Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, delivered Singapore’s Financial Year 2020 Budget Statement on 18 February 2020.
GST TO REMAIN AT 7% FOR 2021
The 2% increase in GST will not be implemented in 2021 keeping in mind the current state of the economy. However, the GST increase will still be needed by 2025, and the government will assess the appropriate time to announce it.
When the GST is raised, Singaporeans will be provided a S$6 billion Assurance Package. This S$6 billion will be set aside to cushion the impact of the GST increase. Households will receive offsets equivalent of 5 years’ worth of additional GST expenses incurred. Low-income households will receive offsets equivalent of 10 years’ worth of additional GST expenses incurred.
Singaporeans living in 1 to 3 room HDB flats will receive offsets equivalent to about 10 years’ worth of additional GST expenses incurred.
HELPING BUSINESSES WITH THEIR CASH FLOW
- Corporate income tax rebate – A corporate income tax rebate at the rate of 25 per cent of tax payable, capped at $15,000 per company, will be granted for the tax year of assessment 2020.
- To put more cash in the hands of enterprises, several tax treatments under the corporate tax system will also be enhanced for year of assessment 2021. For instance, firms will be given a faster write-down of their investments in plants and machinery, and renovation and refurbishment.
- Working capital loan under enterprise financing scheme: The maximum loan quantum will be raised from S$300,000 to S$600,000, and the Government’s risk-share will be increased to 80 per cent from between 50 per cent to 70 per cent.
- Flexible rental payments: Tenants and lessees of Government-managed properties can approach the relevant agencies “to discuss options for more flexible rental payments such as instalment plans”, which will be assessed according to the firm’s individual circumstances, said Mr Heng.
- Property tax rebate: A 30 per cent rebate will be given for the accommodation and function room components of hotels, serviced apartments and meetings, incentives, conventions and exhibitions (MICE) venues.
- International cruise and regional ferry terminals will receive a 15 per cent rebate, and the rebate for the integrated resorts will be 10 per cent.
S$8.3 BILLION TO ENABLE TRANSFORMATION AND GROWTH EFFORTS
A total of $8.3 billion will be set aside over the next 3 years to help Singapore enable in its transformation and growth efforts. There are three main areas for this:
- Enabling stronger partnerships
- Deepening enterprise capabilities
- Developing our people
Our start-up ecosystem is ranked in the top 15 for the global start-up ecosystem report. As part of deepening enterprise capabilities, the government will set aside an additional $300 million under the StartupSG equity.
The government expects to draw in more than $800 million of private funding in the next 10 years.
There are two packages as part of this transformation and growth efforts to help businesses:
Enterprise Grow Package
- Grow business platform
- Greater adoption of digital technology. Extend the SME Go Digital Program
- Help more enterprises enter new markets and enhance market readiness grant by expanding the support coverage
Enterprise Transform Package
- Enterprise Singapore to launch the Enterprise Leadership For Transformation programme that aims to support business leaders of small and medium-sized enterprises to help them achieve the next bound of growth
- Enterprise Development Grant to expand reach with the government expecting to support around 3,000 projects
SUPPORTING LIFELONG LEARNING WITH SKILLS FUTURE ENHANCEMENTS
Budget 2020 will help support Singaporeans acquire new skills in the midst of structural changes in the global economy. This will be done through the Next Bound SkillsFuture. The 3 key elements of this are:
- Enabling the individual
- Enhancing the role of enterprises in developing their staff
- Special focus on mid-career workers
(Individual) SkillsFuture credit top up of $500
All Singaporeans aged 25 years old and above will receive a SkillsFuture Credit top up of $500. This top up will be available from October 2020 and will expire by the end of 2025. This is to encourage Singaporeans to take action earlier to learn new skills and make the best use of this period of economic slowdown.
(Enterprises) SkillsFuture Enterprise credit at $10,000 per enterprise
To encourage employers to embark on the upskilling of workforce. This will help companies defray up to 90% of transformation costs. Most of the companies that stand to benefit from this will be SMEs. The Productivity Solutions Grant will also be expanded.
(Mid-Career Workers) SkillsFuture Mid-Career Support Package
This focuses on mid-career workers in their 40s and 50s to help them stay employable and move on to new jobs and new roles. The aim is to double annual job placements of people in their 40s and 50s.
The government plans to achieve this by:
- Increasing the capacity of reskilling programmes
- Providing hiring incentives to enterprises that hire those aged 40 and above through a reskilling programme. Government will provide 20% salary support for employers for 6 months, capped at $6,000 in total.
- Giving peer-level support and career guidance through a group of volunteer Career Advisors
STABILISATION AND SUPPORT PACKAGE OF $4 BILLION
The aim of this package is to help our workers stay employed in this time of slow growth.
A new cash grant will offset 8% of local workers’ wages for 3 months to help them stay employed amid the COVID-19 crisis. This will cost the government $1.3 billion and benefit all enterprises and their employees and will be given by the end of July 2020.
To help enterprises with cash flow, there will be a corporate income tax rebate for the year of assessment (YA 2020) at 25% of tax payable, capped at $15,000 per company. This is to benefit all tax paying companies, costing the government $4 million. The wage credit scheme will also be enhanced to support wage increases for Singaporean workers.
S$800 MILLION SUPPORT FOR COVID-19
A total of $800 million has been aside to help the economy recover from COVID-19, even as the severity and duration of COVID-19 remains unclear. The bulk of this will go to the Ministry of Health. This is on top of what’s already committed to public health every year.
Singapore’s economy grew by 0.7% in 2019 — recording the weakest growth since the 2008 financial crisis. Tourism and aviation are most directly affected by COVID including visitor arrivals and hotel occupancy. Affected supply chain created ripple effects on other sectors. The Ministry of Trade and Industry has downgraded GDP from 0.5-2.5% to -0.5-1.5%. Deputy Prime Minister and Minister for Finance Heng Swee Keat stated that Singapore must be prepared that the economic impact may be worse than predicted.
HELPING WORKERS STAY EMPLOYED
To help workers stay employed, the Government will support businesses by defraying their wage cost through two schemes, as well as redeployment programmes for selected sectors.
- Jobs support scheme:The Government will offset 8 per cent of every local worker’s wage, up to a monthly cap of S$3,600 for three months. This will support more than 1.9 million local employees in Singapore and will be paid out to employers by the end of July 2020.
- Wage credit scheme: The existing scheme, which supports wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000, will be expanded to workers earning up to S$5,000 a month.
The proportion of wages co-funded by the Government will also be increased by five percentage points to 20 per cent and 15 per cent, for 2019 and 2020 respectively.
Redeployment programmes: Employees in tourism, aviation, retail and food services sectors will receive enhanced support under the adapt and grow initiative, specifically through redeployment
- programmes, with the funding period for reskilling extended from three months to a maximum of six months.
Together with the Jobs Support Scheme, this will support employers in these sectors retain and train more than 330,000 local workers.
TAX REBATES FOR AVIATION
Changi Airport will receive a 15 per cent property tax rebate. Rebates will also be given on aircraft landing and parking charges.
There will also be assistance for ground-handling agents and rental rebates for shops and cargo agents at Changi Airport.