- Are your businesses affected by the recent Coronavirus or COVID-19 outbreak?
The Minister of Finance has announced various short-term measures to help businesses to weather through surprises and unexpected scenarios caused by the COVID-19 outbreak. The measures aim to stabilise the enterprises cash flows. The affected Businesses shall take good of this opportunity on the supports introduced in the Budget 2020 to plan for plan B.Here’s a quick overview:
- Targeted sector 1 – Tourism:
- Property Tax Rebate of 30% for the year 2020 for accommodation and function room components of licensed hotels and serviced apartments;
- Property Tax Rebate of 15% for the year 2020 for prescribed Meetings, Incentives, Conventions, and Exhibitions (MICE) venues, International cruise and regional ferry terminals; and
- Property Tax Rebate of 10% for the year 2020 for the Integrated Resorts.
- Introduced a Temporary Bridging Loan Programme for a year with a loan quantum of up to S$1 million with interest rate capped at 5%. The Government will take on 80% of the risk of the loan. The Scheme will run from March 2020 till March 2021.
- Given that the current effective interest rate for business loans ranges from 6.5%% to 13% per annum, the offered cap rate of interest at 5% is attractive.
- Targeted sector 2 – Aviation:
- A suite of short-term measures will be implemented, they are including:
- Rebates on aircraft landing and parking charges;
- Assistance to ground handling agents;
- Rental rebates for shops and cargo agents at Changi Airport.
- Property Tax Rebate of 15% for the year 2020 for Changi Airport.
- Targeted sector 3 – Food and Retail Businesses:
- NEA will provide a full-month rental waiver to stallholders in NEA-managed hawkers centres and markets;
- Other Government agencies, like HDB, will provide half-month rental waiver to its commercial tenants;
- Property Tax Rebate of 15% for the year 2020 for qualifying private-commercial properties.
- Applies to All Business Sectors:
- Corporate Income Tax Rebate of 25% of tax payable, capped at S$15,000, to be granted for Year of Assessment 2020;
- Companies paying their Corporate Income Tax by GIRO can automatically enjoy an additional 2 months of interest-free instalments, when they file their ECI within 3 months from their financial year end; This applies to companies that file their ECI from 19 Feb 2020 to 31 Dec 2020, and for companies that has filed their ECI before 19 Feb 2020 but have ongoing instalment payment to be made in March 2020;
- The Carry-back Relief Scheme to be enhanced for YA2020 to allow an option for Companies’ qualifying deductions for YA2020 to be carried back up to 3 immediate preceding YAs, capped at S$100,000 of qualifying deductions;
- Companies which incur capital expenditure on the acquisition of Plant and Machinery in the basis period for YA2021, i.e. FY 2020, will be given an option to accelerate the write-off of the cost of the acquiring such plant and machinery over 2 years. The rates of accelerated Capital Allowances allowed are as follows:
– 75% of the cost incurred to be written off in the first year, i.e. YA2021; and
– 25% of the cost incurred to be written off in the second year, i.e. YA2022.
- Provide Companies an option to accelerate the deduction of expenses incurred on renovation and refurbishment (“R&R expenses”) in 1 year instead of over 3 years.
- The Government will also support tenants and lessees of government-managed properties, specifically those under JTC, HDB, SLA, STB, AND SDC, by offering options for more flexible rental payments such as instalment plans.
- Targeted sector 1 – Tourism:
- GST Hike by 2% Will Not Take Effect in 2021
In other words, the GST rate will remain at 7% in 2020 and 2021. However, the GST hike by 2% from 7% to 9% will still happen in sometime from 2022 to 2025.
- SME Working Capital Loan
The SME Working Capital Loan was introduced in 2016 to help small and medium enterprises (SMEs) access financing for their working capital needs. Since October 2019, this has been subsumed under the Enterprise Financing Scheme.The Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL), which is available to SMEs across all industries, will be enhanced for one year to help SMEs with their working capital needs. The Government will raise the maximum loan quantum from $300,000 to $600,000, and enhance the Government’s risk-share to up to 80% (from the current 50% to 70%) for SMEs borrowing from Participating Financial Institutions under the scheme.The Enhanced EFS-WCL will start in March 2020, and is available for one year till March 2021. Interested enterprises can apply directly to the Participating Financial Institutions.
