On February 16, 2021, the Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance, Mr. Heng Swee Keat delivered the budget statement 2021. As stated in the budget statement, in addition to the usual spending last year, the Government committed nearly SGD 100 billion through five Budgets to support Singaporeans, help tide businesses over difficult periods due to the COVID-19 Pandemic, and most importantly, keep everyone safe. It is also stated that Singapore faced the worst recession since its independence and the overall budget deficit for Financial Year 2020 is also the largest since Singapore’s independence.
As per the Budget 2021, key rates are unchanged – There are no changes in corporation tax rate, personal income tax rates, and GST rates.
The key highlights of budget 2021 are:
Goods and Services Tax (GST)
- In the 2018 Budget, the need to raise the GST rate (from 7% to 9%) sometime from 2021 to 2025 was announced. In view of economic conditions, the GST rate increase will not take effect in 2021. The move to increase the GST rate will be made between 2022 to 2025.
- Extension of GST to imported low-value goods (currently, low-value goods imported via air or post are not subject to GST) with effect from January 01, 2023.
Other Tax measures
- Extension of 250% tax deduction for donations to Institutions of a Public Character (IPCs) for another two years, until the end of 2023.
- To ease the transition for Singaporeans, especially for those who rely on their vehicles for their livelihood, the Government will provide following support:
– For motorcycles using petrol, there is a 60% road tax rebate to all motorcycles for one year from August 1, 2021.
– In addition, individual owners of smaller motorcycles up to 400cc will receive SGD 50 or SGD 80 per annum in cash, depending on engine capacity.
– For cars using petrol, there is a one-year road tax rebate of 15% from August 1, 2021.
- A Covid-19 Resilience Package of SGD 11 billion to address immediate needs to safeguard public health and re-open safely, to support workers and businesses, to provide support for sectors that are still under stress.
- In order to support workers and businesses (second prong of Covid-19 Resilience Package)
- Budget 2021 continued to provide for Jobs Support Scheme (JSS) for harder hit sectors
- Extension to various schemes under the SGUnited Jobs and Skills Package, including the Jobs Growth Incentive (JGI) and specific traineeship, attachment, and training opportunities
- Over the next three years, the Government will allocate SGD 24 billion to enable firms and workers to emerge stronger.
- To support businesses, Government will invest in three key platforms:
- Corporate Venture Launchpad – This will provide co-funding for corporates to build new ventures through pre-qualified venture studios.
- Open Innovation Platform (OIP) – This will facilitate the matching of problems faced by companies and public agencies, with solution providers, and co-funds prototyping and deployment.
- Global Innovation Alliance (GIA) – This will serve to catalyse cross-border collaboration between Singapore and major innovation hubs globally.
- Extending and enhancing the Enterprise Financing Scheme – Venture Debt programme – Under this scheme, the Government shares up to 70% of the risk on eligible loans with Participating Financial Institutions. In addition, there will be an increase in the cap on loan quantum supported, from SGD 5 million to SGD 8 million.
- Introduction of the new Emerging Technology Programme – This program will co-fund the costs of trials and adoption of frontier technologies like 5G, artificial intelligence and trust technologies.
- The Chief Technology Officer, or CTO-as-a-Service initiative – This will help firms to identify and adopt digital solutions by providing access to professional IT consultancies.
- Introduction of the new Digital Leaders Program – This will support promising firms in hiring a core digital team and in developing and implementing digital transformation roadmaps.
- For existing enterprise schemes such as the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance Grant, and Enterprise Development Grant, the Government will extend the enhanced support levels of up to 80% until the end of March 2022.
- There will be an extension of the Wage Credit Scheme for a year, at a co-funding level of 15%.
- Introduction of a Household Support Package, to provide additional support to families.