SINGAPORE BUDGET HIGHLIGHTS 2018
This year’s Budget delivered by the Finance Minister, Mr. Heng Swee Keat, on 19 February 2018 outlined steps Singapore must take in order to prepare for three major shifts in the coming decade. These three shifts are: global economic focus on Asia, the emergence of new technologies and an ageing population.
Announcing that the Singapore’s economy will turn in a stronger than expected performance resulting in a budget surplus of $9.6 billion for FY2017 – much higher than an earlier estimate of $1.9 billion forecasted a year ago and Singapore’s biggest in some 30 years. Themed “Together, a Better Future”, Budget 2018 sought to address certain short-term business concerns with focus mainly on long-term challenges in order to lay the foundation for a sustainable future.
For businesses looking for relief over their concerns on rising business cost, measures such as the extension of the Wage Credit Scheme for three more years, which co-funds wage increases for Singaporean employees earning gross monthly wages of up to $4,000, and the enhancement of corporate tax rebate which will be extended to the Year of Assessment 2019, have been announced to provide short-term assistance. Unfortunately, for businesses clamouring for the foreign manpower curb to be relaxed were disappointed. Apart from the deferral of increase in foreign workers levy for the marine shipyard and process industries and the introduction of a new pilot “capability transfer programme” which basically support the transfer of skills from foreign specialists to local trainers and trainees to meet the skills shortages in certain sectors, the tight policies on foreign workers that businesses have long urged the Government to reconsider remains unchanged. Industries such as construction, hospitality and other service sectors may not necessarily benefit from the new pilot scheme. Government should also recognise that as our society progresses, no Singaporean will be attracted to these low-paying jobs.
On the other hand, notable measures have been announced to prepare the local economy for the next decade. In this Budget, the Minister stated that consideration had been taken to cater for the needs for major spending in infrastructural projects, education, security and the anticipated needs in healthcare where the nation’s reserves must be sustainable for the future. It is therefore necessary to ensure that all policies are calibrated prudently to ensure that there will be surplus to cater for these needs. Hence, most of the key measures announced this year will not take effect immediately or will bear fruit only later.
One of the much anticipated changes was the two percentage point hike in GST from 7% to 9% which will be implemented sometime between 2021 and 2025. Other initiatives such as taxes on e-commerce will also not come into force until 2020. Other economic transformation strategies announced in the Budget which will take place over time includes measures to build deep capabilities such as digital skills within our work force, partnerships between companies and trade associations to address common challenges, tax incentives for R&D, innovation and funding for intellectual properties commercialisation. This is aimed at gearing and propelling the country into a smart nation.
On the social front, various initiatives such as higher Annual Edusave Contributions, MOE Financial Assistance, the Community Silver Trust, etc. have also been introduced or enhanced to ensure that the lower and middle income group and our senior citizens will benefit.
Finally, from the nation’s perspective, this year’s Budget could be seen as far-sighted, holistic and a well calibrated blueprint to place Singapore into the future. Whilst we are unable to predict when the next crisis will hit us, this Budget, as well as those in the past, is about ensuring that the nation remains sustainable.
Acutus is pleased to present you with this exclusive highlight to assist you in understanding the impact of the changes and initiatives that were unveiled in Budget 2018. As the details of these proposals have yet to be announced, our comments should not be considered definitive and readers are advised that they should not rely or use this as a basis for formulating business decisions.
We hope you will find this commentary useful and we look forward to supporting you in your business endeavours.
27 February 2018
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© 2018. This publication is contributed by Acutus Tax Services Pte. Ltd. All rights reserved.
Click here to see the Singapore Budget 2018 publication.