BSL Bulletin

The Minister of Finance announced the Budget on 18 Feb 2019. In 2018 the Singapore economy grew 3.2% with an overall budget surplus of S$2.1b. For 2019, the Budget projects a deficit of S$3.5b. The 2019 Budget is an expansionary budget with many feel good factors enabling Singaporean to face future challenges and tackle social needs and requirements of higher cost of living and health care as well as becoming a more skilled workforce ready for the new digital and smart nation initiatives.

The main thrusts of the 2019 Budget are for Singapore to be: a Safe and Secure Country, Vibrant and Innovative Economy, Caring and Inclusive Society and Global City and Home for All.

1. Safe and Secure Country

Singapore is one of the safest cities in the world. However, security and terrorism threats are evolving and becoming complex as well as cyberattacks and spreading of fake news abound. Consequently, the Budget has allocated 30% of the total expenditure to defence to protect the sovereignty and well-being of Singapore.

2. Vibrant and Innovative Economy

As part of the Singapore government policies to support and nourish the Start-Up ecosystem, today more than 150 global venture capital funds, incubators and accelerators are based in Singapore. To further deepen smart patient capital, $100m will be set up to establish SME Co-Investment Fund III, in addition to the $400m government capital already set up in the past. Further through Innovation Agents Programme as well as Enterprise Financing Schemes,
Small and Medium Enterprises (“SMEs”) can obtain both expertise in using technology to improve their businesses as well as have access to working capital loans.

Further as part of the economic transformation process the $4.6b will be spent over the next three years on new and enhanced economic capability-building measures in Budget 2019. $3.6b will go towards helping workers to thrive amid industry and technological changes and $1b will go towards helping SMEs build deep enterprise capabilities.

3. Caring and Inclusive Society

Singapore is celebrating 200 years since Sir Stamford Raffles landed in Singapore. As part of the Bicentennial celebration the Budget 2019 has set aside $1.1b for Singaporeans to commemorate this significant milestone. Lower-income Singaporeans will receive up to $300 in GST Voucher and Singaporeans who received Workfare income supplements in 2018 will receive additional 10% Workfare Bicentennial Bonus. Further senior citizens aged 50 to 64 will receive up to $1000 CPF top-ups where their existing CPF balances are below $60,000. To support parents with
school going children, students in primary and secondary schools will receive $150 in Edusave top-ups, and those aged 17 to 20 will get up to $500.

Further all Singapore resident individuals will enjoy a 50% tax rebate for YA 2019 subject to a cap of $200.

4. Goods and Services Tax

The Minister of Finance had announced in the last year budget fpr the planned increase of GST to 9% from the current 7% which should be implemented gradually from 2021 onwards, though the government will continue to absorb GST on subsidised education and healthcare. To help cushion the impact of the GST increase, the government has committed to enhancing the permanent GST Voucher scheme for lower-income households and the elderly as well as introducing a GST offset package, in which lower and middle income households will receive more.

With effect from 19 February 2019, GST Import Reliefs for travellers have been tightened. For travellers who spend less than 48 hours outside Singapore, the relief cap will be reduced from $150 to $100, while those who spend 48 hours or more outside of Singapore, the relief will be reduced from $600 to $500. This will likely affect those who go to Malaysia frequently for shopping.

4. Goods and Services Tax

There is no change to the corporate tax rate which remains competitively low in the world. The headline corporate tax rate is 17%. The partial tax exemption from year of assessment 2020 is at 75% on the first $10,000 and 50% on the next $190,000 applicable to all companies.

From year of assessment 2020, the start-up tax exemption scheme applicable to new qualifying companies is at 75% of the first $100,000 chargeable income and 50% on the next $100,000 chargeable income of qualifying new companies will be exempt from tax for the first three consecutive years of assessment.

Singapore tax system remains progressive and is being made more resilient for Singapore’s future economic growth and robustness.

Contact Details
BSL Tax Services Pte Ltd

N Vimala Devi
Email: devi.vimala@bsl.sg
DID: +65 6833 6322

Writers’ Caveat
These articles have merely attempted to provide a broad overview on the subject matters. They are not in any way intended to be comprehensive and no specific action should be taken on the basis of the above without consulting your professional advisors.