With economic uncertainties arising out of multiple threats such as COVID-19 and oil crashes, you may understandably be concerned about the impact on your businesses. If you are thinking of incorporating your company in Singapore, benefit from the following government initiatives, which were rolled out as part of Singapore’s fiscal plan for the current financial year.
Jobs Support Scheme
There are more than 1.9 million local workers in Singapore. To help you retain your local workers during this period of uncertainty, the government has introduced a temporary Jobs Support Scheme. You will receive an 8% cash grant on the gross monthly wages of each of your local employees (i.e. Singapore Citizens and Permanent Residents only) for the months of October to December 2019.
However, the cash grant is subject to a monthly wage cap of $3,600 per employee, as illustrated below:
Oct 2019 Nov 2019 Dec 2019 Total Wages paid to local employee (excluding employer CPF) $3,000 $3,500 $4,000 $10,500 Qualifying wage (capped at $3,600) $3,000 $3,500 $3,600 $10,100 Jobs Support payout to employer (8% of qualifying wage) $240 $280 $288 $808
All active employers, except representative offices and Government organisations, are eligible for the scheme. The cash grants will be automatically computed and issued by the Inland Revenue Authority of Singapore (IRAS) by 31 July 2020. The grants will be computed based on CPF contribution data.
Wage Credit Scheme
The Wage Credit Scheme supports businesses embarking on transformation efforts and encourages them to share productivity gains with their workers. Currently, the scheme co-funds wage increases for Singaporean employees earning a gross monthly wage of up to $4,000. Under Singapore Budget 2020, the monthly wage ceiling will be raised from $4,000 to $5,000 for qualifying wage increases given in 2019 and 2020.
In addition, the government will co-fund a higher amount of qualifying wage increases. Government co-funding will be raised from 15% and 10% to 20% and 15% for qualifying wage increases in 2019 and 2020 respectively.
Payouts will be automatically issued in March 2020. Businesses who benefit from the additional wage credits arising from the Budget 2020 announcements will receive a separate supplementary payout in the second half of 2020.
Corporate Income Tax Rebate
To help companies with cash flow, the government has granted a Corporate Income Tax Rebate of 25% of tax payable for Year of Assessment (YA) 2020 per company. This rebate is capped at $15,000.
Extension of Corporate Tax Instalment Plan Payments by Two More Months
From 19 February to 31 December 2020, companies paying their Corporate Income Tax by GIRO can enjoy an automatic extension of their instalment plans by two more months when they file their Estimated Chargeable Income (ECI) within three months from their financial year-end.
This automatic extension will apply to companies that file their ECI from 19 February to 31 December 2020, as well as companies that file their ECI before 19 February 2020 but have ongoing instalment payments to be made in March 2020.
Enhanced Carry-Back Relief Scheme for Unabsorbed Capital Allowances and Trade Losses
To ease cash flow for businesses that may be temporarily unprofitable, the government will allow unabsorbed capital allowances (CA) and trade losses for YA 2020 to be carried back up to three immediate preceding YAs, capped at $100,000 instead of one preceding YA. Companies may choose to carry back to the relevant preceding YAs an estimated amount of qualifying deductions available for YA 2020, before the actual filing of their income tax returns for YA 2020.
Faster Write-Downs for Plant and Machinery Investments
Businesses that incur capital expenditure on the acquisition of plant and machinery (P&M) in financial year 2020 (i.e. YA 2021) will have the option to accelerate the write-off of the cost of acquiring such P&M over two years. This aims to encourage businesses to continue investing in P&M by easing their cash flow on such investments.
The rates of accelerated capital allowances allowed are as follows: a) 75% of the cost incurred to be written off in the first year (i.e. YA 2021); and b) 25% of the cost incurred to be written off in the second year (i.e. YA 2022). This option, if exercised, is irrevocable.
Faster Write-Downs for Renovation and Refurbishment Expenses
Similarly, to put more cash in the hands of businesses, businesses that incur qualifying expenditure on renovation and refurbishment (R&R) in the financial year 2020 (i.e. YA 2021) will have the option to claim R&R deduction in one YA. The cap of $300,000 for every relevant period of three consecutive YAs will still apply. Hotels, for instance, will be able to take advantage of this lull period to carry out upgrading works, and be better prepared for the upturn. This option, if exercised, is irrevocable.
Enterprise Financing Scheme (SME Working Capital Loan)
The government will be enhancing the Enterprise Financing Scheme’s Working Capital Loan component for one year. The maximum SME loan quantum will be raised from $300,000 to $600,000, and the government’s risk-share on these loans will be increased to 80%, up from the current 50% to 70%, for SMEs borrowing from participating financial institutions. This scheme aims to help enterprises access working capital more easily.
To catalyse investment into deep-tech startups, the government will be setting aside an additional $300 million under Startup SG Equity. Under Startup SG Equity, the Government may partner qualified third-party investors to make direct co-investments into eligible startups, or invest in funds. This will give deep-tech startups, especially those in sectors such as pharmbio, medtech, advanced manufacturing and agri-food tech, better access to capital, expertise and industry networks.
SkillsFuture Enterprise Credit
The government will be encouraging businesses to transform and upgrade their workforce. Qualifying enterprises will receive a one-off $10,000 credit to cover up to 90% of out-of-pocket expenses for eligible enterprise capability development and workforce transformation programmes. To encourage employers to undertake workforce transformation to reskill and upskill their workers, $3,000 of the SkillsFuture Enterprise Credit will be reserved for workforce transformation programmes. More than 35,000 enterprises will be expected to benefit from this scheme.
At Corporate Services Singapore, we help entrepreneurs build their dream companies. Whether you are looking for assistance on company incorporation or more information on the above initiatives, give us a call at 6602 8286 or email us at email@example.com to get started today.