BUDGET 2023: MOVING FORWARD IN A NEW ERA

Supporting Businesses

Singapore Global Enterprise Initiative

The Singapore Global Enterprises initiative helps promising companies with customised assistance in areas such as innovation, internationalisation and fostering of partnerships with other companies, will receive a S$1 billion shot in the arm in Budget 2023.

Promising companies will be offered specialised capability building programmes tailored to their needs. This could involve working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline.

Enterprise Singapore will also support companies to secure resources to execute their growth plans, and to build sustained research and innovation capabilities so as to strengthen their value proposition and stay competitive.

More information can be found here: https://www.enterprisesg.gov.sg/keepgrowing/go-global

SME Co-Investment Fund

Government will set aside additional $150 million via SME Co-Investment Fund to invest in promising SMEs.

The Programme aims to catalyse the supply of patient growth capital for growth-oriented SMEs based in Singapore, through co-investing with the private sector.

The Government, as co-investor, would rely principally on the private sector fund managers to assess investment worthiness, so as to avoid eroding commercial discipline in investment decisions.

Private equity fund managers (“Fund Managers”) with experience in SME investing and the ability and aspiration to grow Singapore-based SMEs into globally competitive companies are invited to submit a proposal.

National Productivity Fund

Government will top up $4 billion to National Productivity Fund and expand scope to support investment promotion as a supportable activity. 

The fund will be used to anchor more quality investments in Singapore. This includes supporting companies to build new capabilities, add greater value to our domestic ecosystems, and upskill our workers. Ultimately, these efforts will lead to better-paying jobs for Singaporeans.

Enterprise Innovation Scheme

The following suite of tax measures will be enhanced or introduced under the Enterprise Innovation Scheme to encourage businesses to engage in research and development (R&D), innovation, and capability development activities.

(A) Enhanced Tax Deduction for Staff Costs and Consumables Incurred on Qualifying R&D Projects Conducted in Singapore

Currently, businesses enjoy a 100% tax deduction for all qualifying R&D expenditure incurred on qualifying R&D projects, and an additional 150% tax deduction for staff costs and consumables incurred on qualifying R&D projects conducted in Singapore.

Announced in Budget 2023, the enhanced tax deduction will allow businesses to enjoy a 400% tax deduction for the first $400,000 of staff costs and consumables incurred on qualifying R&D projects conducted in Singapore for each Year of Assessment (YA) from YA2024 to YA2028.

All other existing eligibility criteria and conditions for tax deductions on staff costs and consumables incurred on qualifying R&D projects conducted in Singapore are applicable to the enhancement.

  

(B) Enhanced Tax Deduction for Qualifying Intellectual Property (IP) Registration Costs

Currently, businesses enjoy a 200% tax deduction on the first $100,000 of qualifying IP registration costs on registration of patents, trademarks, designs, and plant varieties. Subsequent qualifying IP registration costs can enjoy a 100% tax deduction.

Announced in Budget 2023, the enhanced tax deduction will allow businesses to enjoy a 400% tax deduction for the first $400,000 of qualifying IP registration costs incurred for each YA from YA2024 to YA2028. 

All other existing eligibility criteria and conditions for tax deductions on qualifying IP registration costs are applicable to the enhancement. 

(C) Enhanced Tax Allowance/Deduction for Acquisition and Licensing of Qualifying IP Rights

Under existing tax measures for IP rights, companies and partnerships can enjoy a 100% writing-down allowance on capital expenditure incurred on the acquisition of qualifying IP rights. Businesses can enjoy a 200% tax deduction on the first $100,000 of qualifying expenditure on licensing of qualifying IP rights. Subsequent expenditure on licensing of qualifying IP rights can qualify for a 100% tax deduction.

Announced in Budget 2023, the enhancement will allow businesses to enjoy tax allowances/deductions of 400% for the first $400,000 of qualifying expenditure incurred on the acquisition and licensing of qualifying IP rights for each YA from YA2024 to YA2028. The expenditure cap of $400,000 is applied across IP rights acquisition and licensing collectively. The enhancement will only be available to businesses that generate less than $500 million in revenue in the relevant YA.

All other existing eligibility criteria and conditions for tax allowances/deductions on acquisition and licensing of qualifying IP rights are applicable to the enhancement. 

(D) Enhanced Tax Deduction for Qualifying Training Expenditure

Today, businesses can claim a 100% tax deduction on training expenditure as a deductible business expense.

Announced in Budget 2023, the enhancement will allow businesses to enjoy a tax deduction of 400% for the first $400,000 of qualifying training expenditure incurred for each YA from YA2024 to YA2028.
The enhancement is only applicable to qualifying training expenditure incurred on courses that are eligible for SkillsFuture Singapore funding and aligned with the Skills Framework. The list of courses that are eligible is available on go.gov.sg/eis-training.

All other existing eligibility criteria and conditions for tax deductions on training expenditure are applicable to the enhancement.

(E) Introduce Tax Deduction for Innovation Projects Carried Out with Polytechnics, the Institute of Technical Education (ITE) or Other Qualified Partners

To encourage businesses to kickstart their innovation journey by tapping on existing technical and innovation capabilities within the polytechnics, the ITE or other qualified partners (collectively termed as partner institutions), the Government will introduce a new tax deduction where businesses can claim a 400% tax deduction for up to $50,000 of qualifying innovation expenditures incurred on qualifying innovation projects carried out with partner institutions for each YA from YA2024 to YA2028. 

The current list of partner institutions include: 

a) Singapore Polytechnic 

b) Ngee Ann Polytechnic 

c) Republic Polytechnic 

d) Nanyang Polytechnic 

e) Temasek Polytechnic 

f) The Institute of Technical Education 

g) Precision Engineering Centre of Innovation at A*STAR SIMTech 

Qualifying innovation projects with partner institutions refer to projects that predominantly involve one or more of the following innovation activities: 

a) Research and experimental development activities; 

b) Engineering, design, and other creative work activities; 

c) IP-related activities; and 

d) Software development and database activities. 

The relevant partner institutions will validate the project as a qualifying innovation project and issue the innovation project invoice. Expenditure incurred outside of the collaboration with the partner institution will not qualify for this tax deduction. 

(F) Cash Conversion

Eligible businesses can opt for a non-taxable cash payout at a cash conversion ratio of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities (described under (A) to (E) above) for each YA, in lieu of tax deductions/allowances. The cash payout will be capped at $20,000 per YA. Applications for the cash payout are to be submitted together with the filing of the businesses’ income tax returns. 

Eligible businesses refer to companies, registered business trusts, partnerships and sole-proprietorships with at least three full-time local employees (Singapore Citizens or Permanent Residents who are paid CPF contributions) earning a gross monthly salary of at least $1,400, in employment for six months or more, in the basis period of the relevant YA. 

Supporting Workers

Jobs-Skills Integrators

Pilot Jobs-Skills Integrators in Precision Engineering, Retail, and
Wholesale Trade sectors to bring together key players to develop
industry-relevant training and facilitate job matching.

Progressive Wage Credit Scheme

To further strengthen support for employers in uplifting lower-wage employees, the Government will enhance PWCS co-funding support for wage increases in the qualifying year 2023 (see Table 1). The enhanced 2023 co-funding support will also apply to wage increases given in qualifying year 2022 and sustained in 2023. All other scheme parameters remain unchanged.

Senior Employment Credit (SEC)

Under the SEC, the Government provides wage offsets to help employers that employ Singaporean workers aged 55 and above adjust to the higher Retirement Age and Re-employment Age. The SEC will be extended from 2023 to 2025 to continue providing wage offsets, and encourage employers to offer flexible work arrangements and structured career planning.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Part-time Re-employment Grant

The Part-time Re-employment Grant (PTRG) helped to increase the availability of part-time re-employment to senior workers in participating companies. The Part-time Re-employment Grant will be extended to 2025 to continue providing wage offsets, and encourage employers to offer flexible work arrangements and structured career planning.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Enabling Employment Credit (EEC)

To encourage more employers to hire persons with disabilities, the EEC will be enhanced to cover a larger proportion of wages and a longer duration for PwDs who have not been working for at least six months.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Uplifting Employment Credit

The Uplifting Employment Credit is a hiring incentive that encourages firms to employ ex-offenders, so as to support their reintegration into
society.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

CPF Transition Support for Platform Workers

To improve the retirement and housing adequacy of Platform Workers (PWs), in November 2022, the Government accepted the Advisory Committee on Platform Workers’ (“the Committee”) recommendation to align CPF contribution rates by PWs and Platform Companies with the rates of employees and employers respectively (“Aligned CPF Contribution Rates”), over a phase-in period of five years.

