On Friday, 18 February 2022, Prime Minister Lawrence delivered the annual budget speech. What are some of the important items that you as an entrepreneur should take note of? Here are four:
Goods and Services Tax increase
Singapore’s GST has stood at 7% for more than a decade. However, this will change when 1 January 2023 rolls around; the tax will be increased one percentage point to 8% and will experience another increase of the same rate the following year. Perhaps the increases are rolled out in two stages to ease the idea to the public and lessen the impact on lower-income families.
The tax hike is predicted to bring approximately S$3.5 billion or a 0.7% increase to the gross national product (GDP) revenue annually when it takes full effect in 2024. It’s important to keep in mind that the government has committed to adding up $640 million to the $6 billion Assurance Package to cushion the impact of the tax hikes:
- Cash payouts of S$700 to S$1,600 will be received by every Singaporean aged 21 and above over the next five years, depending on income and property ownership.
- Eligible seniors aged 55 and above will receive cash payouts of $600 to $900 from 2023 to 2025.
- Eligible HDB households will be entitled to U-Save rebates, ranging from $330 to $570, depending on their flat type. This scheme will happen from January 2023 to 2026.
- $150 top-up will be given to all Singaporean children and seniors into their MediSave accounts annually over the next three years.
- $200 Community Development Council (CDC) vouchers will be given to households annually from2023 and 2024.
Income tax rate will increase for top earners
Singapore’s highest income tax rate has remained at 22% for the last five years, a tax rate that’s applicable for those who earn more than S$320,000. Mr. Wong announced that such an arrangement will no longer be valid in the year assessment of 2024. The tax rate will increase by one percentage point for those who earn above S$500,000 to S$1 million. Another 1% will be added for those who make above $1 million. Such increases are predicted to add approximately $170 million to the tax revenue annually.
Aside from income tax, taxes will also increase for properties and luxury cars. The property tax rate for non-owner-occupied or rental properties will be levied at 12 to 36%, increasing the current tax rate from 10% to 20%. Meanwhile, owner-occupied properties whose value stands above S$30,000 annually will be taxed, ranging from 6% to 32%, increasing from the current tax rate of 4% to 16%.
Then when you decide to purchase a new car whose open market value is above S$80,000, you’ll need to register that vehicle under a new tier, where you’ll pay a tax rate of 220%. Could this make some think twice about purchasing a new Lamborghini, Porsche, or Ferrari?
Support for SMBs recovering from COVID-19
There’s no denying that the effect of COVID-19 still lingers, especially for SMEs who may not have the necessary funds to recover quickly. Therefore, the government has extended the Jobs Growth Incentive until September. On top of that, SMEs will be entitled to a S$1,000 payout per employee until the maximum of S$10,000. An additional S$1,000 payout is also available for groups that don’t hire local employees, such as Singapore Food Agency-licensed hawkers, market and coffee shop stallholders.
Foreign workers revisions
When it comes to foreign workers, the qualifying minimum salary will be increased by S$500, from S$4,500 to S$5,000 and $5,000 to $5,500 for employment pass holders and those who work in the financial sector.
Need a partner to help your company navigate these regulations?