Singapore Budget 2022: How It Might Affect Your Business
Singapore Budget 2022
What Does This Budget Mean For Your Business?
As Singapore business owners, you would want to stay updated with the latest news and announcements from the government so that you can plan for changes and adapt your operations to stay competitive. From GST vouchers to an increase in grants for certain sectors, the recent Singapore Budget 2022 announcements will affect many companies operating in Singapore. We take a look at some of the key highlights here and what they mean for your business.
1. Extending targeted help for firms hit by COVID-19 restrictions
Despite the easing of pandemic restrictions, businesses in industries such as tourism are still struggling to keep afloat.
With the $500 million Jobs & Business Support Package in Singapore, companies in affected sectors (Table 1) can look forward to getting targeted support from the government, such as Singapore’s Small Business Recovery Grant which gives up to $1,000 per local employee (cap of $10,000 per firm for SMEs) or $1,000 one-off grant for groups that do not hire local employees.
The Temporary Bridging Loan Programme and Enterprise Financing Scheme (EFS) in Singapore are also extended to 30 September 2022, with revised parameters.
What can business owners do:
- Rethink existing business strategies that can complement the endemic COVID-19 stance that the Singapore government is adopting.
- Pivot towards other sectors as the government is slowly shifting away from COVID-19 support and pursuing a longer-term development plan for Singapore.
2. Shifting towards digital innovation and sustainability
In this technologically advanced era, digital innovation is key to success, and those who don’t embrace new technology will be left behind.
$200 million will go towards enhancing schemes such as Advanced Digital Solutions, Grow Digital, and TechSkills Accelerator (TeSA) that build digital capabilities in businesses and workers in Singapore. Centres that engage in technology, innovation, and enterprise activities in polytechnics and ITEs will also have their capacities increased.
The city-state also recognises the importance of protecting our planet and is slowly reducing our carbon emissions. There will be an increase in carbon tax rates from $5 per tonne in 2022 to $50 to $80 per tonne by 2030 in Singapore. One silver lining is that carbon credits can be used to offset up to 5% of taxable emissions from 2024.
What can business owners do:
- Engage in technology, innovation, and enterprise activities to enjoy the incentives provided.
- Take steps to lower carbon emissions to avoid an increase in business expenses.
- Consider entering the sustainability sector, such as green finance and carbon services.
3. Increasing productivity through job redesign and skills upgrading
Job redesign and skills upgrading are two important ways to increase productivity in the workplace.
The government is aware of this and has introduced a slew of measures to help companies redesign jobs to be more attractive as well as help workers do their jobs more efficiently and effectively.
For example, companies in Singapore can send their workers for training courses under the SkillsFuture Enterprise Credit (SFEC), which covers 90% of qualifying expenses. The Skills Development Levy contribution requirement will be waived to support an additional 40,000 SMEs.
There are also incentives for companies to hire mid-career job seekers with the right skills. Mid-career workers in Singapore are better supported under the new permanent SGUnited Mid-Career Pathways Programme – Company Attachment and the new SkillsFuture Career Transition Programme that provides co-funded, industry-oriented training courses for jobseekers. The Jobs Growth Incentive (JGI) is also extended to September 2022 to support the hiring of mature and vulnerable workers in Singapore.
To ensure the workforce remains competitive, there will be an increase in foreign worker salaries – a minimum qualifying salary of at least $5,000 is needed for Employment Passes and at least $2,500 is needed for S Passes. In the construction industry, the dependency ratio ceiling will also be lowered from 1:7 to 1:5.
What can business owners do:
- Employ more local mid-career workers and higher-skilled foreign workers to take advantage of the incentives provided.
- Send workers for subsidised upgrading courses.
- Those in the construction industry must support more offsite work.
- Provide skills-related services to meet the growing demand for skills upgrading.
4. Supporting greater innovation and expansion by local firms and enterprises
Innovation is essential for the growth and success of any business in Singapore, regardless of its size. However, smaller companies often find it difficult to innovate due to a lack of resources.
Small local firms in the agri-tech, construction, food manufacturing, precision engineering, and retail sector can look forward to undertaking their own research and development activities, with greater support from the government. There will be $600 million given to fund more than 100,000 PSG projects under the Productivity Solutions Grant (PSG) in Singapore.
New programmes like the Singapore Global Enterprises and Singapore Global Executive Programme will also be rolled out for local enterprises to expand internationally and attract younger local talent to join global enterprises respectively.
What can business owners do:
- Go into the sectors that will receive support for innovation, such as agri-tech, construction, food manufacturing, precision engineering, and retail.
- Employ younger local talent and expand internationally.
5. Increase in taxes for certain groups
With the increase in support and grants, the government will need more revenue to fund Singapore’s social spending.
For the mass public, the Goods and Services (GST) tax in Singapore will be increased in stages. It will be 8% from 1 January 2023 and 9% from 1 January 2024.
For companies in Singapore, a new top-up tax called the Minimum Effective Tax Rate (METR) regime will be introduced in the future.
For those who plan to buy vehicles in Singapore, take note there is a New Additional Registration Fee tier for vehicles whose Open Market Value (OMV) exceeds $80k.
For high-income earners, there will be an increase in the marginal tax rate. It will be raised to 23% (up from 22%) for those earning $500k-$1 million and 24% (up from 22%) for those earning in excess of $1 million.
What can business owners do:
Hire an accounting service provider in Singapore to advise you on the deductions you qualify for, streamline your bookkeeping, and prepare your taxes efficiently.
Work With The Best Accounting Firm in Singapore Today
To stay ahead of the competition, it’s important to be aware of the government’s plans and adapt accordingly.
ApacTrust is an accounting firm in Singapore with more than 20 years of experience in accounting and taxation, corporate secretarial, company registration, offshore incorporation, work visa and business support services. Contact us today and find out more about our comprehensive GST filing, annual tax return, and business advisory services that can help your company cut costs and increase profits.