PWs from mandatory cohorts as well as PWs who choose to opt in to the Aligned CPF Contribution Rates will see the additional CPF contributions from Platform Companies go towards their total earnings. The alignment will boost their savings in their CPF Ordinary and Special Accounts (CPF-OSA), so that they have more for retirement, and can finance their housing loans using CPF instead of cash. At the same time, the Committee recognised that some of these PWs might experience a reduction in take-home pay as they contribute more to their CPF accounts, and therefore recommended that the Government consider providing support for PWs to ease the impact.

Government Introduces the PW CPF Transition Support Scheme in Budget 2023 

In line with the Committee’s recommendation, the Government will introduce the PW CPF Transition Support (PCTS) to provide support for lower-income PWs during the phase-in period. The PCTS will offset part of the PW’s share of the year-on-year increase in CPFOSA contribution rates from Years 1 to 4. Singaporean PWs earning $2,500 or less per month (including from platform work and other employment sources) will be eligible if they are required to or opt in to make contributions based on the Aligned CPF Contribution Rates. 

More details about the PCTS will be announced at the Ministry of Manpower’s Committee of Supply 2023.

Changes to CPF Contribution Rates

The following Budget 2023 initiatives will help enhance the retirement adequacy of seniors who are preparing for or are already in retirement, and help middle-income Singaporeans to save more for retirement.

(A) Increase in Senior Worker CPF Contribution Rates

In 2019, the Government announced that CPF contribution rates will be raised gradually over the next decade or so for Singaporean and Permanent Resident workers aged above 55 to 70 (see Table 1). When the increases have been fully implemented, those aged above 55 to 60 will have the same CPF contribution rates as younger workers.

The first two steps of increases took effect on 1 January 2022 and 1 January 2023. The next increase in senior worker CPF contribution rates will take place on 1 January 2024, as shown in Table 2. As with previous increases, this increase will be fully allocated to the Special Account, to help senior workers save more for retirement.

To mitigate the rise in business costs due to this increase, as part of Budget 2023, the Government will provide employers with a one-year CPF Transition Offset equivalent to half of the 2024 increase in employer CPF contribution rates for every Singaporean and Permanent Resident worker they employ aged above 55 to 70 (see Table 2). This will be provided automatically and employers do not need to apply for the offset.

(B) Increase in Minimum CPF Monthly Payouts for Seniors on the RSS

The Government continues to provide targeted support for seniors with less resources to rely on in retirement. The Silver Support Scheme, which covers a third of all seniors aged 65 and above, provides quarterly cash supplements of up to $900 to eligible seniors in addition to their CPF payouts and other forms of Government support, such as the Workfare Income Supplement and ComCare. Many seniors also receive additional retirement support from their loved ones and from their private savings.

Currently, the minimum CPF monthly payout that seniors on the RSS1 can receive is $250. As part of Budget 2023, the Government will raise the minimum CPF monthly payout to $350 from 1 June 2023 for all seniors on the RSS. This will mean higher monthly payouts for seniors who are currently receiving less than $350 per month. Payouts will continue until CPF savings are depleted. These seniors on the RSS can opt to join CPF LIFE any time before turning age 80 to receive lifelong payouts.

(C) Increase in the CPF Monthly Salary Ceiling

The CPF monthly salary ceiling sets the maximum amount of CPF contributions payable for Ordinary Wages, and is currently set at $6,000. There is also the CPF annual salary ceiling which sets the maximum amount of CPF contributions payable for all wages received in the year, inclusive of both Ordinary Wages and Additional Wages. It is currently set at 17 times of the monthly salary ceiling to account for bonuses equivalent to five months’ salary, and is currently set at $102,000. Both salary ceilings were last updated in 2016.

To keep pace with rising salaries, as part of Budget 2023, the Government will raise the CPF monthly salary ceiling from $6,000 to $8,000 by 2026. The increase will take place in four steps, as shown in Table 3, to allow employers and employees to adjust to the changes.

There will be no change to the CPF annual salary ceiling at this juncture, but it will be reviewed periodically to ensure it continues to cover the broad majority of CPF members.

To ensure that employees earning the same annual salary receive the same CPF contributions regardless of their salary structure, the CPF monthly salary ceiling will eventually be set at one-twelfth of the CPF annual salary ceiling at steady state.

Measures to Encourage Philanthropy and Volunteerism

The following Budget 2023 measures aim to foster a culture of giving in Singapore by encouraging philanthropy and volunteerism.

(A) Extension of the 250% Tax Deduction for Qualifying Donations to Institutions of a Public Character (IPCs) and Eligible Institutions

To continue to encourage giving, the Government will extend the 250% tax deduction for qualifying donations made to IPCs and other eligible institutions (see Table 1) for another three years, i.e., for donations made during the period 1 January 2024 to 31 December 2026 (both dates inclusive).

(B) Enhancement of the Corporate Volunteer Scheme.

The Business and IPC Partnership Scheme (BIPS) provides businesses with 250% tax deduction on wages and qualifying expenses when their staff volunteer, provide services, or are seconded to IPCs. The qualifying expenditure is subject to an annual cap of $250,000 per business, and $50,000 per IPC. 

BIPS is due to lapse after 31 Dec 2023. BIPS will be enhanced into a broader Corporate Volunteer Scheme, and extended for three more years to 31 December 2026. In addition, the following enhancements will be made with effect from 1 January 2024. First, the scope of qualifying volunteering activities will be expanded to include activities which are conducted virtually (e.g., online mentoring and tuition support for youths/children) or outside of the IPCs’ premises (e.g., refurbishment of rental flats). Second, the cap on qualifying expenditure per IPC will be doubled from $50,000 to $100,000 per calendar year. All other conditions of the scheme will remain the same.

Global Anti-Base Erosion (GloBE) Rules (i.e., Income Inclusion Rule and Undertaxed Profits Rule) and Domestic Top-up Tax (DTT)

Existing Tax Treatment

In Budget 2022, Minister for Finance announced that in response to the global minimum effective tax rate under the Pillar 2 GloBE rules of the Base Erosion and Profit Shifting (BEPS) 2.0 project, and based on consultation with industry stakeholders, MOF would study the introduction of a top-up tax. If introduced, this would top up the effective tax rate of multinational enterprises operating in Singapore with annual group revenue of at least €750 million, as reflected in the consolidated financial statements of the ultimate parent entity, to 15%.

New Tax Treatment

Singapore plans to implement the GloBE rules and DTT from businesses’ financial year starting on or after 1 January 2025. We will continue to monitor the international developments and adjust our implementation timeline as needed if there are delays internationally.

We will also continue to engage businesses and provide them with sufficient notice ahead of any rules becoming effective.

Enterprise Innovation Scheme (EIS)

Existing Tax Treatment

Currently, the following tax measures are available to
encourage research and development (R&D),
intellectual property (IP) registration, IP rights
acquisition and IP rights licensing:

a) 250% tax deduction for staff costs and consumables incurred on qualifying R&D projects conducted in Singapore under sections 14C and 14D of the Income Tax Act 1947(ITA). Current sunset date is Year of Assessment (YA) 2025. 

b) 200% tax deduction for the first $100,000 (and 100% for amounts exceeding $100,000) of qualifying IP registration costs under section 14A of the ITA. Current sunset date is YA2025. 

c) 100% writing-down allowance (WDA) over a period of five, 10 or 15 years on acquisition cost of qualifying IP rights under section 19B of the ITA. Current sunset date is YA2025. 

d) 200% tax deduction for the first $100,000 (and 100% for amounts exceeding $100,000) of qualifying IP rights licensing expenditure under sections 14 or 14C, and 14U of the ITA. Current sunset date for section 14U is YA2025. In addition, 100% tax deduction can be claimed for training expenditure incurred, subject to the general tax deduction rules under sections 14 and 15 of the ITA.

