Thursday, 26 March 2020 15:55

Notable tax changes in Singapore Budget 2020

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The Ministry of Trade and Industry of Singapore (MTI) believes that the new strain of coronavirus (Covid-19), is expected to have a negative impact on the Singapore economy, especially for sectors such as tourism, aviation, retail, foodservice, and point-to-point transport services. While Singapore is dealing with the economic collapse from the ongoing Covid-19 outbreak, from February 18 this year, a slew of measures to deal with short-term challenges such as the coronavirus outbreak and long-term economic development was introduced by Deputy Prime Minister Heng Swee Keat.

In the article below, Global Links Asia will update the key announcements made during the Singapore Budget 2020 with the latest schemes and support packages.

 

Singapore Government entails economy-wide support to ease business concerns about cash flow and refunds 25% of corporate income tax

There will be a reduction of corporate income tax for the year of assessment 2020 with a tax rate of 25% payable and capped at 15,000 SGD per company. This move, which will benefit all tax-paying firms, will cost the government about 400 million SGD. Mr. Heng also pledged to apply more tax incentives and help enterprises access working capital more easily within a year, in order to increase cash flow for companies. Government-leased businesses may also propose to loosen payment terms.

Mr. Heng also announced perennial enhancements to several tax treatments under the corporate tax system. For example, businesses will be allowed a faster write-down of their investments in plants and machinery, renovation and refurbishment, arising for the year of assessment 2021.

Hotels, for example, can take advantage of this lull in time to perform renovation work and better prepare for restoration, Mr. Heng proposed.

Enterprise Financing Scheme's Working Capital Loan (EFS) will also be strengthened to make it easier for businesses to access working capital.

In one year, the maximum loan quantum will double from 300,000 SGD to 600,000 SGD.

The government will also support tenants and lessees of government-managed properties with more flexible rental payments, such as installment plans. For this, each payment request will be assessed individually based on the circumstances of each company.

Singapore Government provides specific support for tourism, aviation, retail and foodservice

1. Tourism: hotels, serviced apartments and event venues will receive up to a property tax rebate of 30% for the year 2020. International cruise and regional ferry terminals will receive a 15% property tax rebate, while the integrated resorts will receive a 10% rebate. A temporary bridging loan program for additional cash flow support which helps eligible enterprises borrow up to 1 million SGD with the interest rate capped at 5% per annum from participating financial institutions.

2. Aviation: the government will grant a 15% property tax rebate for Changi Airport, in addition to a range of measures including rebates for aircraft landing and parking charges, support for ground handling agents and rental rebates for shops and cargo agents at Changi airport.

3. Retail and foodservice: businesses are partially supported by the cost of renting and refunding a property tax rebate of 15% for eligible commercial properties.

Goods and Services Tax (GST) will not increase in 2021

The $6 billion insurance package is used to reduce the impact of the GST increase, meaning all adult Singaporeans will receive a cash payout of $700-$1,600 over 5 years, so most Singaporean households will be able to offset the costs of GST for at least 5 years incurred. Low-income households will receive much more.

 

Vietnamese businesses can also benefit from these special support schemes and packages in Singapore.
If you have questions about taxes on businesses operating in Singapore, please see the FAQs article about Singapore tax here.

For more detail information about tax policy, tax incentives or setting up a company in Singapore, please contact:
Hotline: (+84) 0938 531 588
Email: Tony.Ho@globallinks.asia

Read 94 times Last modified on Thursday, 14 May 2020 13:58
Global Links Asia

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