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Singapore Budget 2021 Summary

Singapore Budget 2021 Summary Dear Reader,

Welcome to our Singapore Budget 2021 summary.

The following is the Budget 2021 Summary announced by Minister for Finance, Mr Heng Swee Keat in his Budget Statement for the Financial Year 2021 which was delivered in Parliament on Tuesday, 16 February 2021.

Budget 2021 Tax Updates

Extend Enhanced Carry-back Relief Scheme to the Year of Assessment (“YA”) 2021

The carry-back relief scheme was enhanced for YA2020. Under the enhanced scheme, current year unabsorbed capital allowances (“CA”) and trade losses (collectively referred to as “qualifying deductions”) for YA2020 may be carried back up to three immediate preceding YAs, capped at $100,000 of qualifying deductions, subject to conditions.
Extended to apply to qualifying deductions for YA2021 with the same parameters.

Extend the Option to Accelerate the Write-off of the Cost of Acquiring Plant and Machinery (“P&M”)

Businesses were given an irrevocable option to accelerate the write-off of the cost of acquiring P&M over two years.
To continue providing support to businesses, the option to accelerate the write-off of the cost of acquiring P&M will be extended to capital expenditure incurred on the acquisition of P&M in the basis period for YA2022 (i.e. FY2021) with the same parameters.

Extend the Option to Accelerate the Deduction of Expenses Incurred on Renovation and Refurbishment (“R&R”)

Taxpayers who incurred qualifying expenditure on R&R during the basis period for YA2021 (i.e. FY2020) for the purposes of their trade, profession or business were given an irrevocable option to claim R&R deduction in one YA (i.e. accelerated R&R deduction)
Option for accelerated R&R deduction will be extended to qualifying expenditure incurred on R&R in the basis period for YA2022 (i.e. FY2021) with the same parameters.

No GST Hike for 2021

GST rate increase to 9% will not take effect in 2021 as stated in Budget 2020. Increase in GST rate still needed sometime during 2022 to 2025, sooner rather than later, subject to economic outlook.

Extension of GST to Low-value Goods Which Are Imported via Air or Post and Business-to-consumer (“B2C) Imported Non-digital Services

Currently, low-value goods (value less than S$400) which are imported via air or post are not subject to GST. B2C imported non-digital services (such as live interaction with overseas providers of educational learning, fitness training, counselling and telemedicine) are also not subject to GST.
The GST extension to such goods and services will be effected via the Overseas Vendor Registration regime from 1 January 2023 onwards.
IRAS will consult the industry shortly, before finalising the implementation details.

For other tax updates, kindly refer to the links from IRAS and Ministry of Finance below:

COVID-19 Resilience Package

Public Health and Safe Re-Opening

$4.8 billion for public health and safe re-opening measures

Free and voluntary vaccinations for our people
Contact tracing and testing

Support for Workers and Businesses

Singapore Budget 2021 Summary

Extension of Jobs Support Scheme
- Tier 1 sectors (i.e. aviation, aerospace, tourism): 30% support for Apr to Jun ’21 wages, followed by 10% support for Jul to Sep ’21 wages
- Tier 2 sectors (e.g. retail, arts and culture, food services, built environment): 10% support for Apr to Jun ’21 wages
Continuation of first tranche of SGUnited Jobs and Skills Package into FY21
Innovation and Enterprise Fellowship Programme: build up tech talent in innovation and enterprise, especially in deep technology areas
Enhancing salaries of Healthcare workers: includes workers in public healthcare institutions, publicly-funded community hospitals and long-term care service providers
Extend Wage Credit Scheme for a year at a co-funding level of 15%
Managing Local-Foreign worker mix and industry transformation
- Extend Capability Transfer Programme to end-Sep ‘24
- Cuts in Manufacturing S Pass Sub-Dependency Ratio Ceiling (sub-DRC)
Continued credit access via Temporary Bridging Loan Programme and enhanced Enterprise Financing Scheme – Trade Loan till 30 Sep ’21
New Emerging Technology Programme will co-fund costs of trials and adoption of frontier technologies like 5G, artificial intelligence and trust technologies
CTO-as-a-Service to provide firms with access to professional IT consultancies
Digital Leaders Programme to help promising firms hire a core digital team, develop and implement a digital transformation roadmap
Continued support for enterprises to innovate, transform, and scale
- Extend enhanced support levels of up to 80% for enterprise schemes, such as Scale-up SG, Productivity Solutions Grant, Market Readiness Assistance, and Enterprise Development Grant from end-Sep 2021, to end-Mar 2022
Co-invest $500 million with Temasek in a $1 billion Local Enterprises Funding Platform to help Large Local Enterprises enter their next bound of growth
Growth and Transformation Scheme for the Built Environment sector
- Bring developers, consultants, contractors, and suppliers together as an ecosystem to transform and innovate, as the sector recovers
COVID-19 Recovery Grant to help workers and self-employed persons
- Up to $700 per month for 3 months for employees who have lost their jobs or are placed on involuntary no-pay leave for at least 3 consecutive months
- Up to $500 per month for 3 months for employees and self-employed persons who are facing income loss

