(image source: Ministry of Finance, Singapore: Budget 2022)
Singapore’s Finance Minister Lawrence Wong delivered his Budget 2022 last month, and while the focus was mainly around the tax system, he highlighted that the government will be rolling out major support packages to help businesses transition into post-pandemic recovery, one that is increasingly digital and globalized.
Minister Wong also predicted a steady economic recovery in 2022 as projections grow to 5%, due to global pick-up in vaccination and booster efforts. But recovery is expected to remain uneven, especially for the aviation and tourism industries, as concerns over the virus and new variant emergence remain.
In this latest blog post, we will identify key areas that businesses should talk note of.
Minister Wong also predicted a steady economic recovery in 2022 as projections grow to 5%, due to global pick-up in vaccination and booster efforts. But recovery is expected to remain uneven, especially for the aviation and tourism industries, as concerns over the virus and new variant emergence remain.
In this latest blog post, we will identify key areas that businesses should talk note of.
1. Small Business Recovery Grant
Eligible small and medium enterprises (SMEs) such as those in F&B, retail, tourism and hospitality sectors affected by the pandemic will receive a one-off cash payment of:
- S$1,000 per local employee, up to S$10,000 per company and
- S$1,000 for SFA (Singapore Food Agency)-licensed hawkers, markets, coffee shop holders, and local sole-proprietors.
2. Jobs and Business Support Package
Under this, the following will have their deadlines extended, scheme enhanced and new schemed being introduced:
- 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
- Merger and Acquisition (M&A) loan expanded to include domestic activities from 1 April 2022 to 31 March 2026.
- Productivity Solutions Grant (PSG): additional S$600 million of funding allocated to support businesses keen on adopting IT equipment and solutions to improve their business processes.
- Singapore Global Enterprise initiative: to support scaling up of large local enterprises through customized assistance in areas such as internationalization, innovation and establishing partnerships with other businesses.
- Singapore Global Executive Programme: to develop companies’ talents through industry and overseas attachments, mentorships, and peer support networks.
- Advanced Digital Solutions and Grow Digital scheme S$200 million enhancements and up to 70% funding for the adoption of digital solutions.
3. Changes to Foreign Worker Permit policies
Qualifying salaries for Employment Pass (EP) and S Pass applicants will be increased by S$500 from 1 September 2022, and from 1 September 2023 for renewal applicants.
- EP (financial services sector): increased from S$5,000 to S$5,500.
- EP (other sectors): increase from S$4,500 to S$5,000.
- 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
For companies in the construction and process sectors, the proportion of work permit holders will be reduced from 87.5% to 83.3% from 2024.
4. The Progressive Wage Credit Scheme
Introduced in Budget 2022, the government will co-fund the wages of lower-wage workers between 2022 and 2026.
Eligible small and medium enterprises (SMEs) such as those in F&B, retail, tourism and hospitality sectors affected by the pandemic will receive a one-off cash payment of:
- S$1,000 per local employee, up to S$10,000 per company and
- S$1,000 for SFA (Singapore Food Agency)-licensed hawkers, markets, coffee shop holders, and local sole-proprietors.
2. Jobs and Business Support Package
Under this, the following will have their deadlines extended, scheme enhanced and new schemed being introduced:
- 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
- Merger and Acquisition (M&A) loan expanded to include domestic activities from 1 April 2022 to 31 March 2026.
- Productivity Solutions Grant (PSG): additional S$600 million of funding allocated to support businesses keen on adopting IT equipment and solutions to improve their business processes.
- Singapore Global Enterprise initiative: to support scaling up of large local enterprises through customized assistance in areas such as internationalization, innovation and establishing partnerships with other businesses.
- Singapore Global Executive Programme: to develop companies’ talents through industry and overseas attachments, mentorships, and peer support networks.
- Advanced Digital Solutions and Grow Digital scheme S$200 million enhancements and up to 70% funding for the adoption of digital solutions.
3. Changes to Foreign Worker Permit policies
Qualifying salaries for Employment Pass (EP) and S Pass applicants will be increased by S$500 from 1 September 2022, and from 1 September 2023 for renewal applicants.
- EP (financial services sector): increased from S$5,000 to S$5,500.
- EP (other sectors): increase from S$4,500 to S$5,000.
- 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
For companies in the construction and process sectors, the proportion of work permit holders will be reduced from 87.5% to 83.3% from 2024.
4. The Progressive Wage Credit Scheme
Introduced in Budget 2022, the government will co-fund the wages of lower-wage workers between 2022 and 2026.
Qualifying Year |
First-tier |
Second-tier |
. |
Gross monthly wage is less than S$2,500 |
Gross monthly wage of more than S$2,500 |
2022 |
50% |
30% |
2023 |
50% |
30% |
2024 |
30% |
15% |
2025 |
30% |
. |
2026 |
15% |
. |
5. Increased in Goods and Service Tax in 2023
- January 2023 onwards: increased from 7% to 8%
- January 2024 onwards: increase from 8% to 9%
6. Increase in Carbon Tax
To achieve Singapore’s ambition of net-zero emissions, the Government announced major hikes in the carbon tax rate. It will be raised to S$25 per tonne by 2024 and 2025 from just S$5 today, and by 2026, it will be doubled to S$45.
7. Developing the Green Market
The government will be looking to issue up to S$35 billion in green bonds by 2030 to support the greening of public infrastructure. This will positively impact sectors such as aviation, energy and tourism.
Minister Wong concluded his budget statement by noting the optimistic road ahead for Singapore businesses in 2022. It is obvious that businesses will need to think digital and go green as these dual forces will be reshaping the global economy and affect how businesses are run in the future. Fortunately, with support from the government, businesses can make enhancing their digital capabilities a priority, therefore transforming themselves to thrive in the new normal economy.
For more details, you can visit the Budget 2022 website.
Need help navigating the tax changes and announcements from Budget 2022?
At IGS Consulting, we are kept abreast with Singapore’s financial and tax developments. With our comprehensive services from Accounting and Taxation to Corporate Secretary, you do not have to go through this journey alone.