In the Singapore Budget for 2020, great attention and resources have been devoted to supporting businesses and industries.

Singapore's economy grew only 0.7% in 2019, its weakest growth since the 2008 financial crisis.

Just as the global economy was showing encouraging signs of recovery, the COVID-19 outbreak struck unexpectedly in early 2020 bringing "new uncertainties".

In response, many of the initiatives announced in this year's budget mainly aim to protect the employment levels of local workers. Attention was also paid to companies to support any liquidity problems that may arise in these uncertain times.

The government has established a $ 4 billion stabilization and support package that will help implement a wide range of measures.

Below are the details of some measures that may be useful to companies operating in Singapore.

Supporting wage costs for employers

• To ensure the maintenance of employment levels for Singaporeans, a new support scheme for the employment of local workers (Jobs Support Scheme) will be introduced.
• Employers will receive a cash allowance of 8% of each employee's monthly salary, up to a monthly limit of S $ 3,600, for three months. This applies to Singaporean or Permanent Resident (PR) employees.
• This measure provides for a total outlay of $ 1.3 billion, which employers will receive by July 31, 2020.
• The existing wage credit scheme (Wage Credit Scheme) will also receive a $ 1.1 billion increase to support wage increases for local workers.
• The scheme will now co-finance 20% of wage increases in 2019 and 15% of wage increases in 2020, for Singaporean employees who have a gross monthly salary of up to $ 5,000.

Reduction of corporate income tax and working capital loans

• All companies that pay taxes will be granted a 25% corporate income tax discount for the 2020 tax year (2019 income), limited to S $ 15,000 per company.
• Companies can also expect improved tax treatment for the 2021 tax year, for the insertion of new rules for hyper tax amortization for plants and machinery and costs for development and renewal.
• To allow Singapore businesses easier access to working capital supplies, the Enterprise Financing Scheme will double the cap on loans to the imprinted Working Capital Loans up to $ 600,000.
• The government will assume 80% of the loan risk, increased from the current 50%.

Support for the sectors most affected by COVID-19

• The 2020 Budget identifies tourism, air transport, retail, restaurant services and land transport services as the sectors most directly affected by the COVID-19 epidemic. These sectors will receive additional help in addition to the measures mentioned above.
• Firms operating in these five sectors will enjoy more funding to support wage costs. The coverage will be extended from three to a maximum of six months.
• For tour operators, hotels and service apartments, a 30% reduction in property tax can be expected.
• Discounts will also be introduced for the rental of shops at Changi Airport, while the airport itself will receive a 15% discount on property tax. "
• Taxi and private hire operators will receive a $ 77 million support package to cope with the expected contraction in business.
• In the retail and food sector, hawker stall owners and commercial tenants in government-run facilities will receive discounts on the monthly rent of the premises.

300$ million set aside for Deep-Tech startups

• According to the Global Startup Ecosystem report, Singapore's startup ecosystem is ranked in the top 15 worldwide.
• There are around 3,800 technology startups in Singapore and around 150 venture capital funds that invest in local and regional startups.
• This year, the government will improve support for advanced technology start-ups in emerging technology areas such as pharmbio and medtech, and agro-food technology.
• To catalyze investment in advanced technology start-ups, another $ 300 million will be allocated to Startup SG Equity.
• The government expects this will attract over $ 800 million in private finance over the next 10 years.

Help businesses grow and transform

• The government's new business growth package will help businesses innovate and adopt digital solutions and support their ambitions to enter new markets.
• Businesses can use a new platform, GoBusiness, to access simplified license applications and make transactions with the government easier.
• Singapore companies looking to expand can count on the Market Readiness Assitance (MRA) Grant, increased from $ 20,000 to $ 100,000 per year per new market per company, for the financial years 2020 and 2022.

Support for hiring senior workers and people with disabilities

• To support the extension of working life, employers who hire older workers will receive funding to compensate for the cost of their wages.
• New tools to support the employment of senior workers include the Senior Employment Credit, which will help employers offset up to 8% of wages, depending on the age of the employee.
• This applies to Singapore workers aged 55 and over, who earn up to S $ 4,000 per month.
• Currently, the highest wage compensation is awarded to employers of workers aged 67 and older, this threshold will be increased to 68 on 1 July 2022.
• This new regime will come into effect for two years, from January 1, 2021 to the end of 2022.
• Next year, employers will also receive support to compensate for the increased CPF contribution for older workers, up to the CPF ceiling of $ 6,000.
• In addition, a new support scheme for the employment of workers with disabilities will be available for five years from 2021 to 2025 (Enabling Emplyment Credit Scheme).

Quotas for foreign workers

• The government will reduce the quota for skilled foreign workers in the construction, shipbuilding and industrial transformation processes over the next three years to encourage businesses to hire more Singaporean skilled workers and technicians.
• For these three sectors, the share of S-Pass holders will be reduced from the current 20% to 18% by 1 January 2021 and to 15% on 1 January 2023.
• The overall share of foreign workers among all types of Work Passes remains unchanged, i.e. 87.5% for the construction and transformation processes sectors 77.8% for the shipbuilding sector.
• This means that companies in these sectors can hire more foreign workers with low qualifications or work permit holders, since only the share of skilled foreign workers is reduced.
• The government intends to restrict the number of skilled foreign workers also in the manufacturing sector, but only "when conditions permit".
• Since the manufacturing sector contracted due to economic uncertainties, the government has decided not to reduce the share of foreign workers at this stage.
• Taxes on foreign workers (Foreign Workers Levy) for all sectors, including tourism, the food and beverage sector and retail trade, which have been severely affected by the COVID-19 epidemic, will remain unchanged.

Deferred GST increase

• Many Singaporeans held their breath waiting to find out if the tax on goods and services (GST) would increase next year.
• In light of current economic challenges, GST will remain at 7% in 2021,
• However, it has been confirmed that the increase cannot be indefinitely deferred and will need to be implemented by 2025.
• The government will carefully evaluate the appropriate time to activate the GST excursion and that the increase will be announced sufficiently in advance to allow residents the necessary time to adapt to the change.