Singapore: Budget 2020
Singapore’s 2020 Budget focuses on a range of short and long-term measures to help manage a changing economy.
Announced by Deputy Prime Minister Heng Swee Keat on 18 February, Singapore’s 2020 budget comes during a time of transition and uncertainty. With Asia currently struggling with the challenges posed by the coronavirus outbreak, the budget sees a range of employment spending measures that enhance existing initiatives and introduce new ones.
From a practical perspective, the government is focusing on wage growth and measures to support an ageing population both in the workplace and into retirement. At the same time, the budget takes a long-term perspective, with measures for Singapore’s economic development and the government’s plan for transition over the next 3 years.
Business highlights of Singapore’s 2020 budget include:
7% GST
The proposed increase in GST from 7% to 9% will not be implemented in 2021. The rate increase was previously scheduled for introduction between 2021 and 2025 but has been pushed back as a response to the current state of the economy. The government has planned a S$6 billion support package to cushion the GST hike when it arrives: the package includes means-tested cash payouts of between S$700 and S$1,6000 for adult Singaporeans, and an expansion of the GST voucher scheme.
Support for Economic Transformation and Growth
The budget sets aside S$8.3 billion over the next three years to aid Singapore’s economic transformation and stimulate growth. The fund includes S$300 million for the Startup SG Equity to kickstart private investment in Singapore’s tech sector, and funding for an expansion of the Go Digital scheme for SMEs to include 13 new industry sectors.
Similarly, the Market Readiness Assistance scheme will expand its support level to March 2023 and the Productivity Solutions Grant will be extended to consultancy services. The government will also launch the Enterprise Transformation Package to help SMEs achieve their growth goals.
Support for Wage Costs
As part of the S$4 billion Stabilisation and Support Package, the Jobs Support Scheme will see the government offset 8% of Singaporean tax resident wages for 3 months. Similarly, the Wage Credit Scheme, in which the government co-funds employee wage increases, will have its wage ceiling increased from S$4,000 to S$5,000 for YA 2020, and co-funding levels increased to 20% in 2019 and to 15% in 2020.
Corporate Income Tax Rebate
A corporate tax rebate of 25% (capped at S$15,000) will be introduced for YA 2020 for every Singapore business. Similarly, a range of tax treatments designed to aid business cashflow will be extended for 1 year, and the Working Capital Loan (available under the Enterprise Financing Scheme) intended to help SMEs finance working capital, will also be extended for 1 year from March 2020.
The budget also increases the maximum corporate loan quantum from S$300,000 to S$600,00, with the government’s risk share being increased to 80%.
Help for Older Employees to Stay in Work
In order to help Singaporeans stay in work during the economic slowdown, every employee over 25 years old will receive a SkillsFuture credit top-up worth S$500. Employees aged between 40 and 60 years old will receive an additional S$500 top-up. The credit can be put towards learning new skills but will expire by December 2025.
Beyond the credit top-ups, a Mid-Career Skillsfuture support package will be introduced to increase the number of job placements of local workers aged between 40 and 60 to 5,500 by 2025.
The budget also includes specific incentives for employing older workers. Employers who hire employees over 40 years of age will receive 6 months of salary support at 20%, capped at S$6000, and will receive S$10,000 of Skillsfuture Enterprise Credit to manage the cost of skills training and business transformation. In addition to helping firms adopt digital solutions, the Productivity Solutions Grant will help firms acquire job redesign consultancy services.
Support for Retirement
A Matched Retirement Savings Scheme will be introduced to the Central Provident Fund from 2021 to 2025 to help Singaporeans aged 55 to 70 years old who have not set aside the Basic Retirement Sum. The Matched Retirement Savings Scheme will see the government match the top-ups workers make to their CPF Retirement Account up to an annual S$600 cap.
From 2021, the Special Employment Credit (SEC) and the Additional Special Employment Credit will merge to become the Senior Employment Credit, which will support employers who hire workers over 55 years of age. Employers will also receive grants to support the hiring of older workers in full-time and part-time roles.
Further benefits for older Singaporeans will also be introduced, including enhancements to the Silver Support Scheme in 2021.
Coronavirus Financial Aid
The budget included a S$1.6 billion Care and Support Package for households in Singapore struggling with daily expenses during the coronavirus outbreak. The package will give a means-tested payout of between S$100 and S$300 to Singaporeans aged 25 years and older and a Workfare Special Payment for employees receiving Workfare Income Support.
Businesses in Singapore will also receive coronavirus financial support. Businesses in the sectors hardest hit by the outbreak (tourism, aviation, retail, food services and transport) will be able to access help with operating costs and cashflow, along with help to retain or reskill employees, through the Adapt and Grow Initiative. The support available will be extended from 3 to 6 months for the relevant sectors.
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