New Tax Treatment

To encourage businesses to engage in R&D, innovation and capability development activities, the following suite of tax measures will be enhanced or introduced under the EIS:

a) Enhance the tax deduction to 400% for the first $400,000 of staff costs and consumables incurred on qualifying R&D
projects conducted in Singapore for each YA from YA2024 to YA2028.

b) Enhance the tax deduction to 400% for the first $400,000 of qualifying IP registration
costs incurred per YA from YA2024 to YA2028.

c) Enhance the tax allowance/deduction to
400% for the first $400,000 (combined cap) of qualifying expenditure incurred on
the acquisition and licensing of IP rights per YA from YA2024 to YA2028. This enhancement will only be available to businesses that generate less than $500 million in revenue in the relevant YA.

d) Enhance the tax deduction to 400% for the first $400,000 of qualifying training expenditure incurred on qualifying courses
(i.e. courses that are eligible for SkillsFuture Singapore funding and aligned with the Skills Framework) per YA from YA2024 to YA2028.

e) Introduce a 400% tax deduction for up to $50,000 of qualifying innovation expenditure incurred on qualifying innovation projects carried out with polytechnics, the Institute of Technical Education, and other qualified partners per
YA from YA2024 to YA2028.

f) Allow businesses to, in lieu of tax deductions/allowances, opt for a non-taxable cash payout at a cash conversion ratio of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities in (a) to (e) above per YA. The cash payout option will be capped at $20,000 per YA, and will only be available to businesses which have at least three full-time local employees (Singapore Citizens or Permanent Residents with CPF contributions) earning a gross monthly salary of at least $1,400 in employment for six months or more in the basis period of the relevant YA. 

g) The sunset dates for section 14A (Deduction for costs of protecting IP), section 14C (Deduction for qualifying expenditure on R&D), section 14D (Enhanced deduction for qualifying expenditure on R&D), section 14U (Enhanced deduction for expenditure on licensing IP rights) and section 19B (WDA for capital expenditure on acquiring IP rights) of the ITA will be extended till YA2028, in line with the above enhancements.

All other conditions under sections 14A, 14C, 14D, 14U and 19B of the ITA remain the same.

For more information on this scheme, please refer to Annex D-1 IRAS will also provide further details of the changes by 30 June 2023.  

Enhance Double Tax Deduction for Internationalisation (DTDi) Scheme

Existing Tax Treatment

Under the DTDi scheme, businesses are allowed a tax deduction of 200% on qualifying market expansion and
investment development expenses, subject to prior
approval from Enterprise Singapore (EnterpriseSG) or
Singapore Tourism Board (STB).

The DTDi scheme is in place until 31 December 2025.

New Tax Treatment

E-commerce is an increasingly important and relevant mode of overseas expansion for
businesses. To support businesses in their efforts to overcome initial challenges and build up capabilities in internationalising via e-commerce, the scope of the DTDi scheme will be enhanced to include a new qualifying activity “e-commerce campaign” and cover the following e-commerce campaign startup expenses paid to e-commerce platform/service providers:

a) Business advisory: Advisory on market promotion and execution plans (e.g. choice of suitable e-commerce platforms);

b) Account creation: Assistance with setting up accounts on e-commerce platforms, and the right to sell on e-commerce platforms;

c) Content creation: Design of e-commerce campaign publicity materials (e.g. e-store banners, online product images); and 

d) Product listing and placement: Uploading content on products/services to ecommerce platforms, and selection of suitable frequency and timing to display content on products/services. Prior approval is required from EnterpriseSG to enjoy DTDi on the new qualifying activity. For each business, EnterpriseSG will only approve DTDi support for e-commerce campaigns for a maximum period of one year applied on a per country basis. The above enhancement will take effect for qualifying e-commerce campaign startup expenses incurred on or after 15 February 2023. 

EnterpriseSG will provide further details of the changes by 28 February 2023.  

Option to Accelerate the Write-off of the Cost of Acquiring Plant and Machinery (P&M)

Existing Tax Treatment

Businesses that incur capital expenditure on the acquisition of P&M may claim capital allowance (CA) under section 19 (i.e. write-off over the working life of the assets as specified in the Sixth Schedule) or section 19A (i.e. write-off over one or three years) of the ITA.

New Tax Treatment

To provide temporary broad-based support to businesses during this period of restructuring, businesses that incur capital expenditure on the acquisition of P&M in the basis period for YA2024 (i.e. financial year ending in 2023) will have an option to accelerate the write-off of the cost of acquiring such P&M over two years. This option, if exercised, is irrevocable.

The rates of accelerated CA allowed are as follows:

a) 75% of the cost incurred to be written off in the first year (i.e. YA2024); and

b) 25% of the cost incurred to be written-off in the second year (i.e. YA2025). The above option will be in addition to the options
currently available under sections 19 and 19A of
the ITA. No deferment of CA claims is allowed under the
above option. This means that if a business opts for the accelerated write-off option, it needs to claim the capital expenditure incurred for acquiring P&M based on the rates of 75% (in YA2024) and 25% (in YA2025) over the two
consecutive YAs.

Provide Option to Accelerate Deduction for Renovation or Refurbishment (R&R) Expenditure

Existing Tax Treatment

Under section 14N of the ITA, businesses that incur qualifying expenditure on R&R may claim tax deduction on such expenditure over three consecutive YAs on a straight-line basis, starting from the YA relating to the basis period in which the R&R expenditure is incurred. A cap of $300,000 for every relevant period of the three consecutive YAs applies. 

New Tax Treatment

To provide temporary broad-based support to businesses during this period of restructuring, businesses that incur qualifying expenditure on R&R during the basis period for YA2024 (i.e. financial year ending in 2023) will have an option to claim R&R deduction in one YA (i.e. accelerated R&R deduction). The cap of $300,000 for every relevant period of three
consecutive YAs will still apply. This option, if exercised, is irrevocable.

This option will be in addition to the existing option currently available under section 14N of the ITA. 

Extend Investment Allowance (IA) Scheme

Existing Tax Treatment

The IA scheme provides an additional tax allowance for businesses which incur qualifying fixed capital
expenditure on approved projects. This is calculated as a percentage of the amount of capital expenditure incurred, net of grants, on an approved project. 

The IA scheme, which is administered by the Singapore Economic Development Board, Building and Construction Authority, and EnterpriseSG, is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue encouraging businesses to make capital investments in plant and productive equipment in Singapore, the IA scheme will be extended till 31 December 2028.

Extend IA-100% Scheme for Automation Projects

Existing Tax Treatment

Businesses can enjoy 100% IA support on the amount of approved capital expenditure, net of grants, for automation projects approved by EnterpriseSG.

The IA-100% scheme is scheduled to lapse after 31 March 2023.

New Tax Treatment

To continue to encourage businesses to transform
through automation, the IA-100% scheme will be extended till 31 March 2026, with the same parameters.

Extend Pioneer Certificate Incentive (PC) and Development and Expansion Incentive (DEI)

Existing Tax Treatment

Both the PC and DEI aim to encourage companies to grow capabilities, conduct new or expanded economic activities, and establish their global or regional headquarters in Singapore.

a) Under the PC, recipients are eligible for corporate tax exemption on income from qualifying activities.

b) Under the DEI, recipients are eligible for concessionary tax rates of 5% or 10% on qualifying income.

The PC and DEI are scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue encouraging companies to anchor and grow strategic high value-added manufacturing and services activities in Singapore, the PC and DEI will be extended till 31 December 2028.

Extend the IP Development Incentive (IDI)

Existing Tax Treatment

The IDI aims to support companies that use and
commercialise IP rights arising from R&D in Singapore. Under IDI, recipients are eligible for concessionary tax rates of 5% or 10% on a percentage of qualifying IP income.

The IDI is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the use and commercialisation of IP rights arising from R&D activities in Singapore, the IDI will be extended till 31 December 2028.

Extend and Refine Qualifying Debt Securities (QDS) Scheme

Existing Tax Treatment

The QDS scheme offers the following tax concessions on qualifying income from QDS:

a) 10% concessionary tax rate for qualifying companies and bodies of persons in Singapore;
and

b) Tax exemption for qualifying non-residents and qualifying individuals. To qualify as QDS, debt securities must be substantially arranged in Singapore as follows:

a) All debt securities must be substantially arranged by a financial sector incentive (capital
market) company or a financial sector incentive (standard tier) company (collectively referred to as “FSI company”); and

b) For insurance-linked securities (ILS)6 that are unable to meet the condition in (a) above, at least 20% of the ILS issuance costs incurred by the issuer is paid to Singapore businesses.

The QDS scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the development of Singapore’s debt market, the QDS scheme will be extended till 31 December 2028.

The scope of qualifying income under the QDS scheme will be streamlined and clarified such that it includes all payments in relation to early redemption of a QDS. To ensure continued relevance, the requirement
that the QDS has to be substantially arranged in Singapore will be rationalised, as follows:

a) For all debt securities that are issued on or after 15 February 2023, they must be substantially arranged in Singapore by a
financial institution holding a specified licence (instead of a FSI company).

b) For ILS that are issued on or after 1 January 2024, if they are unable to meet the condition in (a) above, at least 30% of the ILS issuance costs incurred by the issuer must be paid to Singapore businesses.

