Singapore Budget 2022 Highlights

Singapore Budget 2022 Highlights

Singapore’s Finance Minister Lawrence Wong announced the country’s 2022 budget on 18th February 2022. After the 2021 budget focused on financial resilience to the coronavirus pandemic, the 2022 budget shifts that focus to recovery. Driven by strong manufacturing, finance, insurance, and trade sectors, Singapore’s economy grew by a better-than-expected 7.6% in 2021, with a growth forecast of 3 to 5%.

Singapore Budget 2021: Key Tax Highlights

Singapore’s Finance Minister Lawrence Wong announced the country’s 2022 budget on 18th February 2022. After the 2021 budget focused on financial resilience to the coronavirus pandemic, the 2022 budget shifts that focus to recovery. Driven by strong manufacturing, finance, insurance, and trade sectors, Singapore’s economy grew by a better-than-expected 7.6% in 2021, with a growth forecast of 3 to 5%.

With that in mind, the 2022 budget was announced with the theme ‘Charting Our New Way Forward Together’ and is built around measures to strengthen Singapore’s economy post-pandemic, and to realise a ‘vision of a fairer, more sustainable, and more inclusive society.’

The key highlights of the 2022 Singapore budget are as follows:

Support for Jobs and Businesses

Jobs and Business Support Package: The 2022 budget sets out a S$500 million Jobs and Business Support Package which includes a Small Business Recovery Grant for SMEs that have been badly affected by the Covid-19 pandemic. The grant offers SMEs S$1,000 per local employee (up to S$10,000 per firm) and is also available to street-food vendors, street markets, and stallholders that are licensed by the Singapore Food Agency.

Covid-19 support: The Singapore Covid-19 Recovery Grant for employees facing income loss has also been extended to the end of 2022.

Income Tax

The 2022 budget will increase the top rate of personal income tax to 23% (up from 22%) with effect from YA 2024. The new rate will affect chargeable income above S$500,000 - up to S$1 million. Chargeable income above S$1 million will be charged at 24%. The so-called ‘wealth tax’ is estimated to affect 1.2% of Singapore taxpayers.

Carbon Tax

In an effort to address climate change, and achieve the city-state’s net-zero ambition, the 2022 budget will increase Singapore's carbon tax to S$25 per tonne in 2024-5, and S$45 per tonne in 2026-7. The tax will then rise progressively, and could reach S$80 per tonne in 2030.

SkillsFuture Enterprise

Singapore’s government is aiming to encourage a culture of lifelong learning across its business community. To that end, the 2022 budget expands the eligibility criteria of the SkillsFuture Enterprise Credit scheme and includes S$100 million of support for Company Training Committees.

Wage Measures

Progressive wages: With a focus on Singapore’s Social Compact, the 2022 budget extends the city’s Progressive Wage Model to a wider group of workers - and specifically to lower wage workers. Under the new criteria, ‘retail, food services, and waste management sectors, as well as in-house cleaners, security officers, landscape workers, administrators, and drivers across all sectors’ will have access to the wage model.

The government will co-fund the wage increase from 2022 to 2026 with the introduction of the Progressive Wage Credit Scheme, which will function as follows:

  • Wages up to S$2,500 per month will receive 50% co-funding for the first two years of the scheme, 30% for the next two years, and 15% by 2026.
  • Wages between S$2,500 and S$3,000 will receive 30% co-funding for the first two years, tapering to 15% by 2024.

CPF contributions: Employer contribution rates to the Central Provident Fund (CPF) will continue to increase. From 2022-204, workers aged between 55 and 70 will see their contributions rise by up to 4%.

The CPF’s Basic Retirement Sum (BRS) will also increase. Workers that age-up over 55 between 2023 and 2027 will see their BRS rise by 3.5%.

Foreign employees: Companies in Singapore that employ foreign workers will have to offer those workers at least S$1,400 per month (the current Local Qualifying Salary).

Workforce Income Supplement: The 2022 budget raises the qualifying income cap for the Workforce Income Supplement. The current cap is set at S$2,300: under the new cap, from 1 January 2023, workers that make up to S$2,500 per month will be eligible for the supplement.

The supplement scheme will have a minimum income cap of S$500 in order to encourage part-time and casual workers to transition to full time work.

Workfare: Singapore’s Workfare scheme, which provides support for older, lower-wage workers who choose to continue working and training, will be extended to younger workers aged 30 to 34 - up to a maximum of S$2,100. Other Workfare age groups will have their maximum payouts increased to the following levels:

  • Workers aged from 35 to 44 years old: S$3,000
  • Workers aged from 45 to 59 years old: S$3,600
  • Workers aged 60 years old and over: S$4,200

All workers with disabilities will be able to receive the S$4,200 maximum payout.

Goods and Service Tax

The 2022 budget has delayed a proposed increase to GST until 2023. The first stage of the increase will see Singapore’s GST rise from 7% to 8% from 1 January 2023, and then to 9% from 1 January 2024.

Assurance Package

In order to mitigate the effects of the GST rise, and ensure that low income Singaporeans are not adversely affected, the government has introduced a S$6 billion Assurance Package. The Assurance Package involves the following measures:

  • Cash payouts of between S$700 and S$1,600 for all adult Singaporeans.
  • A GST voucher worth between S$600 and S$900 for all eligible seniors in Singapore.
  • Rebates for eligible HDB households of between S$330 and S$900 depending on type of accommodation.
  • MediSave top ups of S$450 for all Singaporean children and seniors.
  • Two sets of CDC vouchers worth S$200 for all Singaporean households. The vouchers will be issued in 2023 and 2024.

More financial support is planned for lower-income households to account for around 10 years of incoming GST expenses.

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.

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