Support for Specific Sectors

$870 million for the aviation sector, to preserve core capabilities and extend cost relief
COVID-19 Driver Relief Fund for eligible taxi and private hire car drivers
- $600 per vehicle per month from Jan to Mar ’21, and $450 per vehicle per month from Apr to Jun ’21
$45 million extension of the Arts & Culture Resilience Package and Sports Resilience Package to support businesses and self-employed persons in these sectors

Jobs Growth Incentive (JGI)

For All New Local Hires: Extend Qualifying Window for New Local Hires by 7 Months

Eligibility: Employers must increase both their local workforce and number of local workers earning at least $1,400 a month*
* Baseline and JGI adjustment factor for employers that hire new locals from Mar ’21 to Sep ’21 will be reset to Feb ’21 (from Aug ’20)

For All Mature Local Hires (Aged 40 and Above), Persons With Disabilities, and Ex-offenders: Extend Duration of Wage Support by Up to 6 Months

Also applies to employers that are already receiving JGI for workers hired from Sep ’20 to Feb ’21

Increase Supportable Gross Monthly Wage Cap to First $6,000, Up From $5,000

Eligible employers that hire such workers from Sep ’20 to Feb ’21 will benefit from the increased gross monthly wage cap for wages paid from Mar ’21 onwards

Household Support Package

GST Voucher — Cash Special Payment

Lower-income Singaporeans who qualify for the GST Voucher – Cash will receive an additional Special Payment of $200 each in Jun ’21

GST Voucher — U-Save Special Payment

All eligible HDB households will receive an additional 50% of their regular GST Voucher – U-Save over one year, or between $120 and $200 of utilities rebates, in Apr ’21 and Jul ’21

Service and Conservancy Charges Rebate

Eligible Singaporean households living in HDB flats will receive rebates to offset between 1.5 and 3.5 months of Service and Conservancy Charges over one year, disbursed in Apr ’21, Jul ’21, Oct ’21, and Jan ’22

Top-ups to Child Development Account, Edusave Account, and Post-Secondary Education Account

Singaporean children below age 21 in 2021 will receive an additional one-off top-up of $200
Top-ups to Edusave Account and Post-Secondary Education Account in May ’21; top-up to Child Development Account in Sep ’21

Community Development Council (CDC) Vouchers

$100 in vouchers for each Singaporean household, to be used at participating heartland shops and hawker centres

Charitable Giving and Volunteerism

Extend 250% tax deduction for donations to IPCs for another two years, until end-2023
Extend Tote Board’s Enhanced Fund-Raising Programme by one year with dollar-for-dollar matching on eligible donations
Extend ComChest’s SHARE as One matching grant period to FY2023
$20 million Change for Charity Grant for businesses to do more to facilitate spontaneous acts of daily giving
Extend Business and IPC Partnership Scheme for two years, until the end of 2023 to support corporate volunteerism
CDCs’ $50 million Care and Innovation Fund to support bottom-up, innovative initiatives which address the needs of the community

Singapore Green Plan 2030

Food Resilience

$60 million Agri-Food Cluster Transformation Fund to continue supporting technology adoption in the agri-food sector

Encouraging Electric Vehicle (EV) Adoption

60,000 EV charging points at public carparks and private premises by 2030
$30 million over the next 5 years for EV-related initiatives
Increasing affordability of electric cars by narrowing the cost differential between electric cars and internal combustion engine (ICE) cars
- Lower Additional Registration Fee floor from $5,000 to $0 for electric cars from Jan ’22 to Dec ’23
- Adjust road tax for electric cars so that mass-market electric cars pay road tax comparable to ICE cars