All other conditions of the scheme remain the same. The Monetary Authority of Singapore (MAS) will provide further details by 31 May 2023. 

Extend Tax Exemption on Income Derived by Primary Dealers from Trading in Singapore Government Securities(SGS)

Existing Tax Treatment

Tax exemption is granted on income derived by primary
dealers from trading in SGS.

The tax exemption is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting primary dealers and encourage trading in SGS, the tax exemption on income derived by primary dealers from trading in SGS will be extended till 31 December 2028.

All other conditions of the scheme remain the same.

Extend and Refine Tax Incentive Scheme for Approved Special Purpose Vehicle (ASPV) Engaged in Asset Securitisation Transactions (ASPV scheme) and Introduce a New Sub-scheme to Support Covered Bonds

Existing Tax Treatment

The ASPV scheme grants the following tax concessions to an ASPV engaged in asset securitisation transactions:

a) Tax exemption on income derived by an ASPV from asset securitisation transactions;

b) Goods and Services Tax (GST) recovery on its qualifying business expenses at a fixed rate of 76%; and

c) Withholding tax (WHT) exemption on payments to qualifying non-residents on over-the-counter financial derivatives in connection with an asset securitisation transaction. 

The ASPV scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue developing the structured debt market, the ASPV scheme will be extended till 31 December 2028.
Instead of a fixed rate of 76%, the GST recovery rate will be the prevailing GST recovery
rate/methodology accorded to licensed full banks under MAS for the specific year in question.

All other tax concessions and conditions of the ASPV scheme remain the same. Further, to support the issuance of covered bonds in Singapore, a new sub-scheme named ASPV (Covered Bonds) will be introduced for the special purpose vehicle holding the “cover pool” in relation to the covered bonds as defined in MAS Notice 648. 

The ASPV (Covered Bonds) scheme will take effect from 15 February 2023 to 31 December 2028 and will be administered by MAS. 

MAS will provide further details by 31 May 2023. 

Extend and Refine the Financial Sector Incentive (FSI) Scheme

Existing Tax Treatment

The FSI scheme accords concessionary tax rates of 5%, 10%, 12% and 13.5% on income from qualifying banking and financial activities, headquarters and corporate services, fund managing and investment advisory services.

The FSI scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the growth of financial sector activities in Singapore, the FSI scheme will be extended and refined as follows:

a) The FSI scheme will be extended till 31 December 2028.

b) The existing concessionary tax rates will be streamlined to two tiers of 10% and 13.5% for new and renewal awards approved on or after 1 January 2024, as follows:

i) FSI-Capital Market, FSIDerivatives Market and FSICredit Facilities Syndication – from 5% to 10%;

ii) FSI-Fund Management and FSIHeadquarter Services – remain at 10%;

iii) FSI-Trustee Companies – from 12% to 13.5%; and

iv) FSI-Standard Tier – remain at 13.5%.

c) The qualifying activities will be updated to ensure continued relevance.

MAS will provide further details of the changes by 31 May 2023.

Extend Insurance Business Development – Insurance Broking Business (IBD-IBB) Scheme

Existing Tax Treatment

The IBD-IBB scheme grants approved insurance and
reinsurance brokers a concessionary tax rate of 10% on commission and fee income derived from insurance
broking and advisory services.

The IBD-IBB scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To further strengthen Singapore’s position as a leading insurance and reinsurance centre, the IBD-IBB scheme will be extended till 31 December 2028.

All other conditions of the scheme remain the same.

Extend Tax Concession for Deduction of General Provisions for Doubtful Debts and Regulatory Loss Allowances Made in Respect of Non-credit impaired Financial Instruments for Banks (Including Merchant Banks) and Qualifying Finance Companies

Existing Tax Treatment

Under section 14G of the ITA, banks, merchant banks
and qualifying finance companies can claim a tax deduction for general provisions on non-credit impaired loans and debt securities made under the Financial Reporting Standard 109 or Singapore Financial Reporting Standard (International) 9, and any additional loss allowances as required under prevailing
MAS Notices, subject to a cap. The tax deduction under section 14G is scheduled to lapse after YA2024 (for banks, merchant banks and qualifying finance companies with a 31-December financial year end (FYE)) or YA2025 (for banks, merchant banks and qualifying finance companies with a non-31-December FYE).

New Tax Treatment

To continue to promote the overall robustness and stability of the Singapore financial system, the tax deduction under section 14G of the ITA will be extended till YA2029 (for banks, merchant banks, and qualifying finance companies with a 31-December FYE) or YA2030 (for banks, merchant banks, and qualifying finance companies with a non-31-December FYE).

Extend Three Tax Measures Relating to Submarine Cable Systems

Existing Tax Treatment

Currently, there are three tax measures relating to submarine cable systems:

a) WHT exemption on payments made to non-residents for use of international telecommunications submarine cable capacity under indefeasible right to use (IRU) agreements. This is scheduled to lapse after 31 December 2023. 

b) WDA for the acquisition of an IRU over their useful life. This is scheduled to lapse after 31 December 2025. 

c) IA for the construction and operation of submarine cable systems in Singapore. 

This is scheduled to lapse after 31 December 2023.  

New Tax Treatment

To maintain and enhance Singapore’s international connectivity, all three tax measures will be extended till 31 December 2028, with the same parameters.

Withdraw Tax Deduction for Expenditure Incurred on Building Modifications for Benefit of Disabled Employees

Existing Tax Treatment

Under section 14F of the ITA, employers can claim tax deductions for approved expenditure incurred on any addition or alteration to business premises for the purpose of facilitating the mobility or work of any disabled employee, subject to a one-off cap of $100,000.

New Tax Treatment

The scheme will be withdrawn from 15 February 2023. 

Introduced in Budget 1989, the scheme has become less relevant over the years. Since then, other support schemes (e.g. the Open Door Programme Job Redesign Grant) have been introduced to help employers recruit and retain disabled employees, or to support employers for accommodations beyond (and including) physical modifications of the workplace. Section 14N on tax deductions for Renovation and Refurbishment, introduced in Budget 2008, can also be tapped upon for workplace modifications without the need for prior approval from government agencies.

Buyer's Stamp Duty and Additional Conveyance Duties for Buyers

Existing Tax Treatment

Currently, transactions in residential and non-residential properties are subject to marginal BSD rates of 1% to 4% and 1% to 3% respectively:

New Tax Treatment

To enhance the progressivity of our BSD regime, higher marginal BSD rates will be introduced for higher-value residential and non-residential properties.

For residential properties, a new marginal BSD rate of:

a) 5% will apply to the portion of the property value in excess of $1.5 million and up to $3 million; 

and

b) 6% will apply to the portion of the property
value in excess of $3 million.

For non-residential properties, a new marginal BSD rate of:

a) 4% will apply to the portion of the property value in excess of $1 million and up to $1.5
million; 

and

b) 5% will apply to the portion of the property value in excess of $1.5 million.

The revised rates will apply to all properties acquired on or after 15 February 2023.

Tobacco Excise Duty

To discourage the consumption of tobacco products, we will raise the excise duties by 15% across all tobacco products. These tax changes will take effect on and after 14 February 2023:

(A) Cigars, Cheroots, Cigarillos and Cigarettes, and Other Manufactured Tobacco:

From $427/kgm or 42.7 cents/stick of cigarette to $491/kgm or 49.1 cents/stick of cigarette.

(B) Beedies, Ang Hoon, and Other Smokeless Tobacco: 

From $329/kgm to $378/kgm.

(C) Unmanufactured and Cut Tobacco and Other Tobacco Refuse: From $388/kgm to $446/kgm.

Vehicular Tax Changes

(A) Additional Registration Fee Changes

To make our vehicular tax structure more progressive, the following changes will be made to the Additional Registration Fee (ARF) payable for cars, taxis, and goods-cum-passenger vehicles (GPVs):

The new ARF structure will apply to all new and imported used cars and GPVs registered with Certificate of Entitlements (COEs) obtained from the second bidding exercise in February 2023 onwards. The second COE bidding exercise in February 2023 will take place from 20 to 22 February 2023. 

For cars that do not need to bid for COEs (e.g. taxis, classic cars), the new ARF structure will apply for those registered on or after 15 February 2023.

(B) Preferential Additional Registration Fee Rebate Changes

To make our vehicular tax system more progressive, PARF rebates will be capped at $60,000. For example, a vehicle with an OMV of $90,000 paying an ARF of $168,000 under the new rates would receive $60,000 in PARF rebates, instead of $84,000, if it is deregistered when it is nine years old.

