BSL Bulletin

The 2022 budget seeks to support jobs, businesses, and households in a significant $560 million package through the Small Business Recovery Grant and Jobs Growth Incentive. Also, to assist Singaporeans in alleviating the cost of living pressures through GST vouchers, top-ups to children’s educational expenses and Community Development Council vouchers.

Businesses have been given a boost with $200 million to enhance digital capabilities that provide bridging, trade loans, and Merger & Acquisition loans for working capital to encourage Singapore-based businesses’ internalisation. Further, $600 million has been set aside under the Productivity Solutions Grant for SMEs to push for greater advancement in the local enterprise ecosystem, including innovation and attracting and growing talent development through industry and overseas attachments.

The anticipated 2% GST hike from the current 7% has been deferred to be raised over two years from 2023 to 2024. The postponement of the GST hike was a pleasant surprise and welcome news to Singaporeans. To address the ageing population, even the income disparity, and fund major health and social programmes, the Minister has introduced more progressivity in high-income earners’ income tax rates. The top marginal resident individual tax rates will increase from the year of assessment 2024 from 22% to 23% for chargeable income over S$500,000 up to S$1 million; 24% for chargeable income over S$1 million.

From 1 January 2023 and 2024, owner-occupied residential property tax brackets will be adjusted with top margins set at 23% (2023) and 32% (2024) for annual value over S$100,000. Non-owner occupied residential property tax rates will range from 11% to 27% (2023) and 12% to 36% (2024), with top margins applicable to annual value over S$60,000. Also, higher bands of property tax rates for high-end residential properties.

Luxury cars will be taxed at a higher rate, with a new Additional Registration Fee tier for vehicles at a rate of 220 per cent for the portion of open market value over S$80,000.

The above wealth taxes aim to build a fairer society where everyone aspires to succeed regardless of background.

With BEPS 2.0, Singapore agreed on the two pillars among the more than 130 countries. Pillar one reallocates profits of multinational enterprises (“MNE”) whose turnover exceeds Euro 20 billion and above 10% profit margin to countries where consumption occurs. Pillar two subjects the MNE with global revenue of more than Euro750 million to profits being subject to a minimum tax rate of 15%.

To prevent the erosion of Singapore’s tax base, the Minister proposed adjusting the Singapore tax system to introduce a Minimum Effective Tax Regime (“METR”). The MNE’s effective tax rate in Singapore is at 15%. The MTER is subject to further study and consultation with the industry on the design of METR and monitoring of international developments before any decisions on the METR will be made. As tax incentives become less attractive, Singapore must compete for foreign investments on other fronts. Singapore has a very efficient logistic hub with easy access to the Asia Pacific region, a world-class talent pool, and a stable government encouraging free trade and a sound business environment. It offers intellectual property protection and an efficient legal system. Businesses setting up in Singapore would have many advantages as Singapore governs based on the rule of law and is renowned as a global business hub.

As part of the green initiative and to achieve net zero emissions by 2050, the government has sent a strong signal by substantially increasing the carbon taxes from the current 5%. Carbon tax hikes will start from 2024 at 25%, with the expected increase to $50 to $80 per tonne by 2030. This will enhance Singapore’s drive to become the Asia hub for carbon services and a marketplace for carbon credits and transition to a green sustainable economy.

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.