Singapore’s economy is recovering from the Covid-19, so the government continues finance to support vulnerable and still-struggling segments of the industries. Mr. Heng Swee Keat, Deputy Prime Minister and Minister of Finance delivered the Budget 2021 speech on 16 Feb 2021. Due to Covid-19, Singapore has incurred a rare budget deficit of $64.9 billion for the Fiscal Year 2020, and Singapore is expected to record a budget deficit of $11 billion this year (2.2% of GDP) which is the largest since Singapore’s independence. Singapore Budget 2021 prioritizes the need to channel more targeted support to the business sectors and segments of society that continue to struggle due to the pandemic. In this blog, we summarise few things that business owners need to know from Budget 2021.
COVID-19 Resilience Package
The economy of Singapore is forecast to grow 4% to 6% from last year’s low base of -5.4%. The Minister announces an $11 billion COVID-19 Resilience Package to support the recovery process. This will go towards addressing urgent needs such as vaccination, contact tracing, testing, and more to safeguard public health, supporting workers and businesses, and directing more support for sectors still under stress.
Equity Investments in Large Local Enterprises (LLEs)
To support the growth of large local enterprises to transform and scale globally, the Singapore government is providing a growth capital of $500 million to be co-invested with Temasek in a funding platform. The platform will have $1 billion available for its investments as Teamask will match the Government’s funds on a one-for-one basis.
New Platforms For Innovation
To enjoy a competitive advantage, the businesses will need to innovate and collaborate on a global scale. This means finding novel ways to innovate and transform the business. For it to occur, these three platforms will be more useful for innovation efforts:
- Corporate Venture Launchpad: This launchpad will be used for building new innovative ventures and co-funding for corporates to build new and innovative ventures through the pre-qualified venture studios. This is helpful for larger businesses that want to rekindle a startup mindset within their organizations.
- Open Innovation Platform (OIP): The OIP Facilitates the routing of problems faced by companies and public agencies, with solution providers, and co-funding their prototypes and further deploying them. New features such as a cloud-based Digital Bench for accelerated virtual prototyping and testing will enhance the OIP.
- Global Innovation Alliance (GIA): The GIA works to catalyze cross-border collaboration between Singapore and enhancing major innovation hubs globally. The GIA network comprises 15 city links at this time; this will be expanded to over 25 cities over the next five years. The GIA will also be enhanced through the inclusion of the Co-Innovation Program.
Extension Of Jobs Support Scheme (JSS):
Under the JSS, up to March 2021, the Government co-funds gross monthly wages paid to each local employee. This scheme is extended by up to six months until September 2021 to support businesses in the hardest-hit sectors in Budget 2021 as follows:
- Tier 1 sectors (e.g. Aviation, Aerospace, and Tourism) that are currently receiving 50% JSS support, will receive:
- 30% support for wages paid from April to June 2021
- 10% support for wages paid from July to September 2021
- Tier 2 Sectors (e.g. Food Services, Retail, Marine & Offshore, and Arts and Entertainment) that are currently receiving 30% JSS support, will receive:
- 10% support for wages paid from April to June 2021
- Tier 3A sectors currently receive 10% JSS support for wages paid from September 2020 to March 2021. JSS support will cease thereafter.
- Employers that are not allowed to resume onsite operations currently receive Tier 1 JSS support for wages paid up to March 2021. For wages paid from April 2021 onwards, JSS support will revert to the firm’s base JSS tier.
Extension Of The Jobs Growth Incentive (JGI)
To be eligible for this scheme, there must be an increase in overall local workforce size and also, an increase in local workforce size earning ≥$1,400/month. The JGI was set to end in February 2021. It is now extended by 7 months i.e. till September 2021. With this extension, eligible companies that hire locals between March 2021 and the end-September 2021 will receive wage support as follows:
- For non-mature locals, up to 12 months based on 25% of the first $5,000 of gross monthly income, from the month of hire.
- For mature workers (aged 40 & above), persons with disabilities, and ex-offenders, up to 18 months (12 months previously) based on 50% of the first $6,000 ($5,000 previously) of gross monthly income.
Extension Of The SGUnited Jobs and Skills Package
This package aims to increase job, traineeship, and skills training opportunities to support Singaporeans affected due to the economic impact of COVID-19. SGUnited Jobs and Skills Package will be extended. This will benefit businesses to hire and train potential employees, while the government funds a significant portion of the scheme. The SGUnited Skills, SGUnited Traineeships, and SGUnited Mid-Career Pathways programs will be extended until March 31, 2022.
Digitalisation And Innovation
Budget 2021 will also continue to help businesses invest in digital transformation and onboard new technologies which includes:
- New Emerging Technology Programme
- Chief Technology Officer-as-a-Service
- Digital Leaders Programme
- Enhance Productivity Solutions Grant – Job Redesign
Extension Of The Wage Credit Scheme (WCS)
The Wage Credit Scheme (WCS) has been extended to 2021 at a co-funding level of 15% and the qualifying gross wage ceiling at $5,000. This will help companies retain local workers and for companies who are able, reward employees with a wage increment.
Industry Transformation Maps
True to Budget 2021’s Emerging Stronger Together theme, $24 billion will be allocated over the next three years to help businesses and workers ‘emerge stronger’ beyond the ravages of the COVID-19 pandemic. It will help to:
- Develop a vibrant business community.
- Catalyze a wide range of capital to enable businesses to transform and scale.
- Redesign jobs and create new job opportunities for Singaporeans to develop their skills, creativity, and talents.
Increased Loan Cap For Venture Debt Program
The cap on the quantum of loan has been increased from $5 million to $8 million through which highly growing enterprises, including startups, will continue to have access to financial capital even if they do not have significant assets available for use as collateral under traditional bank lending.
S Pass Quota For Foreign Workers In Manufacturing
The government has announced its intention to reduce reliance on foreign workers. This will, of course, be done progressively. The government aims to eliminate the S Pass sub-dependency ratio ceiling (sub-DRC) in two steps:
- 18% from Jan 1, 2022, and
- 15% from Jan 1, 2023
GST Extended To Low Value Imported Goods From 2023
GST will be extended to:
- Low-value goods are imported via air or post.
- B2C imported non-digital services.
Overview Of Tax Changes in Budget 2021
- No changes in corporate income tax rates and no tax rebates.
- Following are the extensions of the Budget 2021:
- Carry-Back relief-scheme extended to YA 2021 to permit carry back 3 immediate preceding YAs.
- Accelerated 2-years capital allowance on the acquisition of plant and machinery extended to YA 2022.
- Accelerated 1-year deduction of expenses incurred on renovation and refurbishment extended to YA 2022.
- To continue supporting corporate volunteering, the Business and IPC Partnership Scheme (BIPS) extended till December 2023.
- To continue attracting NPOs to Singapore, the NPO tax incentive extended till December 2027.
- Extension of various enterprise schemes such as Scale-up SG, productivity Solutions Grants, Market Readiness Assistance, and Enterprise Development Grant from Sep 2021 to Mar 2022.
- Extension of the 250% Tax Deduction for Qualifying Donations made to Institutions of a Public Character(IPCs) up to Dec 2023.
If you find this blog informative and would like to know more about Budget 2021, we would love to do another blog for the same, please let us know. If you are looking forward to business set-up or business registration, please feel free to reach out to us at Bluebox for assistance. We are a professional services firm with extensive experience in advisory for SMEs and startups. We would be happy to be of assistance!