For cars that need to bid for COEs, the PARF cap will apply to those that are registered with COEs obtained from the second bidding exercise in February 2023 onwards and are subsequently
deregistered within their PARF eligibility period.

For cars that do not need to bid for COEs (e.g. taxis), the PARF cap will apply to those that are registered on or after 15 February 2023 and are subsequently deregistered within the PARF eligibility period.

The PARF cap does not apply to vehicles that are not eligible for PARF rebates, such as GPVs, classic cars, and vehicles that have been laid-up.

Extent of Penalty for Non-Compliance and the Importance of Accounting Records

The former Chief Executive Officer of Hyflux Ltd (Hyflux), Ms Lum Ooi Lin, its former Chief Financial Officer, Mr Cho Wee Peng, and four independent directors of Hyflux at the material time were charged in court on 17 November 2022 for disclosure-related offences under the Securities and Futures Act (SFA). Ms Lum was further charged with an offence under the Companies Act (CA) for her failure in ensuring Hyflux’s compliance with accounting standards.

Against Lum Ooi Lin:

(a) One count of section 203(2) read with section 331(1) SFA, for consenting to Hyflux’s intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project (Tuaspring), when such disclosure was required under the Singapore Exchange Listing Rules (Listing Rules);

(b) One count of section 253(1)(b) read with sections 253(4)(b)(i) and 277(3) SFA for Hyflux’s omission to state the same information relating to Tuaspring in the 2011 Offer Information Statement (2011 OIS). The 2011OIS was issued for the offer of S$200 million, 6% preference shares on 13 April 2011; and

(c) One count of section 201(5) read with section 204(1) CA for failing to ensure that Hyflux made disclosures required under the accounting standards for its financial statements for the financial year ended 31 December 2017. This included the failure to disclose the breach of a subsidiary’s loan agreement that permitted its lenders to demand accelerated repayment.

Against Cho Wee Peng:

(a) One count of section 203(2) read with section 331(1) SFA for conniving in Hyflux’s intentional failure to disclose information relating to Tuaspring, when such disclosure was required under the Listing Rules.

Against four Independent Directors of Hyflux, namely Teo Kiang Kok, Gay Chee Chong, Murugasu Christopher and Rajskar Kuppuswami Mitta:

(a) One count each of section 203(2) read with section 331(1) SFA, for their neglect in connection with Hyflux’s intentional failure to disclose information relating to Tuaspring, when such disclosure was required under the Listing Rules; and

(b) One count each of section 253(1)(b) read with sections 253(4)(b)(i) and 277(3) SFA, for Hyflux’s omission to state the same information in the 2011 OIS.

In accordance with Section 199 of the Companies Act 1967, every company must cause to be kept such accounting and other records as will sufficiently explain the transactions and financial position of the company and enable true and fair financial statements and any documents required to be attached thereto to be prepared from time to time, and must cause those records to be kept in such manner as to enable them to be conveniently and properly audited.

If the default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months and also to a default penalty.

Please beware of fake SMS from ‘KSN’

If you have received a suspicious SMS from an overseas number claiming to be from a recruitment agency, please be aware that it is not from us.

Police reports have been made against the following:

  • janetchong@ksn.com.sg (Report Number: G/20221111/7033)
  • huizhen@gmail.com.sg (Report Number: G/20221111/7035)
  • +1 (501) 386-5664 (Report Number: G/20221122/7058)

Changes to Singapore GST in 2023

In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:

(i) 7% to 8% with effect from 1 Jan 2023; and

(ii) 8% to 9% with effect from 1 Jan 2024.

The revenue from the increase in GST will go towards supporting our healthcare expenditure, and to take care of our seniors

Rules for Supplies that span the change of GST rate

A supply spans the change of GST rate where one or two of the following events takes place wholly or partially on or after 1 Jan 2023: 

  • the issuance of invoice;
  • the receipt of payment (or the making of payment in respect of a reverse charge supply);
  • the delivery of goods or performance of services.

Invoice issued on or after 1 Jan 2023​

Full payment received before 1 Jan 2023 Goods delivered after 1 Jan 2023

If you issue an invoice for your supply on or after 1 Jan 2023 but you receive full payment before 1 Jan 2023, the supply is subject to 7% GST. 

Full payment received after 1 Jan 2023 Goods delivered before 1 Jan 2023

If you issue an invoice for your supply on or after 1 Jan 2023 but you have delivered all the goods or performed all the services before 1 Jan 2023, the entire value of the supply is subject to 7% GST. 

Invoice is issued before 1 Jan 2023

Full payment received or Goods delivered before 1 Jan 2023

If you have received full payment before 1 Jan 2023, or if you have delivered all the goods or performed all the services before 1 Jan 2023, the entire value of the supply is subject to 7% GST. 

Partial payment received or partial goods delivered before 1 Jan 2023​

If you do not receive full payment before 1 Jan 2023 and you have delivered or performed a part or all of the goods or services before 1 Jan 2023, you can elect to charge 7% GST on the higher of:

(a) The payment received is before 1 Jan 2023; or 

(b) The value of goods delivered or services performed is before 1 Jan 2023. 

The remaining value of the supply will be subjected to 8% GST.

Supply involving invoice issued before 1 Jan 2023 – full payment received after 1 Jan 2023​

On 22 Dec 2022, you issue a tax invoice for your supply of services (value of $1,000) and you receive the full payment on 5 Jan 2023. You perform part of the services (value of $200) before 1 Jan 2023 and the remaining part of the services (value of $800) after 1 Jan 2023.

You must charge and account for GST at 7% ($70) for the tax invoice issued to your customer on 22 Dec 2022. As you do not receive any payment and only perform part of the services before 1 Jan 2023, under the transitional rules, you are required to issue the following to your customer by 15 Jan 2023, for that part of the services performed after 1 Jan 2023:

  • a credit note for $856 ($800 plus 7% GST of $56); and
  • a new tax invoice for $864 ($800 plus 8% GST of $64).

Supply involving invoice issued before 1 Jan 2023 – payments straddle 1 Jan 2023

On 21 Dec 2022, you issue a tax invoice for your supply of services (value of $1,000). Before 1 Jan 2023, you delivered part of the goods (value of $400) and received a payment of $200. After 1 Jan 2023, you receive the remaining payment of $800 and perform delivered the other part of the goods (value of $600).

Under the transitional rules, you are required to issue the following by 15 Jan 2023, for that part of the goods delivered after 1 Jan 2023:

  • a credit note for $642 ($600 plus 7% GST of $42); and
  • a new tax invoice for $648 ($600 plus 8% GST of $48)

Enhanced JSS Support from 25 Oct to 21 Nov 2021

From 25 October to 21 November 2021 onwards, the Government will provide enhanced JSS support for the following sectors:

The enhanced payout corresponding to wages paid for Aug to Oct 2021 will be disbursed in December 2021. Employers who put local employees on mandatory no-pay leave (NPL) or retrench them will not be entitled to the enhanced JSS payouts for those employees.

If your company has an existing GIRO arrangement with IRAS or is registered for PayNow Corporate as at 24 Sep 2021, you will receive a payout titled “Jobs Support Scheme” (GIRO) or “GOVT” (PayNow Corporate) in your bank account from 30 Sep 2021. Other employers will receive their cheques from 15 Oct 2021 mailed to their registered business address.

As part of the checks for JSS eligibility, a small number of employers will receive letters from IRAS asking them to conduct a self-review of their CPF contributions and to provide declarations or documents to substantiate their eligibility for JSS payouts. Their Sep 2021 payout will be withheld pending the self-review and verifications by IRAS. The payout will only be disbursed after the completion of the review. If your company has been selected for self-review, please refer to Self-review for Eligibility of JSS and JGI for more information.

Refresh Progressive Wage Approach and Coverage

What is the Progressive Wage Model?

Developed by tripartite committees consisting of unions, employers and the government, the PWM helps to uplift low-wage workers in the cleaning, security and landscape sectors.

Wages in these sectors had stagnated due to widespread cheap sourcing. The low wages in turn resulted in high turnover and labour shortages.

The PWM benefits workers by mapping out a clear career pathway for their wages to rise along with training and improvements in productivity and standards.

At the same time, higher productivity improves business profits for employers. Service buyers also enjoy better service standards and quality.

What is the Local Qualifying Salary (LQS)?

The Local Qualifying Salary is used to determine the number of local employees that count towards a company’s foreign worker ratio.

This ensures that local workers are employed meaningfully, rather than being employed on token salaries to allow the employer access to foreign workers.

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as:

  • 1 local employee if they earn the LQS of at least $1,400 per month.
  • 0.5 local employee if they earn half the LQS of at least $700 to below $1,400 per month.

