Singapore’s Finance Minister and Deputy Prime Minister Heng Swee Keat, while delivering the Singapore Budget 2021 Statement on February 16, noted how during the last year Singapore has faced the worst recession since independence, as the world has fought the COVID-19 pandemic.
“Last year, in addition to our usual spending, the Government committed nearly $100 billion through five Budgets to support Singaporeans, help tide businesses over this difficult period, and most importantly, keep everyone safe," he said, adding, "Singapore’s GDP contracted by 5.4% in 2020. While the overall budget deficit for the Financial Year 2020 is also the largest since Singapore’s independence, at $64.9 billion, or 13.9% of GDP."
He forecasted this year’s deficit (Financial Year 2021) to be $11 billion, or 2.2% of the GDP.
He also noted how the Singapore Government shifted its focus from containment to restructuring as the city-state re-opened its economy. "We transitioned our broad-based support to more targeted ones for firms, especially those in the hardest-hit sectors. We introduced measures to preserve core capabilities. We shifted our focus from job retention to job creation and helped workers secure jobs in growth sectors," he said.
Now, on the theme of Emerging Stronger Together, the Deputy PM’s Budget for Singapore this year has measures for COVID-19 relief for businesses, workers and families; as well as for initiating structural adaptations in the economy over the long-term.
Table of Contents:
Below is the comprehensive summary of the major announcements in this year’s budget for workers, businesses, families and charities.
Support for workers and businesses in Singapore Budget 2021
1. $11 billion COVID-19 Resilience Package in Singapore Budget 2021
Of these measures, the Government has set aside $4.8 billion for public health and safe re-opening measures, including free and voluntary vaccinations, as well as contact tracing and testing.
Support for specific sectors:
- $870 million is set aside for the aviation sector, to preserve core capabilities and extend cost relief.
- The Government has also extended the Arts & Culture Resilience Package and Sports Resilience Package by $45 million to support businesses and self-employed people in these sectors.
- A new $133 million COVID-19 Driver Relief Fund is put in place for eligible taxi and private hire car drivers. Under this scheme, $600 per vehicle per month from January to March 2021, and $450 per vehicle per month from April to June 2021, will be distributed.
General support for workers and businesses:
- A COVID-19 Recovery Grant scheme is announced. Under this scheme, the grants will be up to $700 per month for 3 months for employees who have lost their employment or are placed on involuntary no-pay leave for at least 3 consecutive months; and up to $500 per month for 3 months for employees and self-employed persons who are facing income loss.
- It has also been decided to continue credit access via Temporary Bridging Loan Programme and enhanced Enterprise Financing Scheme — Trade Loan, till September 30, 2021.
- Finally, the hugely beneficial Jobs Support Scheme (JSS) will be extended. So far, the Government has committed over $25 billion to the JSS, and supported over 150,000 employers for up to 17 months. The current tranche will continue to cover wages up to March 2021 for most sectors. Under this scheme, the available support is as below:
- Tier 1 sectors (i.e. aviation, aerospace, tourism): 30% support for April to June 2021 wages, followed by 10% support for July to September 2021 wages
- Tier 2 sectors (e.g. retail, arts and culture, food services, built environment): 10% support for April to June 2021 wages
- For firms in Tier 3A sectors, JSS will continue covering wages up to March 2021, as previously announced
2. $5.4 billion Extension and enhancement to Jobs and Skills Package in Singapore Budget 2021
The Government is allocating an additional $5.4 billion to a second tranche of the Jobs and Skills Package. This is on top of the $3 billion allocated last year. Of this, the bulk $5.2 billion will be allocated to Jobs Growth Incentive (JGI), thereby extending the hiring window by seven months, up to end-September 2021.
- Companies hiring eligible Singaporeans will be given up to 12 months of wage support from the month of hire. With 25% of wage support for up to 12 months, eligible employers can continue to receive up to $15,000 per non-mature hire. Here the eligibility criteria for employers is that they must increase both their local workforce and number of local workers earning at least $1,400 a month.
- Those hiring mature workers (aged 40 and above), persons with disabilities, and ex-offenders, will be granted enhanced support of up to 18 months, from the existing 12 months.
- There is also an increase in supportable gross monthly wage cap to first $6,000, up from $5,000. Eligible employers that hire such workers from September 2020 to February 2021 will benefit from the increased gross monthly wage cap for wages paid from March 2021 onwards. With 50% of wage support for up to 18 months, eligible employers that hire such workers can receive up to $54,000 per hire.
- For workers who require additional support before finding employment, the Government has extended several schemes including the SGUnited Mid-Career Pathways, the SGUnited Skills, and SGUnited Traineeships.
- Also, as part of the next phase of the SGUnited Jobs and Skills Package, a budget has been put aside to support the hiring of 200,000 Singaporeans this year through the JGI. In addition, the Government will be providing up to 35,000 traineeship and training opportunities to jobseekers.
3. Additional measures for supporting workers in Singapore Budget 2021
- There will be an enhancement in the salaries of nurses and other healthcare workers, across public hospitals, and long-term care service providers. Details of this will be announced by the Minister for Health soon.
