Singapore Budget 2022: How Is Your Business Affected?
6 minute read
The highly-anticipated Singapore Budget 2022 was announced on 18 February 2022, with Minister Lawrence Wong making his first speech as Minister of Finance.
In his opening remarks, Wong highlighted the recovery of the Singapore economy, emphasizing its strong rebound from one of its worst recessions since independence.
Wong continued by predicting a steady recovery in 2022 as projections put the economy to grow by 3 to 5%. This will be primarily due to the global pick-up in vaccination and booster efforts.
Beyond that, Wong also addressed new schemes, fundings, and changes to businesses. Not to worry though; we’ve taken down all the noteworthy updates. Here’s all that you need to know.
Overview:
Changes for businesses
1. Jobs and Business Support Package
Businesses in struggling sectors will receive additional payouts through the S$500M Jobs and Business Support Package that will include payouts for qualified firms.
Small Business Recovery Grant
Eligible small and medium enterprises (SMEs) affected by COVID-19 restrictions will receive:
- S$1,000 payout per local employee, capped at S$10,000 per firm.
- S$1,000 payout for local sole proprietors and partnerships in eligible sectors that do not hire local employees.
Eligible SMEs include those in the F&B, Retail, Tourism, and Hospitality sectors as well as SFA licensed hawkers, market and coffeeshop stall-holders who do not hire local employees.
2. New schemes and enhancements for SME grants
- Singapore Global Enterprises initiative
- To support scaling up and investment in overseas markets.
- Singapore Global Executive Programme
- To develop companies’ talent through industry and overseas attachments, mentorships, and peer support networks.
- Enterprise Financing Scheme
- Enhanced trade loan extended to 30 September 2022.
- Enhanced project loan extended to 31 March 2023.
- Merger and Acquisition (M&A) loan expanded to include domestic activities from 1st April 2022 to 31st March 2026.
- SkillsFuture Enterprise Credit
- Waiver of the Skills Development Levy requirement will be granted for the qualifying period of 1 January 2021 to December 31 2021.
- Advanced Digital Solutions and Grow Digital scheme
S$200M in enhancements.- Up to 70% in funding for the adoption of digital solutions.
3. Changes to work pass applicants
The qualifying salaries for Employment Pass (EP) and S Pass applicants will increase by S$500 starting from 1st September 2022.
- Employment Pass (EP)
- EP holders (financial services sector): increased from S$5,000 to S$5,500.
- EP holders (other sectors): increased from S$4,500 to S$5,000.
A one-year buffer period will be given for renewal applications, ending on 1st September 2023.
- S Pass
- S Pass (financial services sector): increased from S$2,500 to S$3,000.
- S Pass (other sectors): increased from S$3,000 to S$3,500.
- S Pass (Tier 1 levy): increased from S$330 to S$450.
The Dependency Ratio Ceiling (DRC) for construction and process sectors will be reduced from 1:7 to 1:5. DRC is the maximum proportion of S Pass and Work Permit holders that a company is allowed to employ.
4. Workfare enhancements through Progressive Wage Credit Scheme
The government will co-fund the wage increases of lower-wage workers between 2022 and 2026 through the Progressive Wage Credit Scheme (PWCS).
Under this scheme:
- Employees earning S$2,500: co-funding rate will be 50 percent in the first 2 years; 30 percent in the next 2 years; to 15 percent in 2026.
- Employees earning between S$2,500 and S$3,000, the co-funding rate will be 30 percent in the first 2 years and 15 percent in 2024.
- All Singapore companies that employ foreign workers be required to pay all their local employees a monthly salary of at least S$1,400.
Changes for employees
1. Extension of relief packages and grants
Under the aforementioned Jobs and Business Support Package, the following will have their deadlines extended:
- COVID-19 Recovery Grant: extended to end-2022.
- Jobs Growth Incentive: extended to September 2022.
- Temporary Bridging Loan Programme and the enhanced Trade Loan Scheme: extended to end-September 2022.
2. Increase in taxes
The following changes to taxes will be made:
- Personal income tax rates
- Chargeable income of >S$320k: 22%
- Chargeable income of >S$320k to <S$1M: 23% Chargeable income of >S$1M: 24%
- Goods and services tax (GST)
- Jan 2023 onwards: Increased from 7% to 8%
Jan 2024 onwards: Increased from 8% to 9%
- Jan 2023 onwards: Increased from 7% to 8%
Changes to economy
1. Investment in new capabilities
The Singapore government will allocate S$200M to strengthen the nation’s digital capabilities. This includes
- Upgrading broadband infrastructure to increase broadband access speeds by 10x.
- Investing in future tech such as 6G.
2. Increase in carbon tax
To achieve its ambition of net-zero emissions, the Singapore government will incrementally raise carbon tax to S$25 per tonne in 2024, and S$45 per tonne in 2026.
The prevailing carbon tax of S$5 per tonne will remain until 2023 to allow businesses to adjust.
3. Developing the green market
Up to S$35 billion in green bonds will be contributed by 2030 to fund public sector green infrastructure projects. This will positively impact traditional sectors like aviation, energy, and tourism.
The end goal is to develop Singapore as the prime hub for sustainable aviation and carbon services and credits.
Wrap up
Minister Wong concluded his speech by noting the optimistic road ahead for Singapore businesses in 2022. With enhancing digital capabilities becoming a “first priority” for the future, the need to digitize is more pertinent now than ever.
Thankfully, with service providers like Sleek, you need not go through this journey alone. Make the switch to digital easy with our comprehensive services from accounting and bookkeeping to corporate secretary.
Ready to digitize for the future? Talk to us today to get started.
