Singapore Budget 2020 Part 1 – Stabilisation And SupportDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
Singapore’s Budget 2020 has something for everyone, from businesses to senior workers and young people. Expecting to incur the largest deficit in recent history, the Government is drawing on our strong financial position to support businesses in the near term while investing into the workforce to drive productivity and growth for the future.
The impact for enterprises is organised around 2 main themes: 1) Stabilisation and Support to provide cash flow assistance to local enterprises to tide over the challenging economic situation and COVID-19 outbreak, and 2) Transformation and Growth to encourage enterprises to embark on digital transformation and drive growth.
In this first blog on Budget 2020, we will do a quick overview of measures under Stabilisation and Support, here are the salient points
1. Support for Businesses Impacted by the COVID-19 Outbreak.
Other than an additional S$800 million set aside for the frontline agencies fighting the outbreak, the Government is also helping sectors such as Tourism, Aviation, Retail, Food Services and point-to-point Transport hit by COVID-19.
- Tourism: Temporary Bridging Loan Program for cash flow support. Up to 30% Property Tax Rebate for 2020.
- Aviation: Rebates on aircraft landing and parking charges, assistance to ground handlers. Rental rebates for shops and cargo agents at Changi Airport.
- Hawkers: One-month rental waiver for those in Government hawker centres.
- Commercial Tenants: Half-month rental waiver for qualifying commercial tenants in Government-managed properties.
- Point-to-Point Transport: Support package for taxi and private hire car drivers.
2. Supporting for Workers
Two schemes, 1 new and 1 enhanced will help to support enterprise and help workers stay employed.
- Jobs Support Schemes (JSS): This new scheme will support all active employers with an 8% offset of Singaporean and Permanent Resident’s wages, capped at S$3,600 per employee over 3 months. This will support 1.9 million local employees in Singapore and will cost S$1.3 billion. Employers do not need to apply for the JSS, the grant will be computed based on CPF contribution data for local employees contributing to CPF for the months of October 2019 to December 2019. Employers can expect to receive the JSS payment from IRAS by 31 July 2020.
- Wage Credit Scheme (WCS): WCS supports enterprises embarking on transformation efforts and encourages employers to share productivity gains with workers by co-funding wage increases. This scheme will be enhanced by increasing the qualifying wage ceiling from S$4,000 to S$5,000, increases in monthly wages given to Singaporean employees must be at least S$50. The Government will co-fund 20% of the wage increases in 2019 and 15% of the wage increases in 2020. The overall co-funding ratio by the Government will increase under the enhanced WCS. Employers do not need to apply for WCS, all qualifying employers will receive a letter informing them of the supplementary payout. Click hereto IRAS for a more detailed explanation of the WCS changes.
3. Cash Flow Support for Businesses
To help companies to alleviate cash flow pressures, the Government will introduce economy-wide measures.
- Corporate Income Tax Rebate: Tax-paying companies will be granted a corporate income tax rebate of 25% of tax payable, capped at S$15,000 for Year of Assessment (YA) 2020.
- Extension of Interest-Free Instalments: Companies paying corporate income tax by GIRO can automatically enjoy an additional two months of interest-free instalments when they file their ECI within three months from their financial year end.
- Carryback relief for YA2020: Unabsorbed capital allowances and trade losses for YA2020 may be carried back up to three immediate preceding YAs, capped at S$100,000.
- Accelerated Deductions for Investments into Plant, Machinery, Renovation and Refurbishments: The Government wishes to encourage companies to continue investments into plant, machinery, renovation and refurbishments by allowing accelerated write-off and deductions for amounts investments.
- SME Working Capital Loan: The Enterprise Financing Scheme will be enhanced for one year by raising the quantum from S$300,000 to S$600,000 and enhance the Government’s risk share up to 80% from the current 50%-70%. Enterprises can apply directly to the Participating Financial Institutions.
4. Projected GST hike to 9% in 2021
The Government also announced that the previously announced GST hike in 2021 will be deferred, the Government will assess carefully the appropriate time to implement the increase. The Government will roll out a S$6 billion package for Singaporeans to cushion the increase in GST.
Not sure how this will impact your business?
The Stabilisation and Support Package is intended to provide assurance and support to workers and enterprises in this time of economic uncertainty. Follow us for an overview of the Transformation and Growth measures. Speak to us if you have any query on how your company will be impacted by Budget 2020, or if you need a reliable accounting service provider in Singapore.