On Friday, February 18, the Singapore Budget 2022 was announced by Singapore’s Finance Minister Lawrence Wong. This year’s budget focuses on the country’s immediate needs to support the local economy from recovering from the pandemic to tackling the rising cost of living in Singapore. In this article we have summarised how the Singapore Budget 2022 will impact your business.
The Singapore government has set aside S$500 million to a Jobs and Business Support Package, which includes:
Small Business Recovery Grant
A one-off cash support for SMEs that were most affected by COVID-19 restrictions in 2021. Eligible companies will receive S$1000 for each local employee, with a cap of S$10,000 per firm. Inland Revenue Authority of Singapore (IRAS) will be notifying the eligible firms from June 2022.
For more details, please refer to the MOF website.
Job Growth Incentive (JGI) – supports employers who increase overall local workforce size and an increase in local workforce size earning more than 1,400 per month. Under JGI, the government will subsidise the newly hired local workers’ wages, who are aged of 40 and above and had not been employed for six months of more.
Corporate and income taxes
Personal income tax rates will increase from the year of assessment 2024. ‘For the portion of chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24% both up from 22% today.’
Corporate tax, in particular Minimum Effective Tax Rate (METR) will be explored in the near future. It is still too early to say how it will pan out.
Goods and Services Tax (GST) hike
The GST hike will be delayed until 2023 to help cushion the rise in the cost of living. It will be increased into 2 stages. The first hike is slated for January 2023 with GST rate increasing from 7% to 8% followed by 8 to 9% in January 2024.
Foreign employment and wages
There will be changes to the Employment Pass (EP) requirements. From September 2022, minimum qualifying salary for new EP applicants will be raised from S$4,500 to S$5,000. For the financial sector, this will be raised from the current S$5,000 to S$5,500.
To provide transactional support for businesses to adjust to the new wage requirements, the government has introduced the Progressive Wage Credit Scheme (PWCS).
“Under the PWCS, the government will co-fund the wage increases of lower wage workers between 2022 and 2026. For workers earning up to S$2,500 the PWCS co-funding rate will be 50% in the first two years 30% in the next two years before tapering to 15% in 2026.”
Property tax rates for non-owner-occupied residential properties which includes investment properties will be increased.
Luxury cars will also be taxed at a higher rate. A new Additional Registration Fee (ARF) tier for cars, taxis, and goods-cum-passenger vehicles whose Open Market Value (OMV) exceeds $80,000 will be taxed at 220%.