Singapore’s Finance Minister Heng Swee Keat while presenting the Budget 2020 in the country’s Parliament on February 18, introduced a slew of measures amounting to $5.6 billion, to deal with the coronavirus outbreak. This includes a $4 billion – Stabilisation and Support Package – to help firms with cash flow and retain workers; a $1.6 billion – Care and Support Package – for household expenses; as well as some additional support to sectors directly affected by the outbreak which are tourism, aviation, retail, food services, and point-to-point transport services.
The above measures are discussed in greater detail below.
Stabilisation and Support Package
The aim of this package, amounting to $4 billion, is to stabilise the economy and support workers and enterprises, by helping workers to stay in their jobs and enterprises with cash flow.
First is the measure to support enterprises by defraying their wage cost, through two schemes.
- Introducing a Jobs Support Scheme, amounting to $1.3 billion – For every local worker in employment, the Government will offset 25% (up from 8%) of the wages, up to a monthly wage cap of $4,600 (up from $3,600), for three months. This payment will be given to employers between May and October this year.
- Enhance the Wage Credit Scheme to support wage increases for Singaporean workers, amounting to $1.1 billion, benefiting 90,000 enterprises – Currently, the Wage Credit Scheme co-funds wage increases for Singaporean employees earning a gross monthly wage of up to $4,000. The government will raise the monthly wage ceiling from $4,000 to $5,000, for qualifying wage increases given in 2019 and 2020, so that more Singaporean employees will benefit. The government will also raise the Government co-funding levels for 2019 and 2020 qualifying wage increases by five percentage points, to 20% and 15% respectively.
Measures have also been introduced to help enterprises with cash flow.
- Corporate Income Tax Rebate for Year of Assessment 2020, at a rate of 25% of tax payable, capped at $15,000 per company. This rebate will benefit all tax-paying companies and cost about $400 million.
- Companies will be allowed a faster write-down of their investments in plant and machinery, and renovation and refurbishment, incurred for Year of Assessment 2021. This will realise immediate tax savings for profitable businesses and improve their cash flows. Businesses such as hotels can also take advantage of the lull period to carry out upgrading works and be better prepared for the upturn.
- Enhancing the Enterprise Financing Scheme’s Working Capital Loan component for one year – Government will raise the maximum loan quantum from $300,000 to $600,000, and increase its risk-share on these loans to 80%, from the current 50% to 70%.
- More flexible rental payments such as instalment plans for tenants and lessees of government-managed properties, including those under JTC, HDB, SLA, STB, and SDC.
For sectors directly affected including tourism, aviation, retail, food services, and point-to-point transport services, the measures introduced are as under.
- Help for retaining and re-skilling workers: Government will enhance support under the Adapt and Grow initiative for this year, specifically through redeployment programmes in the tourism, aviation, retail, and food services sectors. For these sectors, the funding period for reskilling will be extended from three months to a maximum of six months. By this, the Government hopes to support more than 330,000 local workers.
- Tourism sector will be given a Property Tax Rebate of 30% for the year 2020, for the accommodation and function room components of licensed hotels and serviced apartments, and prescribed Meetings, Incentives, Conventions, and Exhibitions (MICE) venues. International cruise and regional ferry terminals will receive a 15% Property Tax Rebate, and the Integrated Resorts will receive a 10% Property Tax Rebate. Additionally, for enterprises in the tourism sector, the Government will be working with Participating Financial Institutions to introduce a Temporary Bridging Loan Programme for a year, with a loan quantum of up to $1 million and interest rate capped at 5%. The Government will take on 80% of the risk of the loan.
- For the aviation sector, a suite of measures will be implemented, comprising rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport. The Government will also grant a 15% Property Tax Rebate for Changi Airport.
- For food services and retail business: NEA will provide a full month of rental waiver to stallholders in NEA-managed hawker centres and markets. Other Government agencies, like HDB, will provide half a month of rental waiver to its commercial tenants. The Government will also grant a 15% Property Tax Rebate for qualifying commercial properties.
- The Ministry of Transport has also announced a Point-to-Point Support Package.
Care and Support Package
To help all Singaporeans with their household expenses during this period of uncertainty, the Government has provided this comprehensive package for households, amounting to about $1.6 billion. In summary, put all together, the Care and Support Package will provide a young family with about $1,300, while a three-generation family can receive about $1,800.
- All Singaporeans aged 21 and above in 2020 will receive a one-off cash payout of $300, $200 or $100, depending on their income.
- The annual GST Voucher – U-Save provides rebates to help HDB households with their utility expenses. This year, Government will double the amount of U-Save rebates through a one-off GST Voucher – U-Save Special Payment to all eligible HDB households.
- In addition, the Service and Conservancy Charges Rebate will be extended by another year. Eligible HDB households will receive rebates of between one and a half and three and a half months.
- Lower-income Singaporeans will get additional help with their daily living expenses, including the Workfare Transport Concession Scheme, Public Transport Voucher, Workfare Special Payment, as well as Grocery Vouchers.
- There will be additional help for families taking care of children and elderly parents including a $100 cash payout for every adult Singaporean with at least one Singaporean child aged 20 years and below this year; an additional GST Voucher – U-Save rebate for larger households with five or more members; a $100 top-up to the PAssion Card to all Singaporeans aged 50 years and above this year.
- Self-Help Groups will also be provided a $10 million grant over two years so that they can help more families.
- The Community Development Councils will be provided $20 million to do more, and better meet the needs of their residents through local initiatives.
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Benjamin has over 20 years of tax experience, spending more than 13 years working for the Big 4 accounting firms and being an in-house tax advisor. Benjamin has also worked with SMEs, multinational corporations, and publicly-listed companies from diverse industries, offering tax advisory and planning, corporate restructuring, M&A, business model optimization, tax ruling requests, tax incentives application, tax risk mitigation, and tax reporting services on complex projects.