SINGAPORE BUDGET 2020
Budget 2020, delivered by the Finance Minister, Mr Heng Swee Kiat on 18 February 2020 seeks to deal with the immediate needs as well as the longer-term strategies to place Singapore on her ongoing transformation journey as a Global-Asia node of technology, innovation and enterprise.
Set against the backdrop of uncertain times and the recent COVID-19 outbreak, a S$4 billion Stabilisation and Support Package was unveiled to provide immediate support to sectors most affected by COVID-19 such as the tourism, aviation, retail, hospitality and point-to-point transport services industries. This package provides short term support to improve business cash flow and to keep local workers in employment. Under the new Jobs Support Scheme, employers will received an 8% cash grant on the gross monthly wages of Singaporean employees for three months subject to a monthly wage cap of S$3,600 per employee. This aims to help employers to defray staff cost and to retain employees during the current economic uncertainty. The existing Wage Credit Scheme has also been enhanced to support wage increases for Singaporean employees.
For SMEs, the SME Working Capital Loan, which has been subsumed under the Enterprise Financing Scheme will be enhanced to increase the maximum loan quantum from S$300,000 to S$600,000 with the Government’s share of the risk to increase from the current 50% to 70%, to 80%. This is targeted to provide temporary financing relief and is available for a one year period commencing March 2020.
Other initiatives introduced to weather these near-term economic uncertainties include corporate tax and property tax rebates, carry-back of unabsorbed capital allowances and unabsorbed losses to more than just one immediate preceding Year of Assessment, accelerated write-off for qualifying plant and machinery expenditure and qualifying expenditure for renovation and refurbishment.
While alleviating the near-term concern to mitigate the impact of COVID-19 for businesses and jobs, the Minister has not lost sight of the important task of positioning Singapore and Singaporeans for future growth and continued success. In outlining the ongoing transformation of the economy, some S$8.3 billion have been allocated over the next three years to drive Singapore’s transformation and growth to ensure that Singapore is ready to seize new opportunities arising from the following trends:
- Decline in support for globalisation
- Shift in global economic emphasis towards Asia
- Rapid advancement of technology; and
- Singapore’s transition to an ageing society.
To prepare for such opportunities, measures and initiatives are introduced to assist Singaporeans in life-long education, training and reskilling in order to remain relevant and employed. Singaporeans are also encouraged to upgrade their skills to be better prepared when the economy rebounds.
In this year’s budget, three key thrusts were announced as a strategy to drive Singapore’s transformation and growth:
- Strengthening partnerships within Singapore and across the world through various channels of economic linkages;
- Deepening enterprise capabilities as a catalyst for investment in deep-tech startups and help SMEs to go digital, venture abroad and develop leaders; and
- Developing capabilities of Singaporeans in order to have access to good jobs.
The 2% increase in GST rate from the prevailing rate of 7% will not take place in 2021 considering the fact that Singaporeans are deeply concerned about the current unfavourable economic situation and the effect of COVID-19. When the increase becomes necessary, the Minister announced that a S$6 billion Assurance Package will be put in place to help Singaporeans cushion the impact when the increase in the GST rate is implemented.
In Budget 2020, the estimated overall deficit is S$10.9 billion. It is the largest deficit since 2009. It is comforting to note that unlike in 2009, there is no need to draw from Singapore’s past reserves to support these initiatives. Our fiscal prudence has provided us with a sound footing to deal with economic uncertainties and unexpected challenges. Without this, the Government would not have been able to mount such decisive and objective response. The Minister has also given the assurance that, ‘if needed, we can and are prepared to do more’ to support Singapore and Singaporean in times of need. It was indeed a strong statement made in confidence. A true spirit of putting “Singapore Together”.
2 March 2020
DISCLAIMER: This publication is issued exclusively for the general information of clients and staff of Acutus Tax Services Pte. Ltd. The material should not be relied upon without appropriate professional advice. Acutus Tax Services Pte. Ltd. will not be liable for any loss or damage arising out of or in connection with the material contained in this publication.
© 2020. This publication is contributed by Acutus Tax Services Pte. Ltd. All rights reserved.
Click here to view the Singapore Budget 2020 publication.