- SkillsFuture Enterprise Credit (SFEC)
The SFEC encourages employers to undertake enterprise and workforce transformation initiatives in tandem. Eligible employers will receive a one-off $10,000 credit to cover up to 90% of out-of-pocket expenses for supportable enterprise capability development and workforce transformation programmes. To encourage employers to undertake workforce transformation to reskill and upskill their workers, $3,000 of the SFEC will be reserved for workforce transformation programmes.Employers have four qualifying windows until 31 March 2021 to qualify for SFEC. At each of the qualifying windows, employers must have contributed at least $750 Skills Development Levy (SDL) in total in the preceding 12 months and have at least three Singapore Citizens/Permanent Residents employed in each of the preceding 12 months, based on latest available data. Upon qualification, employers will be able to use the SFEC on supportable schemes any time from 1 April 2020, with claims to be submitted latest by 30 June 2023.The list of current SFEC-supportable programmes is at Table-1. The supportable programmes will be reviewed from time to time. The updated list will be made available at Enterprise Singapore’s website at a later date.
- Wage Credit Scheme (WCS)
The WCS was introduced in Budget 2013 and extended in Budget 2015 and in Budget 2018 till 2020. Under the Budget 2018, the Government will co-funded 20%, 15% and 10% of wage increases in year 2018, 2019 and 2020 respectively.In Budget 2020, it was announced that the Government’s co-funding ratios for wage increases in 2019 and 2020 given to Singapore citizen employee will be raised from the current 15% and 10%, to 20% and 15% respectively. The qualifying gross wage ceiling will also be raised to S$5,000 for both years, up from the current S$4,000.Qualifying employers benefiting from these enhancements for the 2019 wage increases will be notified by end September 2020. From March 2020, the WCS payouts will only be disbursed electronically through direct crediting modes. If you did not register for GIRO to pay Income Tax/GST or have not registered for PayNow Corporate, you are required to sign up for either of these modes to receive the payout.
- Startup SG Equity
The enhancement to Startup SG Equity dedicates an additional $300 million to catalyse private investment into Singapore-based deep-tech startups in key emerging sectors. These sectors include pharmbio and medtech, advanced manufacturing, and agri-food tech. Under Startup SG Equity, the Government may partner qualified third-party investors to make direct co-investments into eligible startups, or invest in funds through a fund-of-funds approach.More details will be shared at the Ministry of Trade and Industry Committee of Supply.
- Support for Enterprise Growth and Digital Capabilities
- Industrial Digital Plans (IDPs)
Thus far, IDPs have been rolled out to 10 Industry Transformation Map (ITM) sectors, i.e. Accountancy, Environmental Services, Food Services, Hotel, Logistics, Media, Retail, Sea Transport, Security and Wholesale Trade.IMDA will develop more IDPs, and pre-approved more digital solutions. Some of the new sectors that will benefit are Healthcare, Food Manufacturing, Adult and Early Childhood Education.
- Grow Digital Initiative
The IMDA and Enterprise Singapore will:
Support SMEs to participate in B2C e-commerce platforms. Eligible SMEs will be co-funded at 70% for Multichannel E-commerce Platform solution packages. These equip SMEs with the capabilities to reach out to new customers online, diversify into new markets, and optimise sales on multiple overseas e-marketplaces; andSupport SMEs to participate in B2B marketplaces to benefit from overseas procurement demand, starting with industrial hardware and food supplies. Details will be announced by IMDA and Enterprise Singapore in 2Q 2020
- Enhancement to Market Readiness Assistance (MRA)
Introduced in 2013, MRA is a broad-based enterprise grant scheme that provides support to companies taking their first steps overseas. It supports pre-scoped activities to help SMEs set up overseas, identify business partners, and promote their products and services.To accelerate the internationalisation efforts of SMEs, MRA will be enhanced to:
(i) Expand the scope of supportable activities to include: (a) Free Trade Agreement (FTA) consultancy services to support companies in better leveraging FTAs; and (b) in-market business development;
(ii) Increase the grant cap from $20,000 per year to $100,000 per new market per company over the enhancement period of FY20-22; and
(iii) Extend 70% support level for another 3 years, until 31 March 2023.More details will be shared at the Ministry of Trade and Industry Committee of Supply.