- There will further help to support wage increments for companies to retain or draw in Singaporeans by extending the Wage Credit Scheme for another year, at a co-funding level of 15%.
- The Capability Transfer Programme, or CTP, under which expatriates with the right expertise to complement Singaporeans are helped to build local capabilities, will be extended to end-September 2024.
- There will be a reduction in the sub-Dependency Ratio Ceiling (sub-DRC) for Manufacturing S Pass in two steps, to 18% from January 1 2022, and to 15% from January 1 2023.
4. Measures to encourage innovation in businesses in Singapore Budget 2021
- The Government has announced an Innovation and Enterprise Fellowship Programme to build up tech talent in deep technology areas. "The NRF will be offering about 500 Fellowships over the next five years under the new Innovation and Enterprise Fellowship Programme. This will meet the needs in areas such as cybersecurity, artificial intelligence and health tech. It will work with a range of partners, including accelerators, venture capital firms and deep tech startups," informed the Deputy PM.
- The Government will invest in innovation under the three schemes – Corporate Venture Launchpad, Open Innovation Platform (OIP), Global Innovation Alliance (GIA).
ü Corporate Venture Launchpad will be piloted later this year to drive new innovative ventures. This initiative will provide co-funding for corporates to build new ventures through pre-qualified venture studios. It is especially useful for larger businesses that want to rekindle a startup mindset within their organisations.
ü The OIP facilitates the matching of companies and public agencies, with solution providers, and co-funds prototyping and deployment. This will be enhanced with new features such as a cloud-based Digital Bench for accelerated virtual prototyping and testing.
ü The GIA will also be enhanced. This platform serves to catalyse cross-border collaboration between Singapore and major innovation hubs globally.
- As businesses innovate, they create intellectual property and intangible assets, or IP and IA. They then need to identify and protect, value and manage, and commercialise these IPs. To support businesses commercialise the fruits of their innovation, the Singapore Government is developing the Singapore Intellectual Property Strategy 2030. This emcompasses equipping businesses with tools to value their IP and IA, and training skilled professionals in these specialisation. Singapore’s Intellectual Property will be announcing more details on World IP Day in April this year.
- In a bid to secure Singapore’s position as a key aviation hub, the country will invest in on-arrival testing and biosafety systems. Moreover, the authenticity of digital COVID-19 test results will be verified through the Notarise and Verify system.
5. Co-funding measures for businesses as announced in Singapore Budget 2021
- The Finance Minister has announced the extension and enhancement of the Enterprise Financing Scheme – Venture Debt programme. As part of this, the Government shares up to 70% of the risk on eligible loans with Participating Financial Institutions. The Government will now increase the cap on loan quantum supported, from $5 million to $8 million.
- The Government has put aside $1 billion to co-fund companies investing in new and emerging technologies to sharpen their competitiveness. Under this:
- The Emerging Technology Programme will co-fund the costs associated with trials and adoption of frontier technologies such as 5G, artificial intelligence and trust technologies. This initiative is poised to support commercialisation of innovations and diffusion of technology downstream.
- To help firms identify and adopt digital solutions, the Chief Technology Officer, or CTO-as-a-Service initiative, will provide access to professional IT consultancies.
- The new Digital Leaders Programme is also aimed at supporting firms to hire a core digital team, and develop and implement digital transformation roadmaps.
- Beyond these new initiatives, the Government will also extend the enhanced support levels of up to 80% for existing enterprise schemes to end-March 2022. This includes the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance Grant, and Enterprise Development Grant.
- Additionally, to support businesses in redesigning jobs, the Government will enhance the Productivity Solutions Grant – Job Redesign, by raising its co-funding ratio from 70% to 80%, till end-March 2022.
- The Government will also put $500 million to be co-invested with Temasek in a Local Enterprises Funding Platform. This will be managed commercially. Moreover, Temasek will match the Government’s funds on a one-for-one basis, so the platform will have $1 billion available for its investments. The Ministry of Trade and Industry will share more details about the Platform later.
- The Government will launch the Growth and Transformation Scheme, or GTS, for the Built Environment sector. Under this, developers will work closely with their consultants, contractors and suppliers to level up as an ecosystem or value chain. The Minister for National Development will announce details about GTS soon.
6. Singapore Green Plan 2030 as announced in Singapore Budget 2021
Last week, the Singapore Government launched the Singapore Green Plan 2030, which is an ambitious long-term plan that builds on ongoing efforts, to secure a green, liveable, and sustainable home for generations of Singaporeans to come.
- Under this plan, the Government has set aside $60 million for a new Agri-Food Cluster Transformation Fund.
- Additionally, there will be $30 million over the next five years for EV-related initiatives, such as measures to improve charging provision at private premises. With this money, the aim is to deploy 60,000 charging points at public car parks and private premises by 2030.
- To enable mass-market electric car buyers to maximise the rebates from the EV Early Adoption Incentive, the Additional Registration Fee floor will be lowered to zero for electric cars, from January 2022 to December 2023. There will be an increase in petrol duty with rebates for affected motorists.
