Everything you need to know about the Singapore Budget 2020

Posted by InCorp Global on February 28th, 2020

Singapore’s Deputy Prime Minister and Finance Minister Heng Swee Keat while delivering the country’s annual budget on 18 February 2020 indicated that last year the country’s economy grew by a modest 0.7%, which is its weakest growth since the 2008 financial crisis. As such the Ministry of Trade and Industry (MTI) has downgraded the GDP forecast from between 0.5% to 2.5% to between -0.5% and 1.5%, he said.

Among other things, he introduced a slew of measures amounting to .6 billion, to deal with the coronavirus outbreak. This includes a billion – Stabilisation and Support Package – to help firms with cash flow and retain workers; a .6 billion – Care and Support Package – for household expenses; as well as some additional support to sectors directly affected by the outbreak which are tourism, aviation, retail, food services, and point-to-point transport services. For details on all these measures, please refer to our write-up, Budget 2020: Singapore introduces measures to deal with the coronavirus outbreak.

Additionally, Minister Heng Swee Keat noted, “Our Transformation and Growth effort, costing .3 billion over three years, will support our longer-term plans to position Singapore as a Global-Asia node of technology, innovation, and enterprise.”

He also called the Budget a “more expansionary” one, with this year’s overall budget deficit projected to be .9 billion (2.1% of GDP).

During his speech, the Minister also announced several changes, extensions, expansions, and modifications in the country’s tax regime and schemes for Singapore-incorporated companies – affecting foreign and local individuals, entrepreneurs and businesses.

Below is the exhaustive summary of the major changes.

Tax changes in Singapore Budget 2020

1) Goods and Services Tax (GST) to remain at 7% in 2021.

In 2018, the minister announced his plans to raise the GST by two percentage points, to 9%, sometime from 2021 to 2025. “After reviewing our revenue and expenditure projections, and considering the current state of the economy, I have decided that the GST rate increase will not take effect in 2021. In other words, the GST rate will remain at 7% in 2021,” he said.

The Government has also assured that whenever the GST is raised, a billion Assurance Package will be introduced to offset the increase, which will give every adult Singaporean a cash payout of 0 to ,600 over five years.

This will be in addition to the permanent GST Voucher or GSTV scheme, already in place.

2) Grant Corporate Income Tax (“CIT”) Rebate

To help companies with cash flow, a CIT Rebate of 25% of tax payable, capped at ,000, will be granted for Year of Assessment (“YA”) 2020.

Read more about Singapore Budget 2020 at InCorp Global.