Resilience Budget: We Will Get Through This!Download Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
In a follow-up to the Budget 2020 announcement where the Covid-19 crisis has escalated into a global pandemic and wrecked the global economy and disrupted supply chain, the Singapore Government has announced an unprecedented $48 billion Resilience budget to support Singaporean and businesses.
The budget is largely focused on supporting workers and alleviating businesses’ cash flow in order to protect jobs and stabilise businesses. While there is significant allocation to households, this blog here focuses on the impact to businesses.
1. Support for Workers
The Enhanced Job Support Scheme is the major gun in the budget as it covers 1.9 million workers. Wage support is increased from 8% to 25%, salary cap increased from the first $3,500 to the first $4,600, period of support increased from 3 months to 9 months. Affected sectors such as aviation, tourism and food service have higher caps at 50% to 75%. Companies will not need to make any applications to eligible as these will be automatically credited to companies in May, July and October based on salary contributions in previous periods.
The Wage Credit Scheme where the Government co-pay increases in Singaporeans’ salaries will be enhanced where an additional $500 million will be allocated.
SGUnited is a new scheme to help companies co-fund wage cost for traineeship to first-time jobseekers, designed to support 8,000 trainees. SGUnited Jobs Initiative aims to create 10,000 jobs over the next year.
2. Support for Self Employed Persons
Self-employed persons will receive income relief of $1,000 a month for 9 months to support the decline in business. Further budget will be set aside to support training for Self Employed Persons.
In order to be eligible to Self Employed Persons Income Support, Self Employed Persons are defined as having started Self Employment (meaning declared income to IRAS as self-employment income) on or before 25 March 2020, net trade income of not more than $100,000, do not own 2 or more properties, do not earn income as an employee and AV or property of not more than $13,000.
3. Helping Businesses with Expenses
The Government announced a freeze on increases in government fees and charges over 1 year. The Government is also providing a rebate on property tax, 100% rebate for the most heavily affected qualifying commercial properties (eg hotels, serviced apartments, restaurants, shops), 60% rebate for the integrated resorts and 30% for other non-residential commercial properties. Tenants on Government properties will also have their rental waived with up to 3 months for hawkers and up to 2 months for other types of tenants. While the Government has taken the lead to alleviate the stress on rent for businesses, we have yet to see the major landlords (who owns most of the commercial real estate in Singapore) make any announcement other than committing to pass on the property tax savings to their tenants.
4. Helping Businesses with Cash Flow
Some of the initiatives to help businesses with cash flow is a deferment for corporate income tax payment for 3 months, a similar income tax deferment applies for Self Employed Persons too. The Enterprise Financing Scheme is also enhanced with the government risk-share quantum increased to 80%, and the maximum loan quantum increased to $10 million for EFS-Trade Loan and $1 million for EFS-SME Working Capital Loan. The Government will increase its subsidies for loan insurance premium to 80%. The Temporary Bridging Loan first introduced in 2020 Budget for the Tourism sector, is expanded to include all sector and maximum quantum raised to $5 million, this will be available until 31 March 2021.
5. Building Resilience
SMEs Go Digital will be enhanced to add teleconferencing solutions to help companies strengthen business continuity programmes. EDG and PSG will be enhanced to provide up to 90% and 80% support. Training support will be enhanced to Land Transport and Art & Culture sectors to help companies send workers for training during downtime. Cost subsidies increased to 90% and up to $10 hourly absentee payroll.
We Will Get Through This!
The Government has committed a huge portion of the reserves to help SMEs, workers and households to get through these tough times. Sprout is also looking into ways how we can support our clients through our fee structures and complimentary reviews of financial performance to identify ways our clients can reduce cost. Give us a ping if you wish to learn more how we can help.