Refresh Progressive Wage Approach and Coverage

On 29 Aug 2021, Government has accepted three suggestions from a tripartite work group to uplift lower-wage workers on his National Day Rally speech. 

1. Expand progressive wages to new sectors, including:

    • Retail from Sept 2022,
    • Food Services from March 2023 and;
    • Waste Management from 2023.

2. Extend existing cleaning, security and landscape PWMs to in-house workers from Sept 2022.

3. Introduce new occupational progressive wages to:

    • Administrators from March 2023 and;
    • Drivers from March 2023.

4. From Sept 2022, firms employing foreign workers have to pay at least the Local Qualifying Salary (LQS) of $1,400 to all local workers.

Currently, firms have to pay some local workers this amount, depending on how many foreign workers they hire.

Different industries have different foreign worker quotas.

Example: companies in the services sector have to pay 13 locals S$1,400 or more before they can hire seven foreign workers to fulfil its quota of 35 per cent.

From Sep 1, 2022, any firm employing foreign workers will have to pay at least the minimum salary to all its workers before it can hire any foreigners.

5. Progressive wages and LQS will be converted to fair hourly rates for those working part-time or overtime.

Meaning that firms will be able to hire locals on different work arrangements and pay them a fair wage based on hours worked, without affecting their foreign worker quota.

6. A Progressive Wage Mark will also be introduced to accredit companies that are paying all their workers progressive wages.

The mark will tell consumers which companies are paying all their workers “decent wages”

Covid-19 Relief for Construction Firms Facing Higher Foreign Manpower Cost

Construction firms here will soon be able to seek relief for higher foreign manpower costs from their contract partners if their workers’ salaries have been affected as a result of Covid-19-related measures.

This will be done through an amendment to the Covid-19 (Temporary Measures) Act Bill that was introduced in Parliament on Monday (May 10).

Under the amended law, affected contractors, including sub-contractors, may apply to the authorities for an assessor to adjust the contract sum to take into account an increase in foreign manpower salary incurred between Oct 1 last year and Sept 30 this year due to reasons relating to Covid-19.

Part 10A of he Covid-19(Temporary Measures) Act has come into operation on 6 August 2021. Part 10A provides a framework for parties to construction contracts to apply for relief from their contractual counterparties if they are affected by an increase in cost of work permit holders due to the Covid-19 events such as border control quotas set by Government limiting the inflow of foreign workers.

Part 10A Critieria

COTMA Part 10A (which commenced on 06 August 2021) allows contractors in eligible contracts to apply to an independent Assessor. The Assessor has the power to adjust the contract sum of eligible construction contracts taken into consideration of the increase in foreign manpower salary cost incurred anytime during the period from 01 October 2020 to 30 September 2021 (both dates inclusive). 

Criteria:

  • Construction contracts entered before 1 October 2020
  • Contract must not have been terminated(or notice of termination given) before 10 May 2021
  • Construction works under the contract must not have be certified as completed as at 10 May 2021

Contractors must show proof of reasonable attempts to negotiate with their clients before they can apply to an Assessor. 

Part 10A Application Procedure

Party A must first apply to the Registrar for the Appointment of an Assessor.

  • The prescribed application period is from 6 August 2021 to 14 October 2021
  • The application must be made via Form A

Response from Registrar

If the Registrar is satisfied with the application, he/she will end to Party A the following:

  • An acknowledgement of receipt of the application; and
  • A response to the application via Form D or the electronic location at which the Form D may be obtained.

Notifying respondents

Party A must serve a copy of the application and the Registrar Response to the following parties within two working days after the date Party A receives the response

  • Party B and any other party to the contract, and any assignee thereof; and
  • Any person who is Party A’s guarantor or surety, or who has issued any performance bond or equivalent.

Party A must then, within two working days after the service of the copy of the application and the Registrar Response to the above parties, submit to the Registrar a declaration in Form C of such service.

Application fee

Once the relevant parties have been notified and the Form C declaration has been submitted, the Registrar will inform Party A of the application fee and the payment procedure. The application fee is based on the increase in the amount of foreign manpower salary costs incurred (the amount of foreign manpower salary costs incurred because of a COVID-19 event minus the amount of foreign manpower salary costs that would have been incurred in a circumstance without COVID-19

Refer to this table to ascertain the fee payable for an application.

Once the prescribed application fee is paid the Registrar will send a notice of the appointment of an Assessor to Party A and inform the date and place for the hearing if applicable.

Response from respondents

If Party B wishes to contest an application, they must submit to the Registrar a response to the application via Form D no later than five working days after being serve the copy of the application and the Registrar Response by Party A.

The response must also be served on:

  • Party A and any other party to the contract, an d any assignee thereof; and
  • Any person who is Party A’s guarantor or surety, or who has issued any performance bond or equivalent.

Assessor’s determination

The Assessor will them determine whether:

  • Part 10A is applicable to the case;
  • Party A had made a reasonable attempt to negotiate with Party B;
  • There has been an increase in the amount of eligible foreign manpower salary costs;
  • It is just and equitable in the circumstances to adjust the contract sum; and
  • The quantum of the adjusted amount.

Other Forms (only to be submitted when applicable):

Form B – Withdrawal of Application for Determination

Phase Two Heightened Third Alert

Update: Enhanced JSS Support From 22 Nov to 19 Dec 2021

The enhanced payout corresponding to wages paid for Aug to Oct 2021 will be disbursed in December 2021, while the enhanced payout corresponding to wages paid in Aug 2021 will be disbursed in December 2021. As JSS payouts are intended to offset and protect local employees’ wages, employers who put local employees on mandatory no-pay leave (NPL) or retrench them will not be entitled to the enhanced JSS payouts for those employees.

Enhanced Jobs Support Scheme (JSS) Support

SectorEligibility CriteriaCurrent JSS
Support
(1 Apr 2021 –
15 May 2021)
Enhanced
JSS Support
(16 May 2021

13 Jun 2021*)
Food and
Beverage
Entities must be classified under SSICs 56, or 68104. Licensees registered as
individuals will also be included if they make mandatory CPF contributions for their employees.
10%50%
Performing Arts &
Arts Education
Entities must:
• Meet at least one of the conditions of being a: (i) participant in a project, activity, programme or festival supported by the National Arts Council (NAC) or National Heritage Board (NHB) between 1 April 2018 to 31 March 2021; or (ii) Museum Roundtable member before 31 March 2021; or (iii) accredited Arts Education Programme (AEP) provider listed in the 2019-2022 NAC-AEP Directory; or (iv) has more than two-thirds of its business in arts/heritage related activities (as defined by one of the 6 qualifying SSICs in criterion 2); and
• Be classified under SSICs 85420, 90001, 90002, 90003, 90004 or 90009.
10%50%
SportsGyms, fitness studios and other sports facilities that must:
• Be classified under SSIC 93111, 93119, 93120 or 85410; and
• Operate sports- and/or fitness-related programmes that are (i) conducted indoors
without masks on prior to P2(HA); or (ii) for those 18 years and under prior to
P2(HA).
0% 50%
RetailQualifying retail outlets must:
• Have physical storefronts; and
• Be classified under SSICs 47191, 47199, 474, 475, 476, 4771, 47721, 4773,
4774, 47752, 47759, 47761, 47769, 4777, 47802, or 4799.
10%30%
Cinema operatorsEntities must:
• Hold a valid Film Exhibition licence from the Infocomm Media Development Authority (IMDA); and
• Be classified under SSIC 5914.
10%30%
Museums, art
galleries and
historical sites
Entities must:
• Meet at least one of the conditions of being a: (i) participant in a project, activity, programme or festival supported by the National Arts Council (NAC) or National Heritage Board (NHB) between 1 April 2018 to 31 March 2021; (ii) Museum Roundtable member before 31 March 2021; or (iii) accredited Arts Education Programme (AEP) provider listed in the 2019-2022 NAC-AEP Directory; or (iv) has more than two-thirds of its business in arts/heritage related activities (as defined by one of the 6 qualifying SSICs in criterion 2); and
• Be classified under SSICs 91021, 91022, 91029
10%30%
Indoor
playgrounds and
other family
entertainment
centres
Entities must:
• Be classified under SSICs 93201 or 93209; and
• Operate family entertainment centres or family attractions-related businesses.
0%30%
Indoor
playgrounds and
other family
entertainment
centres
Entities must:
• Be classified under SSICs 93201 or 93209; and
• Operate family entertainment centres or family attractions-related businesses.
0%30%
Affected Personal
Care Services
Entities must:
• Be classified under SSIC 96022 or 96029;
• Have physical storefronts; and
• Operate personal care services that require masks to be removed (e.g. facial and
spa)
0%30%

