Highlights of Singapore’s Budget 2022
On February 18th, 2022, Finance Minister Lawrence Wong shed light on Singapore’s budget updates moving forward into 2022. In this article, we share insights and updates to matters such as job and business support, Goods and Services tax inflation, Company Training Committees (CTCs), Productivity Solutions Grants, and much more.
Jobs and Business Support Package
- As part of the jobs and business support package, a “Small Business Recovery Grant” for small- and medium-sized enterprises (SMEs) will be provided to ease the financial disturbances endured by businesses that have been most affected by COVID-19.
- SMEs in eligible sectors will receive a payout of S$1,000 per local employee. The maximum amount for this is S$10,000 per firm.
- Local sole proprietors and partnerships in eligible sectors, as well as SFA licensed hawkers, market and coffee shop stallholders, who do not hire local employees, will receive a S$1,000 payout.
- Workers who continue to face income loss due to COVID-19 can apply for the “COVID-19 Recovery Grant”, which has been extended to the end of 2022.
- S$100 million will be provided to support NTUC in an active effort to scale up the Company Training Committees (CTCs).
Good and Service Tax (GST) Inflation
After much speculation following Prime Minister Lee Hsien Loong's New Year message, in which he suggested the tax increase would be tackled in Budget 2022. It was found that there is likely to be an increase from seven per cent GST to nine per cent GST, in two distinct stages - one percentage point each time on Jan 1, 2023 and Jan 1, 2024.
The delayed GST hike, which will bring in approximately 0.7 per cent of gross domestic product in revenue annually, totaling to about $3.2 billion - when the full hike is in place in 2024, it will predominantly utilised to support healthcare expenditure and to care for senior citizens while other areas of social spending rise as well. By 2030, government expenditures are expected to increase to more than 20 per cent of GDP.
Updated Framework for the Employment Pass (EP) and S Pass Applicants
Finance Minister Lawrence Wong stated that there will be adjustments to foreign worker policies to allow companies to “access a diverse pool of manpower”, ensuring that incoming workers are comparable in quality to the top one-third of our local professional, managerial, executive and technical (PMET) workforce. Here are some updates:
- From September this year, the minimum qualifying salary for new EP applicants will be raised from the current S$4,500 to S$5,000. For the financial services sector, this will be raised to S$5,500 from the current S$5,000 (older S Pass holders will also be raised in tandem).
- For S Pass holders, the minimum qualifying salary for new applicants will be raised from the current S$2,500 to S$3,000 in September this year. For the financial services sector, there will be a higher minimum qualifying salary of S$3,500 (older S Pass holders will also be raised in tandem).
- The minimum qualifying salary for new S Pass applicants will be raised in September 2023, and again in September 2025.
- To better manage the flow of S Pass holders, the Government will progressively raise the Tier 1 levy from the current S$330 to S$650 by 2025.
Strengthening Singapore’s Enterprise Ecosystem
- The local government plans to set aside approximately S$600 million to expand the range of available solutions under the “Productivity Solutions Grant” (PSG), and push for greater take up of productivity solutions by SMEs.
- Larger local enterprises will be supported by a new initiative called the Singapore Global Enterprises, which will provide bespoke assistance tailored to the needs of promising local enterprises.
- Approximately S$100 million will be utilised to support National Trades Union Congress (NTUC) in its efforts to scale up the Company Training Committees (CTCs), and will partially be contributing to a new grant that will be administered by NTUC to support companies that have set up CTCs to implement their transformation plans.
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