Editor’s Note: ‘Singapore Budget 2022: Key Updates for Local Businesses [Infographic]’ is written by Jesslyn Phoon, Head of Marketing at Talenox. ‘Infographic: Singapore Budget 2022’ is designed by Wong Hern Yee, Content & Community Lead at Talenox.
If you missed Finance Minister Lawrence Wong’s Singapore Budget 2022 announcement on 18 February 2022, fret not, we’ve sieved out key updates that we think small-and-medium-sized enterprises (SMEs) and/or business owners like yourself may find useful and put them together in this article. We’ve also designed an easy-to-digest infographic that can be found further below.
We’ve segmented the article and infographic into three sections:
- Points 1 to 5 detailing employment-related updates you need to know,
- 6 to 11 on the various types of financial assistance from the government, and lastly,
- 12 to 14 on the non-financial ones.
You may jump straight into the article to read the details that further explain the infographic, or simply click into the relevant section of interest in ‘Contents’ to navigate the article.
Infographic: Singapore Budget 2022
Key Updates: Important changes to note (2022)
1. Salary Increments for Employment Pass (EP) and S Pass
The minimum qualifying salaries for new Employment Pass (EP) and S Pass applicants will rise by S$500 from September this year.
|Pass Type||Current Salary||New Salary|
*Financial Services sector:S$5,000
*Financial Services sector:S$5,500
*Financial Services sector:S$3,000
*Financial Services sector:S$3,500
Additionally, the Tier-1 levy for S-Pass applicants will be progressively increased from the current $330 to $650 by 2025.
2. Enhancements to Workfare Income Supplement (WIS)
The Workfare Income Supplement (WIS) scheme helps to supplement the incomes and CPF savings of lower-wage Singaporean workers and encourage them to work regularly.
Some of the enhancements this year include:
- The qualifying income for the scheme will be increased from S$2,300 to S$2,500, from 1 January 2023.
- Workfare will also extend to younger workers aged 30 to 34, with a maximum annual payout of S$2,100.
- There will be a minimum income criterion of S$500 a month to encourage casual workers and part-timers to take on full-time work.
- Maximum annual payouts for other age groups will be raised to S$3,000 for those aged 35 to 44; S$3,600 for those aged 45 to 59; and S$4,200 for those aged 60 and above.
- People with disabilities will also get a maximum payout of S$4,200 annually, regardless of their age.
|Age group||Maximum annual payout|
|30 to 34 *New||S$2,100|
|35 to 44||S$3,000|
|45 to 59||S$3,600|
|60 and above(and those with disabilities regardless of age)||S$4,200|
The enhanced Workfare scheme is expected to benefit more than half a million workers.
3. Employers to get CPF offsets for older workers
The Central Provident Fund (CPF) Basic Retirement Sum (BRS) will be increased by 3.5 per cent per year for the next five cohorts of CPF members turning 55 from 2023 to 2027. The employer and employee CPF contribution rates for workers aged 55 to 70 will also continue to increase.
With this increase, employer and employee CPF contribution rates have and will continue to increase; hence, the government will be giving a CPF Transition Offset, equivalent to half the increase in employer contributions.
4. GST Hikes: 7% to 9% in two phases
We’ve all been anxious about the news about the upcoming GST hike, especially on how it will affect our online shopping plans (*coughs*). However, the hike will impact local businesses all the more – from the rising cost of supplies to pricing that into the retail price for the consumer.
Companies will have to make plans on how to adjust the GST increment into their prices.
The good news is – we’ve still got some time. The rate will go up from 7 per cent to 9 per cent in two phases. It will first increase from 7 per cent to 8 per cent on Jan 1, 2023 and then increase from 8 per cent to 9 per cent in 2024.
5. Increase in Carbon Tax
To achieve Singapore’s net-zero carbon ambition, the carbon tax will be raised from the current $5 per tonne to $25 per tonne in 2024 and 2025. The tax will be raised again to $45 in 2026 and 2027, with the view of reaching $50 to $80 per tonne by 2030.
The good news is that companies will be allowed to use high-quality international carbon credits to offset up to five per cent of their taxable emissions, in lieu of paying carbon tax, from 2024.
There will also be more support for companies to invest in energy-efficient equipment and decarbonisation solutions.
Note that there will be no additional carbon tax on the use of petrol, diesel and compressed natural gas as these already have excise duties.
Financial Support: Grants, Payouts and Loans
6. Small Business Recovery Grant: S$1,000 cash payouts per local employee
The government has set aside a S$500 million support package under the Jobs and Business Support Package.
Under this scheme, there is the Small Business Recovery Grant. SMEs affected most by COVID-19 restrictions will receive one-off cash payouts of S$1,000 per local employee (receiving mandatory CPF contributions in the period of 1 November 2021 to 31 December 2021), up to a cap of S$10,000 per company.
There is no need to apply for this as eligible companies will be notified. These include companies in hard-hit sectors such as hospitality, tourism, retail, and food and beverage.
For sole proprietorships and partnerships in qualified sectors and business types (e.g. hawkers, coffee shop stallholders, etc) that are run by at least one local business owner but do not hire any local employees, the company will receive a flat payout of $1,000.
7. Extension of Jobs Growth Incentive (JGI): Till September 2022
The Jobs Growth Incentive (JGI) scheme provides wage support to companies that promote the hiring of mature and vulnerable workers. This has been extended to September 2022 with stepped down rates.
8. Extension of Financing Options: Various schemes
COVID-19, coupled with inflation, took a massive toll on companies’ finances. To assist companies with their cash flow concerns, the government has extended the timeline of various financing schemes.
Here are the schemes:
- Temporary Bridging Loan Programme will extended to 30 September 2022 with revised parameters.
