This year’s budget not only has impacted individuals, but businesses in Singapore as well.
Singapore Budget 2019 affecting Individuals
Personal Income Tax Rebate
50% tax rebate (capped at $200) will be given as Bicentennial Bonus to all tax resident individuals for YA 2019.
In previous years, the tax rebate was higher. This would mean that individuals would now be paying more tax to IRAS.
Not Ordinarily Resident (“NOR”)
NOR scheme (started since YA 2002) aims to attract foreign talents to move to Singapore and benefits the economy (This is review by MOF from time to time).
NOR scheme will cease after YA 2020, and the NOR status granted will expire in 3 years. Tax exemptions will be applicable until the NOR status expire (if criteria are met).
As YA 2020 will be the last year for one to obtain the NOR status, this means that individuals especially expats should claim NOR scheme when they are preparing and submitting their personal tax returns for YA 2020. This would ensure that they are able to claim NOR in subsequent years even after the end of expiry year YA 2020.
Tighten the GST Import Relief for Travellers
GST import relief for travellers arriving in Singapore has been revised.
Effective from 12.00am, 19 February 2019.
GST import relief is applicable for the first $100 of the value of goods purchased outside Singapore (spent less than 48 hours outside Singapore) while GST import relief is applicable for the first $500 of the value of goods purchased outside Singapore (spent 48 hours or more outside Singapore).
This had declined from previous years, which means that travellers would now need to pay GST if they are importing more than the stated value. There is less amount of relief available to traveller for the value of goods purchased outside Singapore.
Singapore Budget 2019 impacting Business
Reduction in Dependency Ratio Ceiling (DRC), or Foreign Worker Quotas
Reduction is only applicable to Services Sector; DRC and S Pass Sub-DRC for other sectors remain unchanged.
DRC for Services Sector
(Reduction in 2 steps)
Effective from 1 January 2020, reduce from 40% to 38%
Effective from 1 January 2021, reduce from 38% to 35%
S Pass Sub-DRC for Services Sector
(Reduction in 2 steps)
Effective from 1 January 2020, reduce from 15% to 13%
Effective from 1 January 2021, reduce from 13% to 10%
Generally, the workforce in Singapore will be affected by these structural changes. Work permits and S Passes last for 2 years. With the reduction in this, it will affect businesses especially those in service sector. Hiring and retaining of foreign workers will be tougher compared to the past. This will likely mean that business will become less competitive and productive now.
Support to businesses in Singapore
Company that need more time for transformation, may consider applying for the Lean Enterprise Development (LED) Scheme for assistance and support.
Other kinds of support include but not limited to the following:
- SMEs Go Digital Programme
SMEs Go Digital Programme helps business owners by providing support and assistance on development of digital capabilities. SMEs can search for such solutions under the business grants portal and apply for the Productivity Solutions Grant for funding support for up to 70 per cent of the qualifying costs to adopt these solutions.
- Scale-up SG programme
Scale-up SG programme helps business owners by providing support and assistance on international expansion. SMEs can apply for up to 70 per cent of the qualifying programme costs.
- Innovation Agents programme
Innovation Agents programme helps business owners by providing 2 years of advisory support on innovation opportunities, from suitable industry professionals who are identified as Innovation Agents. It will be either one-on-one consultation or a group consultation, and the period vary depending on it needs.
With the various programmes in place, generally these help businesses cushion their expenses. With lower costs in place, it not only help them stay competitive, but also help them in being more efficient and effective.
Advice to business owners
In view of the above, business owners staffing and human resources may be affected. The changes in DRC may directly or indirectly affect your current pool of talent. If your business meets the eligibility criteria, you may apply for an Enterprise Development Grant. It helps to support staff upskilling or workplace restructuring through technological implementation.
As for individuals, especially foreigners who had just came into Singapore, it is highly recommended that these personal individuals know about the NOR Scheme eligibility criteria. Once they are aware about it, they should file and apply for NOR status when submitting their tax filing for YA 2020.
Be prepared for new changes. If you are unsure of what to do now, we would recommend that you seek professional help such as J Accounting for advice and support.
