readiness Assistance grant cap will be raised from $20,000 annually to $100,000, while expanding the coverage of what can be claimed, such as Free Trade Agreement consultancy.
#7 New SkillsFuture Enterprise Credit Introduced To Defray 90% Of Training Costs
A new SkillsFuture Enterprise Credit will be introduced, which can cover 90% of out-of-pocket costs for business transformation, re-design, re-skilling purposes. The credit is capped at $10,000 per company.
Productivity Solutions Grant will be expanded to include support for pre-approved job redesign consultancy services.
Read Also: 10 SkillsFuture Courses For Entrepreneurs
#8 Introduction Of Senior Workers Support Package
The popular Special Employment Credit (SEC) and Additional SEC will be refashioned into the Senior Employment Credit, which will take effect from 2021. It provides employers with wage offsets when employing Singaporean workers aged 55 and above.
There will also be a CPF Transition Offset to cover half of the increase in employer contributions in 2021.
Other measures within the Senior Workers Support Package include Senior Worker Early Adopter Grant which rewards companies that raise their own Retirement and Re-employment ages ahead of the legislated changes, as well as Part-Time Re-employment Grant, which encourages companies to formalise part-time re-employment provisions.
#9 Cuts In S Pass sub-Dependency Ratio Ceiling (DRC) Thresholds
Industries include construction, marine shipyard and process sectors will see reductions in S Pass sub-DRCs from 20% to 15% by 2023. This will be conducted in two phases: from 20% to 18% on 1 January 2021, and then from 18% to 15% on 1 January 2023.
# 10 New Scheme To Encourage Employers Of People With Disabilities:
$31 million will be spent on supporting employers of people with disabilities, from 2021 to 2025.
This will be spent on new Enabling Employment Credit (EEC), which will replace the existing SEC and Additional SEC schemes to provide stronger support for employers of persons with disabilities.
As a recap, you can refer to this handy infographic by the DollarsAndSense Business:
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