- Enhancement to Productivity Solutions Grant (PSG)
The PSG provides support to businesses in their transformation journey through funding support for the adoption of IT solutions, and equipment that have been pre-identified by the Government.The PSG will be enhanced to offer a more comprehensive suite of pre-approved solutions. PSG’s support will be expanded to include consultancy services, starting with job redesign. The number of sector-specific solutions on the PSG will also be increased.More details will be shared at the Ministry of Trade and Industry Committee of Supply.
- Enterprise Leadership for Transformation (ELT)
The ELT programme is a three-year pilot that supports business leaders of promising SMEs in achieving the next bound of growth. The programme offers:
i) Structured modular training in business growth capabilities, with focus on using frameworks and case studies to address actual business problems;
ii) Coaching by advisors and industry practitioners, who will guide business leaders in the development of a business growth plan;
iii) Access to alumni engagement and networking, to enable peer learning and collaboration; and
iv) Support for implementation of business growth plans, depending on the enterprises’ respective needs.The programme will be delivered in partnership with Institutes of Higher Learning (IHLs), banks, and experienced industry experts.Business leaders with the ambition and commitment to transform their business can apply for the ELT.More details will be shared at the Ministry of Trade and Industry Committee of Supply.
- Industrial Digital Plans (IDPs)
- Tax Changes for Vehicles
It is the vision of the Singapore Government to phase out vehicles with internal combustion engines, or ICEs, and have all vehicles run on cleaner energy by 2040. To promote this, the following tax changes for vehicles have been introduced in the Budget 2020:
In addition to the above tax changes for vehicles, the Minister of Finance in its Budget 2020 introduced/enhanced the followings:Vehicular Emissions Scheme for cars and taxis (VES for cars & taxis)
The VES for cars and taxis was introduced in the Budget 2018. Under the scheme, car buyers and taxi operators who choose cleaner car models can receive an upfront rebate of up to S$20,000 and S$30,000 respectively.In Budget 2020, this scheme is further enhanced as follow:
– Those who purchase fully electric cars and taxis will receive a rebate of up to 45% on the Additional Registration Fee, capped at S$20,000. This is to be known as “EV Early Adoption Incentive” and will be implemented for 3 years, from January 2021.Commercial Vehicle Emissions Scheme (CVES)
A similar scheme to the VES for cars & taxis, this CVES is for light goods vehicles.The Minister for the Environment and Water Resources will announce the details at the Committee of Supply.In view of the Government’s plan to phase out ICE’s vehicles plus the above tax changes and new schemes for vehicles, it is wiser for businesses to plan progressively in procuring for replacement of its fleets of vehicles with more environmentally friendly and cleaner vehicles for use in the businesses. Make this plan as your Corporate initiatives support to Go Green and Clean for Singapore.You may refer to the following annexures for other tax changes and schemes introduced in the Budget 2020:
Annex (A) – Summary of Tax Changes
Annex (B) – Budget 2020 Booklet by Ministry of Finance
Click here to download a pdf copy, or here to read it on-line.IBP hopes the above summaries are helpful in your business planning. We are keen to hear from you if you do have any comments or any clarification required in relation to the Budget 2020.Thank you and wishing you a prosperous year 2020.
Mr Eric Leaw
Accredited Tax Advisor, SIATP (Membership no.ATA017)
Call: +65 6323 1928