Rental Relief

  • Hawkers and coffeeshop stallholders, who are self-employed and do not benefit from the JSS, the Government will provide one month of rental waiver for hawker stall and coffeeshop tenants of Government agencies
  • For privately-owned commercial properties, some landlords have given rental waivers or rebates to support their tenants during this P2(HA) period. To provide additional support, the Inland Revenue Authority of Singapore (IRAS) will disburse a 0.5-month rental relief cash payout directly to qualifying tenants as part of a new Rental Support Scheme (Annex C). The payout will be disbursed starting from mid-August 2021 and computed based on the latest contractual gross rent within the period 14 May 2021 to 29 May 2021.
  • Separately, property owners who run an SME business or an eligible NPO on their own qualifying commercial property will also be eligible for the cash payout, computed based on the Annual Value of the property (or part of) for Year 2021 as at 14 May 2021.
Most qualifying tenants and owner-occupiers will receive the cash payout automatically without needing to submit an application. The cash payout will not be disbursed automatically to tenants who only rent part of a property, or to tenants who rent a mixed-use property (e.g. a shophouse for both retail and residential use), and/or to licensees. Such businesses should submit an application to IRAS, and provide supporting documents. IRAS will provide more details of the Rental Support Scheme and application process on its website by mid-June 2021.

Further Support for Hawkers

Ministry of Sustainability and the Environment on 22 May 2021, we will subsidise 100% of fees for table-cleaning and centralised dishwashing services for around 6,000 cooked food stallholders in hawker centres managed by the National Environment Agency (NEA) or NEA-appointed operators during the no dine-in period.

COVID-19 Recovery Grant (Temporary)

One-off support for lower- to middle-income employees and self-employed persons who are financially impacted as a result of the tightened measures. Individuals who experience at least one month of involuntary NPL or income loss of at least 50% for at least one month, during the period between 16 May 2021 and 30 June 2021 may apply for CRG-T. 

  • Eligible individuals placed on involuntary no-pay leave may receive a one-off payout of up to $700
  • Those experiencing significant income loss may receive a one-off payout of up to $500
  • Applications will be open from 3 June 2021 to 2 July 2021.

Enhanced COVID-19 Driver Relief Fund

  • From 16 May 2021 to 30 June 2021, from $450/month/vehicle to $750/month/vehicle
  • Changi Airport Group also announced that retailers in Changi Airport terminals would have their rental fees fully waived for the period of closure, from 13 May 2021 until 13 June 2021

Sports Resilience Package

Sport and Fitness Operating Grant

  • The grant has been rolled out to provide additional support for over 500 entities, in particular gyms and fitness studios
  • Those eligible for this grant will receive a one-time disbursement, which takes overhead costs such as rental and salaries into account, ranging from $5,000 to $100,000 for the three-week period (May 8-30)

Who can apply?

  1. Businesses under SSIC code 93111: Fitness studios and gymnasiums;
  2. Have received JSS support; and
  3. Sign a written undertaking on preserving jobs, compliance with SafeEntry implementation, and adoption of the SGClean Quality Mark, which will be included in the letter of offer provided to successful applicants for acceptance.

Note: Businesses of similar nature but have different SSIC codes i.e. 85410, 93119, 93120 can apply for Sport Singapore’s assessment.

SEP Project Grant

  • Aims to support about 300 projects – thrice the original number – that help self-employed people collaborate with each other and develop initiatives targeted at enhancing the health and wellness of Singaporeans
  • Successful grant applicants, who can work individually or with others, may obtain up to $25,000 in funding per project

Sport and Fitness SEP Support Fund

  • Those who have experienced at least 50 per cent income loss during the three weeks will be eligible for a one-time cash assistance of up to $400

Continuing Coach Education (CCE) Training Allowance Grant

  • Fitness instructors can claim $7.50 for every claimable hour for the CCE training, programme or event up to a maximum of $300 per person until March 31, 2022
  • These include CCE courses facilitated by CoachSG, ExPRO Fitness on-demand online learning content and events, and courses offered under Union Training Assistance Programme as endorsed by the National Instructors and Coaches Association

Setting up a Singapore Family Office

What is a Singapore Family Office (SFO)?

A Singapore Family Office usually refers to an entity which manages assets for or on behalf of only one family and is wholly owned or controlled by members of the same family. The term ‘family’ in this context refers to individuals who are lineal descendants from a single ancestor, as well as the spouses, ex-spouses, adopted children and step children of these individuals.

SFOs are exempted from engaging in fund management and financial advisory activities from licensing requirements. Under the statutory exemptions, an SFO may be exempted from licensing requirements if it was structured as either (a) a corporation which manages funds for its related corporations, or (b) a corporation that provides financial advisory services to its related corporations.

Requirements to be a SFO

MAS may consider the following to be of a SFO arrangement:

  • where there is no common holding company, but the assets managed by the SFO are directly held by natural persons of a single-family;
  • where assets are held under a  discretionary trust, the settlor of the trust and the beneficiaries are members of the same family;
  • where a family trust is set up for charitable purposes, the charitable trust is funded exclusively by settlor(s) from a single-family; and
  • where non-family members such as key employees of the SFO are shareholders in the SFO for the purpose of alignment of economic interest and risk-sharing, the initial assets and additional injection  of funds are funded exclusively by a single-family.

The business would need to have an interview with the MAS, which we will help to coordinate and prepare the client for.

Tax Exemption

After incorporation of the Single Family Office, various holding companies would be incorporated under the family office structure. There are some conditions that must be met if the corporation wants to qualify for the Enhanced Tier Fund Tax Exemption Scheme (also known as Section 13X).

For example, the office would need to hire at least three investment professionals, invest at least S$50 million into the fund entity and have local business spending of at least $200,000 a year.

The business would have to go through an interview with the MAS, which we will help to coordinate and prepare the client for as well as to see an investment strategy before granting approval for the business to qualify for Section 13X tax exemption.

The 13X exemption allows specified income derived from certain designated investments to be exempted from tax. The designated investments include a wide range of assets such as stocks, shares, securities and derivatives.

Tax Incentives

Family offices in Singapore could apply for a tax incentive under the Financial Sector Incentive-Fund Management Scheme (FSI-FM) which incentivises fund management and the provision of investment advisory services in Singapore.

Under this scheme, fee income derived by a Singapore fund manager from managing or advising a qualifying fund is taxed at a rate of 10% instead of the usual corporate tax rate of 17%. 

To qualify for the scheme, a fund manager must hold a Capital Markets Services (CMS) licence, employ at least 3 experiences investment professionals earning at least S$3,500 per month and have a minimum AUM of S$250 million. This is very relevant for large family offices, where the scale of operations and the income derived from managing or advising qualifying funds could be substantial.

Operational Requirements

The company must first decide where the family office will be located in order to set up the family office. Other administrative tasks include establishing family governance guidelines and come up with a Family Constitution, opening of bank accounts, implementing IT systems for portfolio aggregation and so on.

Budget 2021 – Emerging Stronger Together

Budget 2021, with the theme Emerging Stronger Together, combines measures to help families, workers and businesses weather the Covid-19 crisis in the immediate term, with measures to accelerate structural adaptations for the long term.

Tax Changes - GST

Extend GST to (i) goods imported via air or post that are valued up to (and including) the current GST import relief threshold of S$400 (“low-value goods”), and (ii) business-to-consumer (“B2C”) imported non-digital services, through the extension of the Overseas Vendor Registration and reverse charge regimes

Existing Tax Treatment

Currently, low-value goods that are worth $400 or less and are imported via air or post are not subject to GST. 

All goods imported via land or sea are already taxed, regardless of value.

B2C imported non-digital services (such as live interaction with overseas providers of educational learning, fitness training, counselling and telemedicine) are also not subject to GST.

New Tax Treatment

GST will be extended to:
a) Low-value goods which are imported via air or post. This will be effected via the Overseas Vendor Registration and reverse charge regimes. Jurisdictions that have extended their GST or Value Added Tax (“VAT”) regimes to cover imported low-value goods include Australia, New Zealand, Norway, Switzerland, and the United Kingdom.

b) B2C imported non-digital services. This will be effected via the Overseas Vendor Registration regime. Jurisdictions which already tax similar services include Australia and New Zealand. 

This change will take effect from 1 January 2023.

Enterprise Financing Scheme - Venture Debt Programme

A programme aimed at startups, where Government takes up to 70% of the risk on loans with participating institutions.