- To encourage sustainability efforts, the Government will issue green bonds on up to $19 billion of public sector green projects as a start. This will deepen market liquidity for green bonds, attracting green issuers, capital, and investors, and anchoring Singapore as a green finance hub.
- The Government will be committing to more ambitious goals under the GreenGov.SG initiative for the public sector. More details will be announced by the Minister for Sustainability and the Environment soon.
- A new Enterprise Sustainability Programme will be launched. This will help enterprises, especially SMEs, use resources more efficiently and develop new green products and solutions. Details will be announced soon.
Tax changes for businesses in Singapore Budget 2021
- In his budget speech, the Deputy PM announced that the enhancements to the carry-back relief scheme for YA2020 will be extended to apply to qualifying deductions for YA2021, with the same parameters.
- Also, the option to accelerate the write-off of the cost of acquiring P&M (plant and machinery) will be extended to capital expenditure incurred on the acquisition of P&M in the basis period for Financial Year 2021, with the same parameters.
- Moreover, to continue supporting internationalisation efforts of businesses amid changes in the business environment, the scope of the DTDi (Double Tax Deduction for Internationalisation) scheme will be enhanced to cover the specified expenses incurred to participate in approved virtual trade fairs.
- The Government has also extended the Business and IPC Partnership Scheme till December 31, 2023, and the Not-for-Profit Organisation tax incentive till December 31, 2027. To continue encouraging Singaporeans to give back to the community, the Government will extend the 250% tax deduction to qualifying donations made from January 1 2022 to December 31 2023.
- To promote retail bond issuances in the finance sector, the DTD (double tax deduction) scheme will be extended for qualifying upfront cost incurred on or after May 19, 2021.
- The Government will also extend the Goods and Services Tax (GST) to:
- 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
- business-to-consumer ("B2C") imported non-digital services, through the extension of the Overseas Vendor Registration and reverse charge regimes. Examples will include live interaction with overseas providers of educational learning, fitness training, counselling and telemedicine. This comes into effect from January 1, 2023.
Support for families in Singapore Budget 2021
1. $900 million Household Support Package in Singapore Budget 2021
The Finance Minister introduced this package to provide additional support to families.
- First, for lower- and middle-income households. All Singaporeans who are eligible for GST Voucher – Cash will receive an additional one-off GST Voucher – Cash Special Payment of $200. This is in addition to the already-in-place GST Voucher – Cash payment.
- The Government will also provide a GST Voucher – U-Save Special Payment to eligible HDB households, amounting to an additional 50% U-Save rebate over one year. Each household will receive additional utilities rebates of between $120 and $200 this year.
- The Service and Conservancy Charges Rebate for all eligible HDB households will be extended for another year. Under this scheme, eligible households (Singaporean) living in HDB flats will be given rebates to offset between 1.5 and 3.5 months of Service and Conservancy charges over one year, disbursed in April, July, October, this year and January 2022.
- Additionally, there will be top-ups to Child Development Accounts in September 2021, and Edusave Accounts, and Post-Secondary Education Accounts in May 2021. These measures include an additional one-off top-up of $200 to all Singaporean children below the age of 21 in 2021.
- Each Singaporean household will receive $100 in vouchers, which can be used at participating heartland shops and hawker centres.
Apart from the Household Support Package, which is short-term and immediate relief, the Finance Minister has announced few additional medium- and long-term measures to support households:
- Increase in budget allocation for the Senior Worker Early Adopter Grant and Part-Time Re-employment Grant
- Expand ComLink nationwide to cover 14,000 families over the next two years
- Inclusive Support Programme pilot to provide early intervention support for children
2) Measures to support charities and volunteerism in Singapore Budget 2021
- To provide greater support for bottom-up, innovative initiatives, which address the needs of the community, the Government will provide three dollars for every dollar raised, for the CDCs’ $50 million Care and Innovation Fund.
- To encourage philanthropy in Singaporeans, and to provide strong support for the charity sector in this time of crisis, the Government has extended the 250% tax deduction for donations to IPCs (Institutions of a Public Character) for another two years, until the end of 2023.
- There will also be an extension in the additional government support for Tote Board’s Enhanced Fund-Raising Programme by one year. Charities in Singapore can apply to receive dollar-for-dollar matching on eligible donations, which are raised from projects in FY2021, up to a cap of $250,000 per applicant. This includes donations raised through approved digital platforms.
- There will be an extension in ComChest’s SHARE as One matching period to FY2023. The SHARE as One scheme provides dollar-for-dollar matching for new and additional donations through the SHARE programme, which enables corporates, employees and individuals to commit to regular giving. The Government will set aside $20 million for a new Change for Charity Grant. The Charity Grant will match ComChest donations raised through this new initiative. The grant also co-funds one-off development costs needed to integrate or enhance donation functions onto businesses’ payment platforms.
- There will be an extension in the Business and IPC Partnership Scheme for another two years, until the end of 2023.
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