- Enhanced Enterprising Financing Scheme will be extended to 30 September 2022 (Trade Loan) and March 2023 (Project Loan):
- Trade Loan = Enhanced support for enterprises trading in challenged markets to encourage internationalisation, with a maximum loan quantum of S$5 million per borrower, or S$20 million per borrower group.
- Project Loan = Extension of support for domestic projects specifically for the construction sector, with a maximum loan quantum of S$30 million per borrower, or per borrower group for domestic projects.
- Enterprise Financing Scheme – Merger & Acquisition (M&A) will be extended to 31 March 2026. This scheme supports enterprises’ M&A financing needs, including for domestic M&A deals, to encourage restructuring and consolidation post-COVID.
Businesses may apply for these financing schemes via any of the participating financial institutions listed in the Enterprise Singapore website.
9. Employment Support: Progressive Wage Credit Scheme (PWCS)
Another form of financial support provided by the government is the Progressive Wage Credit Scheme (PWCS). Starting with a S$2 billion injection this year, the scheme helps to offset wage costs involved with the implementation of the Progressive Wage Model (PWM), which encourages employers to upskill their workers and adjust their wages accordingly.
Currently, it applies to those in the cleaning, security and landscape sectors. Over the next two years, the PWM will be extended to the retail, food services, and waste management sectors.
In addition, starting September this year, companies employing foreign workers are also required to pay all their local employees at least the local qualifying salary, which is currently set at S$1,400 per month.
Though all measures are a bold step forward to building a more inclusive labour market, these would definitely contribute to higher manpower costs, resulting in further cashflow concerns for companies. The PWCS thus provides transitional support to employers, as the government will co-fund wage increases of eligible workers between 2022 and 2026.
|Year||Co-funding for employee wages up to S$2,500/month||Co-funding for employee wages between S$2,500 to S$3,000/month|
|2022||50% of pay increase||30% of pay increase|
|2023||50% of pay increase||30% of pay increase|
|2024||30% of pay increase||15% of pay increase|
|2025||30% of pay increase||Not applicable|
|2026||15% of pay increase||Not applicable|
To qualify for this scheme, employers must make an average gross monthly wage increase of at least S$100 in a year. They can then expect to receive the PWCS payout from the Inland Revenue Authority of Singapore (IRAS) by the first quarter of the following year.
10. Support for Business Innovation: SkillsFuture Enterprise Credit Scheme (SFEC)
Employers must prepare their employees for sustainable employment by equipping them with new skills. One such way is to tap on the SkillsFuture Enterprise Credit Scheme (SFEC).
This scheme encourages employers to invest in workforce transformation initiatives, enhancing the capabilities of their employees. A one-off credit of up to $10,000 will be provided to eligible companies, to cover up to 90% of out-of-pocket expenses for supportable transformation programmes.
In addition, the Skills Development Levy (SDL) requirement will be waived for the qualifying period of 1 January to 31 December 2022 to benefit more small and micro businesses to utilise the scheme. The deadline will be extended to 30 June 2024.
11. Support for Digital Transformation: Productivity Solutions Grant (PSG)
The PSG was launched in April 2018 to support the adoption of IT solutions, equipment and consultancy services that improve productivity.
Over the next four years, an additional S$600 million will be injected into the grant to help SMEs boost productivity by automating and digitising business processes. This is expected to support more than 100,000 productivity projects over the next four years.
Non-Financial Support: Partnerships
12. Support for Business Innovation: Working with Polytechnics and ITEs
Besides simply tapping on the financial grants and schemes above, employers are encouraged to explore non-financial ones as well. One such way is to collaborate with Polytechnics & ITEs via their Technology, Innovation, and Enterprise (“TIE”) centres.
Companies may find new ways of transforming their businesses through the fresh eyes of students, by working together on innovation projects, R&D, business consultancy, and product development.
To apply for this, Enterprise Singapore will be sharing the curated list of centres on their website. Interested applicants may contact any of the TIE centres directly through the respective centre Directors.
13. Support for Digital Transformation: More schemes totaling S$200 million
In addition to the Productivity Solutions Grant (PSG) mentioned above, companies may look forward to these schemes to digitise and transform their businesses. They include:
- Advanced Digital Solutions
- Supports the adoption of advanced technologies (e.g. artificial intelligence, robotics, Internet of Things) and integrated digital solutions that address common sector-wide challenges.
- Grow Digital
- Provides targeted support to help SMEs internationalise via cross-border digital platforms, without the need for physical in-market presence.
- TechSkills Accelerator (TeSA)
- TeSA is a tripartite initiative between the Government, industry, and the National Trades Union Congress (NTUC), to build and develop a skilled Information and Communications Technology (ICT) workforce for the Singapore economy, and to enhance employability outcomes for individuals. The key programmes for companies and individuals are supported by IMDA, SSG, and WSG.
14. Global programmes for companies expanding overseas
Lastly, it may seem ironic to talk about expanding overseas when our local businesses are struggling to survive even in their homebase, but internationalisation can be thought of as a means to set foot in new markets to acquire new streams of income.
As such, the government has introduced more programmes to help local firms scale up in overseas markets.
A new Singapore Global Enterprises initiative will be introduced to larger local enterprises, providing customised assistance in areas like innovation, internationalisation and the fostering of partnerships with other firms.
Another initiative is the Singapore Global Executive Programme, which will help companies attract and nurture their next generation of leaders through industry and overseas attachments, mentorships and peer support networks.
More information will be provided on the Enterprise Singapore website at a later date.
And… that’s about it! We’ve exhausted almost every point from the Singapore Budget 2022 that we think you may find useful. If you liked this article, feel free to share it with your friends and colleagues. You may also drop us some comments below!
If you’d like to take a closer look at the Singapore Budget 2022, you can refer to the official speech here.