  • Increase cap on loan quantum from $5 million to $8 million
  • Expecting approximately $45 million of venture debt to be catalysed over the next year

CTO(Chief Technology Officer)-as-a-Service

This initiative aims to provide companies with access to professional IT consultancies, to help firms identify and adapt digital solutions more efficiently.

Digital Leaders Programme

Will be launched to help firms hire core teams to further develop their digital transformation roadmap.

Extensions of Existing Business-Focused Schemes

Enhanced support levels of up to 80%, from 70% previously for enterprise schemes, such as Scale-up SG, Productivity Solutions Grant, Market Readiness Assistance, and Enterprise Development Grant from end-September 2021 to end-March 2022.

Local Enterprises Funding Platform

An investment scheme targeted at large local enterprises was announced by Mr Heng. Under the scheme, the Government will set aside $500 million for a commercially managed funding platform with Temasek, which will match the investment. This means there will be S$1 billion in total for the fund manager to invest in non-control equity and mezzanine debt of large local enterprises.

Growth and Transformation Scheme for Built Environment Sector

This scheme is aimed to digitalise processes and upskill workers through the entire value of the Built Environment sector (includes construction, real estate and environment and facility services businesses). It will require developers to work closely with their consultants, contractors, and suppliers to level up as an ecosystem or value chain. 

Further details about the scheme will be given by The Ministry of National Development during the debate on its budget.

Corporate Venture Launchpad (CVL)

The launchpad will provide co-funding for corporates to build new ventures through pre-qualified venture studios.

Open Innovation Platform (OIP)

Enhanced with new features such as a cloud-based Digital Bench for accelerated virtual prototyping and testing. Through OIP, problems faced by companies and public agencies can be matched with solution providers. The platform also co-funds prototyping and deployment.

Global Innovation alliance (GIA)

The GIA catalyses cross-border collaboration between Singapore and major innovation hubs across the globe. Its network has 15 city links, including four South-east Asian cities: Bangkok, Ho Chi Minh City, Jakarta and Manila. This will be expanded to more than 25 cities around the world over the next five years.

In addition, the Co-Innovation Programme will be included in GIA. The programme will support up to 70 per cent of qualifying costs for cross-border innovation and partnership projects.

Jobs Support Scheme (JSS)

Extend support for Tier 1 sectors (Aviation, Aerospace, and Tourism)

  • 30% for wages paid from Apr to Jun 2021, and 10% for wages paid from Jul to Sep 2021

Extend support for Tier 2 sectors (such as Retail, Arts & Culture, Food Services, and Built Environment)

  • 10% for wages paid from Apr to Jun 2021

Covid-19 Recovery Grant

Continual support for workers who lost their jobs or experienced significant income loss.

  • Up to $700 per month for 3 months for employees who have lost their jobs or are placed on involuntary no-pay leave for at least 3 consecutive months
  • Up to $500 per month for 3 months for employees and self-employed persons who are facing average income loss of at least 50% for at least 3 consecutive months

Jobs Growth Incentive (JGI)

The JGI supports employers to accelerate their hiring of local workers between September 2020 to September 2021 (inclusive), so as to create good, long-term jobs for locals.

SGUnited Traineeships

The SGUnited Traineeships (SGUT) programme provides recent graduates with opportunities to gain industry-relevant work experience and build professional networks, amidst weaker hiring sentiments during the COVID-19 pandemic. Workforce Singapore co-funds 80% of the qualifying training allowance for host companies offering traineeship opportunities targeted at recent graduates, with the remaining being funded by the employer.

SGUT will be extended for one year until 31 March 2022 to continue supporting fresh jobseekers from the 2021 graduating cohort, in addition to those who have graduated in 2020 and 2019, with the following adjustments:

  • Starting from 1 April 2021, the stipend for ITE and diploma SGUT positions will be increased from $1,100 – $1,500 to $1,600 – $1,800 and from $1,300 – $1,800 to $1,700 – $2,100 respectively to encourage take-up. The stipend for university SGUT positions will remain unchanged.
  • The maximum duration of each traineeship will be reduced from nine to six months from 1 April 2021 onwards, in line with the economic recovery and to encourage employers to offer trainees full-time jobs.

SGUnited Mid-Career Pathways Programme - Company Attachment (SGUP-CA)

The SGUP-CA programme is a full-time attachment programme with approved host organisations for mid-career individuals to gain industry-relevant experience, develop new skills and boost employability. Trainees currently receive a training allowance of up to $3,000 per month for the
duration of the programme. The Government funds 80% of the training allowance, while the host organisation funds the remaining.

SGUP-CA will be extended for one year until 31 March 2022 to continue supporting mid-career jobseekers with the following adjustments to encourage take-up:

  • The maximum training allowance for mature trainees3 will be increased to up to $3,800 per month.
  • The minimum training allowance for non-mature trainees will be increased to $1,600 per month
  • The Government co-funding rate for mature trainees will be increased to 90%.
  • The maximum training duration of each company attachment will be reduced from nine to six months from 1 April 2021 onwards, in line with the economic recovery and to encourage employers to offer trainees full-time jobs.

SGUnited Mid-Career Pathways Programme - Company Training (SGUP-CT)

The SGUP-CT programme is a full-time training programme for mid-career individuals, developed and delivered by market-leading companies such as Google, Shopee, and IBM.

Trainees will receive a training allowance of $1,500 per month for the duration of the programme, to cover basic subsistence expenses. Individuals can use their SkillsFuture Credit to offset the course fees.

SGUP-CT will be extended for one year until 31 March 2022 to continue to support mid-career jobseekers in reskilling and upskilling, with the following adjustments:

  • The capacity of in-demand courses and courses with good hiring opportunities will be expanded, to increase chances of jobseekers securing a job in growth sectors as the economy recovers.
  • SGUP-CT courses will be made more compact from 1 April 2021 onwards, with a duration of up to six months in general, to channel jobseekers more quickly to employment opportunities.

SGUnited Skills (SGUS)

The SGUS programme is a full-time training programme comprising certifiable courses delivered by Continuing Education and Training (CET) Centres, including Institutes of Higher Learning. The training courses are designed in partnership with industry. Trainees will also have the chance to apply the skills learnt during the programme, through opportunities like workplace immersions and industry projects.

Trainees can also benefit from employment facilitation efforts offered by training providers. SGUS courses are conducted in a modular format to facilitate transition to employment as and when job opportunities are present.

Trainees will also receive a training allowance of $1,200 per month for the duration of the programme, to cover basic subsistence expenses. Individuals can use their SkillsFuture Credit to offset the course fees.

SGUS will be extended for one year until 31 March 2022 to continue supporting the reskilling of mid-career jobseekers with the following adjustments:

  • The capacity of in-demand courses and courses with good hiring opportunities will be increased to help jobseekers access job opportunities in growth sectors as the economy recovers.
  • SGUS courses will be made more compact from 1 April 2021 onwards, with a duration of up to six months in general, to channel jobseekers more quickly to employment opportunities.

GST Voucher - Cash Special Payment

Lower-income Singaporeans who qualify for the GST Voucher (GSTV) – Cash (paid every August) will each receive an additional Cash Special Payment of $200 in June 2021. In total, lower-income Singaporeans can receive up to $500 in GSTV – Cash and Cash Special Payment this year, to help them with their daily living expenses. The GSTV – Cash scheme benefits Singaporeans aged 21 years and above in 2021 with:

(i) Assessable Income (AI) for the Year of Assessment (YA) 2020 of not more than $28,000,

(ii) Annual Value of place of residence (as reflected on NRIC) as at 31 December 2020 of not more than $21,000, and

(iii) ownership of not more than one property (see Table 1).

GST Voucher - U-Save Special Payment

All eligible HDB households will receive an additional 50% of their regular GST Voucher (GSTV) – U-Save this year, through a one-off GSTV – U-Save Special Payment (see Table 2). This U-Save Special Payment will be credited in April 2021 and July 2021, together with their regular U-Save.

Service and Conservancy Charges Rebate

Eligible Singaporean households living in HDB flats will receive rebates to offset between 1.5 and 3.5 months of Service and Conservancy Charges (S&CC) over FY2021 (see Table 3).

Top-ups to Child Development Account, Edusave Account, and Post-Secondary Education Account

The Government will provide families with additional support for their children’s education-related expenses. Each Singaporean child will receive a one-off top-up of $200 to the Child Development Account (CDA), Edusave account, or Post-Secondary Education Account (PSEA), depending on his/her age and/or academic level (see Table 4). The top-up to the Edusave account is in addition to the annual Edusave contribution that the Government makes.