SINGAPORE BUDGET 2019
Finance Minister Heng Swee Keat unveiled the Budget for Fiscal Year starting April 2019 in Parliament on Monday, 18 February 2019. Title of this year Budget is “Building A Strong, United Singapore”.
What Budget 2019 is about for Singapore and businesses?
Budget 2019 is the 4th Budget unveiled by Finance Minister Heng Swee Keat. We summarised the key thrusts in his budget delivery since his first budget delivery in Parliament in 2016:
Finance Minister Heng Swee Keat introduced “Industry Transformation Programme” (“ITP”) as a nation’s strategies in transforming Singapore’s economy through enterprise and innovation.
Finance Minister Heng Swee Keat unveiled 3 key thrusts in the Budget to support the ITP. The 3 key thrusts are (i) Strengthen Enterprises Capabilities, (ii) Deepen People’s Capabilities, and (iii) Partnerships for shared success.
Finance Minister Heng Swee Keat enhanced the 3 key thrusts in support of the ITP via (i) Fostering Pervasive Innovation, (ii) Building Deep Capabilities, and (iii) Forging Strong Partnership.
The 3 key thrusts in supporting the ITP were again given the emphasis, they are (i) Deepening Enterprises Capabilities, (ii) Deepening Worker Capabilities, and (iii) Encouraging Strong Partnership.
You may notice that Budget 2019 is a continuing strategy and a continuing push for the nation’s industry transformation. Therefore, expectedly there are no major makeover or restructuring to the economy and there will be little changes to the current tax system. The approach of the Finance Minister Heng Swee Keat has provided consistency and a clear directive to the industry players as well as to the people of Singapore about where we go and how we are going to get there! However, it comes with a lack of excitement in the announcement in the Budget 2019.
Deepening Enterprises Capabilities
The following summarises some key changes or enhancements unveiled in the Budget 2019:
- “Scale-Up SG Programme” will be launched by Enterprise Singapore (ESG) in partnership with the public and private sectors to assist high-growth local SMEs to identify how they can innovate, grow, venture overseas and to obtain advice on ways to commercialise technology from industry veterans with expertise in technology and business;
- An additional top-up of S$100 million to the SME Co-Investment Fund III (“CIP”). The CIP was launched in 2010 with the Government contributing a seed capital to match with private sector capital on a 1:1 ratio to catalyse patient growth capital for Singapore-based globally competitive companies to execute their growth and expansion plans;
- “Enterprise Finance Scheme” (“EFS”) will be launched in October 2019 to streamline the existing various financing schemes into a single scheme to further facilitate the SMEs access to the loans. The EFS will cover trade, working capital, fixed assets, venture debt, mergers and acquisitions, and project financing. To further enhance the scheme, the Government will increase its participation in the risk for the bank loans from the current 50% to 70% targeted those companies incorporated for less than 5 years;
- The SME Working Capital Loan Scheme which is to lapse in this year will be extended for two more years until March 2021;
- The SME Go Digital Programme will be expanded to cover sectors in Accountancy, Sea Transport and Construction. The respective industry digital plans will be unveiled this year;
- The “Automation Support Package” (“ASP”) which was introduced in the Budget 2016 will be further extended for another two-year, until March 2021.
You may notice that in Budget 2019, the Government has shifted away from traditional tools of tax policies to spur growth. Instead, it tends to create an ecosystem to enabling an enterprise to grow and transform via various created opportunities, ease in financing and cash grant support.
Key Tax Changes:
As the result, there are no major tax changes in Budget 2019. The following summarises the key Tax Changes:
Goods and Service Tax:
For Financial Sectors:
Other Changes impacting Businesses:
- The excise duty on diesel fuel is to be doubled from S$0.10 to S$0.20 per litre with immediate effect. That would mean the costs of running a diesel-powered vehicle will probably be increased by double for years to come. However, the commercial diesel vehicles will get a 100% road tax rebate for one year, and partial road tax rebate for another 2 years. Diesel buses ferrying schoolchildren will also get additional cash rebates of up to S$3,200 over three years.
The road tax rebates are temporary measures, but the excise duty on diesel fuel is likely to stay and most probably will increase further in near future as the Government’s policy to push vehicle owners to shift towards more environmentally friendly engines such as electric hybrids.
- The Government is in one hand assisting local enterprises to deepen enterprise capabilities in technology, and on the other hand, the Government is continuously tightening the use of foreign labour source. In Budget 2019, the Services sector Dependency Ratio Ceiling (“DRC”) is reduced further.
We hope the above summaries are helpful in your business planning. You may visit our tax website at www.ibp.com.sg for more information and helpful insights for your businesses.