On February 18, 2022, the Finance Minister, Lawrence Wong delivered the budget speech for the year 2022. The Finance Minister (FM) stated that the Singaporean economy is expected to grow at the rate of 3% to 5% in the year 2022, but it will continue to be vulnerable to pandemic-related risks and supply-chain disruptions.
The key highlights of budget 2022 are as under:
Goods and Services Tax (GST)
- Increase in GST rates in a phased manner, which will be
- Increase from current GST rate of 7% to 8% from January 1, 2023, and
- A further increase in the GST rate to 9% from January 1, 2024.
Personal Income Tax
- Higher tax rates for top earners – Top marginal personal income tax rate (for resident individual taxpayers) is increased from the year 2023 (i.e., for year of assessment 2024) as follows
- For income exceeding SGD 500,000 up to SGD 1 million, the tax rate will be 23%, instead of current rate of 22% levied on income exceeding SGD 320,000, and
- For income exceeding SGD 1 million, the tax rate will be 24%, instead of 22% as above.
Please find below the table depicting tax rates changes:
|Current Income Tax Slab For years of assessment up to year 2023||Upcoming Income Tax Slab For the year of assessment 2024|
|Annual Taxable Income (In SGD)||Income Tax Rate||Annual Taxable Income (In SGD)||Income Tax Rate|
|Up to 20,000||Nil||Up to 20,000||Nil|
|20,001 to 30,000||2.00%||20,001 to 30,000||2.00%|
|30,001 to 40,000||3.50%||30,001 to 40,000||3.50%|
|40,001 to 80,000||7.00%||40,001 to 80,000||7.00%|
|80,001 to 1,20,000||11.50%||80,001 to 1,20,000||11.50%|
|1,20,001 to 1,60,000||15.00%||1,20,001 to 1,60,000||15.00%|
|1,60,001 to 2,00,000||18.00%||1,60,001 to 2,00,000||18.00%|
|2,00,001 to 2,40,000||19.00%||2,00,001 to 2,40,000||19.00%|
|2,40,001 to 2,80,000||19.50%||2,40,001 to 2,80,000||19.50%|
|2,80,001 to 3,20,000||20.00%||2,80,001 to 3,20,000||20.00%|
|Above 3,20,000||22.00%||3,20,001 to 5,00,000||22.00%|
|5,00,001 to 10,00,000||23.00%|
Corporate Income Tax proposals
- Corporate tax rates would remain unchanged in the year of assessment 2023. However, Singapore proposes to explore the introduction of “Minimum Effective Tax Rate (METR)” for large multinationals (with annual consolidated group revenue of EUR 750 Mn) in light of developments with respect to global minimum effective tax rate under Global Anti-Base Erosion (“GloBE”) rules of the BEPS 2.0 project. The METR will top up the MNE group’s effective tax rate in Singapore to 15%. Singapore will continue to monitor global developments before making any decision on METR. Further, Singapore Tax Authority will consult industry stakeholders on the design of METR.
- Regarding sharing of information by IRAS under GST Act and Income-tax Act, it is proposed that IRAS will be authorized to share information with public officers for performance of official duties where the taxpayer has given the consent for information sharing. Additionally, IRAS can disclose a prescribed list of identifiable information on companies to public sector agencies for the performance of official duties. This sharing of identifiable company related information within the public sector will be conducted without the need for taxpayer’s consent. Such information will be made less granular to preserve taxpayer’s confidentiality while remaining useful to public agencies.
Proposals relevant for Employer
- Budget proposes to increase the employer and employee Central Provident Fund (CPF) contribution rates. The combined contribution rates (employee and employer’s share) for employees aged above 55 years up to 70 years for the year 2022 onwards are as follows:
|Age Band||From Jan. 1, 2021||From Jan. 1, 2022||From Jan. 1, 2023||Long term target by 2030|
|Less than 55||37.00%||No change|
|More than 55 less than 60||26.00%||28.00%||29.50%||37%|
|More than 60 less than 65||16.50%||18.50%||20.50%||26%|
|More than 65 less than 70||12.50%||14.00%||15.50%||16.5%|
|More than 70||12.50%||No change|
- Government proposes to provide employers with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contribution rates for every Singaporean and Permanent Resident worker they employ who is aged above 55 to 70.
- Budget proposes to introduce a Progressive Wage Credit Scheme (PWCS) to co-fund employers for progressive wage increases for lower-wage workers (earning below SGD 3,000 per month) as under:
|Year||Payout period||Employees with gross monthly wages up to SGD 2500||Employees with gross monthly wages up to SGD 2500|
- The budget proposes to revise the minimum qualifying salary for various work passes (commonly known as work visas) for foreign workers as under:
|Status||Sector(s)||Revised minimum qualifying salary|
|Employment Pass (EP) Holders||All sectors, except for Financial Services||$5,000 (increases up to $10,500 for a candidate in mid-40s)|
|Financial Services sector||$5,500 (increases up to $11,500 for a candidate in mid-40s)|
|These changes will apply to new applications from 1 September 2022, and to renewal applications from 1 September 2023.|
|S Pass holders||Minimum qualifying salary for new applications will be revised in 3 phases|
|Sector(s)||On 1 Sep 2022||On 1 Sep 2023||On 1 Sep 2025|
|All sectors, except for Financial Services||$3,000 (increases up to $4,500 for a candidate in mid-40s)||At least $3,150*||At least $3,300*|
|Financial Services sector||$3,500 (increases up to $5,500 for a candidate in mid-40s)||At least $3,650*||At least $3,800*|
*The finalized values will be announced later.
- Carbon tax to be raised to SGD 25 per ton (as against current SGD 5 p/t) from year 2024. It is proposed that carbon tax would be increased to SGD 50 to 80 p/t by 2030 in phased manner.
- The Jobs and Business Support Package is introduced for workers and businesses. The Package consists of the ‘Small Business Recovery Grant’ i.e., one-off cash support to small businesses in certain industry sectors meeting specified conditions, including revenue and headcount thresholds. Eligible businesses will receive SGD 1,000 for each local employee, as specified, with mandatory Central Provident Fund (CPF) contributions in the period from 1 November 2021 to December 31, 2021, up to a cap of SGD 10,000 per business.
- The ‘Household Support Package’ is introduced for Singaporean families which includes, utilities rebates, top-ups to education/ development accounts for children’s education and vouchers for use at designated shops, etc.
- Certain support measures are introduced for businesses viz. extending the ‘Temporary Bridging Loan Programme’ and the enhanced ‘Trade Loan Scheme’, with revised parameters, for another six months, from April 1 to September 30, 2022. The ‘Enterprise Financing Scheme – Merger and Acquisition Loan’ will be enhanced for four years, from April 1, 2022, to March 31, 2026, to include domestic M&A activities. The scheme supports acquisition of overseas or local enterprises by Singapore-based enterprises.
- To provide support for mid-career workers, ‘Train-and-Place scheme’ is introduced viz. ‘Skills Future Career Transition Programme’ which will commence from April 1, 2022 and will replace the SG United Skills (SGUS) and SG United Mid-Career Pathways programs, which will expire on March 31, 2022. The program contains industry-oriented courses, course fees support etc.
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