If there was one message from Finance Minister Tharman Shanmugaratnam’s Budget 2013, it is this: If you own a business in Singapore, have a desire to remain competitive and are willing to climb up the productivity ladder, his government will go all out to assist you towards becoming more successful.
A new measure emerges among a plethora of incentives for raising productivity; it is the Wage Credit Scheme (WCS). Singapore company registration specialist Rikvin postulates the impact WCS will have on narrowing income gaps in the city-state.
The WCS is part of the three-year transition support package, under which the government will co-fund 40% of wage increases between 2013 and 2015 given to Singaporean employees earning a gross monthly wage of up to S$4,000.
Gross monthly wage is the total wages paid by the employer to the employee in the calendar year, divided by the number of months in which CPF contributions were made. Total wages paid to an employee is computed from the CPF contributions that the employer makes for the employee in the year. It includes basic salary and additional wages such as overtime pay and bonuses, and exclude employer’s CPF contributions.
With this, the government seems to be gravitating towards its promise of ensuring more inclusive growth for our workforce.”
Eligible employers will receive a payout automatically every year. The first payout will be in the second quarter of 2014, and the last payout will be in 2016. Essentially, WCS co-funds Singapore registered businesses (except government-related entities), that implement wage increases for their eligible employees. The wage credit is taxable.
To be eligible for WCS, an employee must have been employed for at least 3 months in 2012, along with being on the payroll for at least 3 months in 2013. Owners of companies or businesses are not considered as employees even if he has paid himself CPF contribution. More importantly, employers qualify for WCS in any calendar year from 2013 to 2015, only if they gave at least a S$50 increase in gross monthly wage to Singapore citizen employees earning up to S$4,000.
Analysis by Rikvin reveals that WCS is an effort on the part of the government to support productivity gain sharing between employers and employees through meaningful wage increases, especially for lower income workers.
“What is particularly worth noting is the ease with which WCS will be implemented. The money will be paid automatically to the qualifying companies without any application. If you own an SME and were not always very excited about the bureaucratic red-tape around any government incentive scheme, WCS is a god-send for you,” said Ms. Christine Lim, General Manager of Rikvin. “With this, the government seems to be gravitating towards its promise of ensuring more inclusive growth for our workforce,” she concluded.Tags: Singapore company setup, Singapore taxation, Singapore Work Credit Scheme