All posts tagged: Singapore Budget 2021

Each year when the budget is announced, the government of Singapore focuses on balancing the priorities through a combination of both long-term and short-term measures that can help support the economy. Singapore budget 2021 is no exception as the government is again responding to the immediate short-term needs of families, workers, businesses that have been hit hardest by the Covid-19 pandemic.

As much as Covid-19 has disrupted business models and global supply chains; it has also accelerated digitalization which to a great extent presents new areas of growth that Singaporean citizens can explore. Singapore has in the past year incurred a strange budget deficit and the government continues to offer economic support in the face of an extended downturn that has come up as a result of Covid-19 pandemic. The government has announced a sizeable budget stimulus which then makes this year a bit unusual as Singapore continues to draw from the past reserves for another consecutive year.

Singapore is expected to register a budget deficit of S$11 billion this year which is about 2.2% of the GDP and this should be in addition to S$64.9 billion which is the deficit for the 2020 fiscal year, the largest to be realized since Singapore’s independence. The budget 2021 has prioritized the need to set apart targeted support to the business sectors and the various segments of society that are hardly hit and continue to struggle due to the pandemic. The move is combined with the long-term goals such as a range of initiatives that are designed to encourage global partnerships, business innovation, and digital transformation for the local businesses.

In order to position your company for growth; ensure that you have in depth understanding of what the budget entails. Working with a reputable corporate service provider in Singapore can help break down some of the key highlights of the budget that can have an impact on your business. The Minister for Finance announced in the budget that there will be an S$11 billion Covid-19 Resilience Package. This amount is meant to specifically go towards safeguarding public health including the provision of vaccination and ensuring continued support for the workers and businesses that are hardest hit by the pandemic.

Such a move is quite different from the broad-based support that the government provided last year to the sectors that have been hardest hit by the pandemic. The government continues to provide support to workers and businesses through an extension of the Job Support Scheme which targets the provision of support to the hardest hit sectors such as aerospace, aviation, and tourism.

For families that are still coping with the uncertainties that came along as a result of covid-19; an amount of S$900 million Household Support Package which also include a one-off cash payments to the lower and middle income families receiving more. The Minister also talked of measures that are meant to help strengthen social safety nets in support of the vulnerable members of the society including the lower income families and low-wage workers.

Related link-
Company secretary services
Auditor in Singapore
Audit firm in Singapore

Singapore budget is announced each year with the financial year starting from the 1^st of April of every year to the 31^st of March of the next calendar year. The budget normally includes revised government revenue and expenditure projections for the current year as well as a planned government revenue and expenditure for the coming financial year. Before announcing the budget; the minister of finance carries out consultation to help gather feedback for the next financial year’s budget.

The feedback process takes about two months and all the suggestions and views gathered gets submitted during the set period and are taken into consideration when designing the budget. Once the designing of the budget is done, it gets presented before the cabinet for approval. Just like the budget that people set aside for their own personal expenditures; Singapore budget is normally planned with the aim of enabling Singaporeans to spend wisely.

The measures that were announced in Singapore budget 2021 are meant to help the country press on with economic and workforce transformation while strengthening the social compact and building a future for all in a way that’s sustainable. While budget 2020 was tilted towards the delivery of emergency support in a broad-based way, budget 2021 focuses on accelerating structural adaptations. Last year, apart from the usual spending; the government also committed about S$100 billion through the five budgets to support Singaporeans and also help businesses to stay strong during the pandemic.

One of the secret ingredients of Singapore’s 2021 budget is the fact that it puts in place structural economic policies to help equip businesses and workers with deep and future-ready capabilities. In order to fund the budget, Singapore will draw from its past reserves for the second year in a row and the budget is expected to post a deficit of S$11 billion or an equivalent of 2.2 percent of gross domestic product (GDP). The budget is such a balanced one as it addresses the immediate needs by supporting some of the worst-hit sectors in a way that’s targeted.

The budget focuses on the environmental and fiscal perspective while still supporting the medium to long-term needs of digital transformation, sustainability and upskilling of workers. The key ingredient of Singapore budget 2021 is the push for transformation.

Transformation

The government outlined S$24 billion that’s to be spent over the next three years to help workers and companies emerge stronger in the push for transformation. The funds are designed to be used in building the ecosystem for innovation, digitalize businesses, create a vibrant business sector and strengthen the workforce. The new budget measures such as the emerging technology program and the digital leaders program further helps in strengthening the range of measures that companies can tap on for increased competitiveness and position for growth post Covid.

Large local enterprises

The government also set aside S$500 million to be in a local enterprises funding platform to be commercially managed. The platform is to invest in non-control equity and mezzanine debt of the selected LLEs which are committed to work with the fund manager in pursuit of the next phases of growth.

Related link-
Formation of company
Unaudited report
Onestop company secretary
CA firms in Singapore

On February 19, 2021 the deputy prime minister and minister of finance, Mr. Heng Swee Keat unveiled Singapore budget 2021. Budget 2021 is quite broad based and structured in a way that helps embolden and restructure businesses as they seek new growth opportunities. In order to help businesses emerge stronger together; the government committed to building strong growth enablers that foster innovation spirit, and enterprise of the business communities with the aim of enhancing a range of capital to help transform and also scale businesses.

Some of the tax changes proposed in the budget are as below;

Extension of Budget 2020 Tax measures

Several tax measures and the non-tax ones were announced during budget 2020 to help mitigate the widespread financial impact of covid 19 on workers and businesses. Since there is still no visible end to the pandemic, specific sectors are still struggling from the effects of covid-19 and that has led to some of the relief measures being extended.

Enhanced carry-back relief scheme

Under the existing carry-back relief scheme, the unabsorbed capital allowances and trade losses for the current year could be carried back to the immediate year of assessment. In the budget for 2020, the carry-back relief scheme was expanded to create room for qualifying deductions for the year 2020 to be carried back up to the three immediate preceding years but it’s subject to conditions.

Option to accelerate tax write-off on plant and machinery acquiring costs

The option to accelerate write off of the plant and machinery acquiring costs will be extended to qualifying capital expenditure that’s incurred on the acquisition of plant and machinery in the financial period 2022. This move will help ease cash flow for businesses that have plans of purchasing new assets. Under the accelerated option, businesses are allowed to claim capital allowance of 75% of the cost incurred in the first year and 25% of qualifying cost in the second year. There is no deferment of capital allowance claim that’s allowed under these.

Option to accelerate the deduction for refurbishment and renovation expenses

The expenditure that’s incurred on refurbishment and renovation works that are related to business setting do not qualify for capital allowances. The taxpayers who incur renovation and refurbishment expenditure for the purpose of profession, business or trade should claim tax deduction on those costs for a period of three consecutive years. However, the claim is subject to an expenditure cap of S$300,000 for every relevant year. For the qualifying refurbishment and renovation costs that are incurred in the year 2021, taxpayers were given the option to claim the deduction within one year.

Goods and Services Tax

It was announced in the budget that the planned goods and services tax rate is to increase from 7% to 9% and this is to happen within the period 2022 – 2025. The timing for the increase of GST tax will be subject to the economic outlook. GST will be extended to the low-value goods which are imported either via post or air. And the non-digital imported B2C services.

Related links-
Company secretary services
Auditor in Singapore
Audit firm in Singapore
Incorporation of company