Singapore’s Finance Minister Lawrence Wong unveiled the 2022 Singapore Budget on Feb 18 2022, his maiden Budget since becoming Finance Minister at the last Cabinet reshuffle.
As Singapore eases closer into the post Covid-19 era, financial support was rolled back to focus on the sectors that continue to face delayed recovery.
Significant changes were largely on revenue measures with increases in Good & Services Taxes, property and personal taxes while the hike in carbon taxes signals a strong push to support decarbonisation efforts.
Read on as we summarise the key takeaways on how Budget 2022 will impact businesses in Singapore in the coming years.
Minimum Effective Tax Rate (METR)
• In response to the Base Erosion and Profit Shifting initiative (BEPS 2.0), Singapore is exploring the introduction of METR possibly in future years
• The METR will top up the effective tax rate of affected multi-national enterprise (MNE) groups operating in Singapore to 15%
• IRAS and MOF will study the METR further and closely monitor international development before making any decisions.
Goods and Services Tax (GST)
• GST increase will be delayed to 2023 and staggered over two years
• Increase in marginal tax rates from 2023 in two steps for residential properties
• From Year of Assessment (YA) 2024, there will be an increase in the top marginal personal income tax rate for resident individual taxpayers
• Increase in carbon taxes from 2024
• Carbon tax-liable businesses can use carbon credits to offset up to 5% of their taxable emissions
• New transitional framework to help emission-intensive, trade-exposed sectors manage the short-term impact on business competitiveness
Financial Support and Loans
• New Job and Business Support Package of $500 million: Payouts of $1,000 per employee for SMEs, $1,000 for sole proprietors and partnership in sectors most affected by COVID-19 restrictions
• Extension of Temporary Bridging Loan Program and Enterprise Financing Scheme – Trade Loan till end-Sep 2022 to support working capital and trade financing needs
• Support domestic M&A activities through the Merger & Acquisition (M&A) Loan from Apr 2022 to Mar 2026
• $200 million to help local businesses strengthen digital capabilities through schemes like Advanced Digital Solutions (ADS), Grow Digital and TechSkills Accelerator.
• $600 million for SMEs to boost productivity and automation through expanded solutions under the Productivity and Solutions Grant (PSG)
Foreign Worker Policies
• Raise minimum qualifying salaries for Employment Pass to $5,000 ($5,500 for financial services) from Sep 2022
• Raise minimum qualifying salaries for S Pass to $3,000 ($3,500 for financial services) from Sep 2022