On Friday, 18th February, 2022, the Minister of Finance, Mr Lawrence Wong announced key measures of the Singapore budget 2022.
Singapore economy, and businesses in the country have been struggling against the COVID-19 pandemic during the last two years. In 2022, the government continues to extend certain programs that contribute to the achievement of goals set out in the budget.
Importantly, the Minister stated about providing new supporting programs to help businesses and Singaporeans recover from the pandemic impacts. The programs also direct businesses to new ways of development.
“Top-up” tax for MNEs, increased tax rates for high earnings
With new tax policies, high-income groups are going to pay more than the groups with lower income.
Corporate income tax. The minimum effective tax rate is 15% applied on certain multinational enterprise groups (MNEs) in response to the global tax proposals under the Base Erosion and Profit Shifting initiative (BEPS 2.0).
Accordingly, Singapore-based MNE groups with yearly global revenues of 750 million euros or more in the consolidated financial statements of their ultimate parent entity will be subject to following this regime.
Personal income tax for tax-resident individuals. The top marginal tax rate will increase from the year of assessment 2024.
- Individuals with income over S$500,000 up to S$1 million are subject to a 23% tax rate.
- With income over S$1 million, individuals have to submit 24% of the income for tax.
Property tax. The marginal tax rates for residential properties will be modified and revised in two steps from 2023, and the higher tax rates will be effective from 2024.
- The tax rate is from 12% to 36% imposed on non-owner occupied residential properties.
- Owner-occupied residential properties with annual value over S$30,000 have to pay 6%-32% tax rate of the properties.
Moreover, groups that own luxury cars are subject to higher additional registration fees. To be specific, people who possess cars with open market value over S$80,000 are subject to a tax rate of 220%.
General goods and services tax (GST). The GST hike is implemented in two periods. The tax rate will be increased from 7% to 8% from 1st January, 2023. Then, from 1st January, 2024, the government will raise the rate to 9%.
To cushion the impact of GST hike implementation, S$6.6 billion will be offered as an Assurance Package for Singaporeans. It will cover spending in healthcare and support for senior citizens. There are supporting programs for lower to middle income households.
Additional S$15 million is annually granted for Town Councils to absorb additional GST payable on Service and Conservancy Charges.
Direct support packages for SMEs
With the objective of improving business competitiveness, the government provides financial support and support programs to businesses. Besides, investing in people is also the main focus of the budget to help businesses have a competent and diverse workforce.
The government provides immediate support to businesses to recover from the pandemic. Below are the key support packages:
- S$500 million Jobs and Business Support Package is to support small businesses in the recovery. The program also incentivizes the employment of people who have difficulties finding jobs.
- Additional S$200 million is to help businesses build digital assets.
- S$600 million is to support local enterprises in development and productivity improvement. In addition, incentive schemes such as Merger & Acquisition (M&A) Loan and Trade Loan are implemented from 2022, giving the promising development of local companies.
- SkillsFuture Enterprise Credit (SFEC) supports 90% of qualifying expenses for businesses, such as training programs. Additionally, S$100 million is to improve the training programs.
- Mid-career workers will receive incentive programs by attending training courses. To encourage the growing number of foreign workers, the government will raise the minimum qualifying salaries besides relaxing the entrance pass regulations.
- The government will expand the capacity of centres close to 2000 projects to provide support in research and innovation to SMEs. Pilot business sectors including Agri-Tech, Construction, Food Manufacturing, Precision Engineering and Retail will have more opportunities to grow.
Singapore Budget 2022 shapes how businesses will develop in the years to come. For more detailed measures and programs from the budget plan, please refer to this page.
BBCIncorp will keep you updated with related news and updates for your Singapore business.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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