Singapore Budget 2021: Key Tax Highlights

Singapore’s 2021 Budget was released on 16 February 2021, accompanied by a statement from Minister for Finance, Heng Swee Keat. The 2021 budget focuses on addressing the adverse effects of the coronavirus pandemic, with relief measures introduced for individual taxpayers and with adjustments to the wider tax system that are designed to ensure a consistent stream of revenue for the city.

The key highlights of Singapore’s 2021 Budget are as follows:

Employee and Employer Support Measures

The 2021 Budget introduced the following changes for workers and businesses within Singapore:

Jobs Support Scheme: The Jobs Support Scheme (JSS) has been extended for up to 6 months for businesses in Tier 1 and Tier 2 sectors. The amount of JSS funds available to businesses will depend on the projected recovery of their respective sectors, with a reduction in support over the course of 2021.

Wage Credit Scheme: The Wage Credit Scheme (WCS) has been extended by 12 months. Under the WCS, the government will co-fund wages at a ratio of 15% - with a qualifying wage ceiling of $5,000. Wage increases of at least $50, implemented in 2019/20, will continue to be co-funded if they are sustained into 2021.

Jobs Growth Incentive: The qualification period for the Jobs Growth Incentive (JGI) has been extended by 7 months. Eligible businesses that hire local employees between March and September 2021 will receive wage support in the following ways:

• For employees up to 40 years of age: 25% of the first $5,000 of income for up to 12 months.
• For employees at least 40 years old employees with disabilities, and ex-offenders: 50% of the first $6,000 of income for up to 18 months. Businesses that hired this category of employees between September 2020 and March 2021 will begin receiving JGI support from March 2021.

Tax System Changes

A number of tax measures and changes affecting almost every sector of business were introduced under the 2021 budget.

Measures for all businesses:

• Extension of the carry-back relief scheme to Year of Assessment (YA) 2021.
• Options to accelerate the write-off costs of acquiring plant and machinery will be extended to capital expenditure in YA 2022.
• Options to claim R&R tax deductions in a single YA are extended to qualifying expenditure for YA2022.
• Enhancement of the Double Tax Deduction for Internationalism (DTDi) scheme to cover a wider range of expenses incurred virtual trade fairs.
• Extension of the Business and IPC Partnership Scheme (BIPS) to 31 December 2023.
• Extension of the Not-for-Profit Organisation (NPO) incentive to 31 December 2023.
• Retention of the Investment Allowance (IA) scheme for 2 years for projects approved between 1 April 2021 and 31 March 2023.
• Termination of the Automation Support Package after 31 March 2021.
• Extension of the Investment Allowance Energy Efficiency (IAEE) scheme for projects approved between 1 April 2021 and 31 December 2026.
• Withdrawal of the Accelerated Depreciation Allowances for Highly Efficient Pollution Control Equipment (ADA-PCE) scheme from 17 February 2021.

Measures for businesses in the finance sector:

• Extension of the double tax deduction (DTD) for costs related to MAS retail bonds to 31 December 2026.
• Extension of withholding tax exemptions for financial sector businesses - in effect from 1 April 2021 through to a review date of 31 December 2031.
• Extension of withholding tax exemptions for structured products through to 31 December 2026.
• Extension of withholding tax exemptions for payments on over-the-counter (OTC) financial derivatives for 5 years - until 31 December 2026.

Measures for the Goods and Service Tax (GST):

• Extension of GST imposed on any ‘low value’ goods imported to Singapore via air or post up to a value of $400 (the current import relief threshold).
• Extension of GST to imported business-to-consumer (B2C) non-digital services (such as educational, fitness training, or counselling materials) - with effect from 1 January 2023.
• Adjustment to the application of GST zero-rating to media sales regarding the place of circulation of an online advertisement - with effect from 1 January 2022.

Further tax changes:

Extension of the 250% Tax Deduction for Qualifying Donations from 1 January 2022 to 31 December 2023.

For more information on Singapore’s tax and payroll system, browse activpayroll’s dedicated Global Insight Guide to Singapore. For news and updates on the global payroll landscape visit our latest news page.