Accounting Trends to Look Forward to in 2020
Small and medium enterprises (SMEs) are at the very centre of this plan. The newly allocated budgets aim to prevent local and small businesses from closing down and support them via tax incentives, loan schemes and by providing massive subsidiaries to low-income workers and self-employed people throughout the country.
The previous stimulus package, Resilience Budget, was of US$34 billion, much higher than the latest package. The new budget is being named the Solidarity package. According to Singapore’s Finance Ministers, Heng Swee Keat, the new budget will increase the budget deficit to 8.9% of the GDP.
As well as supporting small businesses, the budget provides financial help to people through cash handouts and is highly flexible in terms of fees, interest rates and loans. The primary aim of the Solidarity Budget is to save jobs and preserve the livelihoods of workers who are dependent on their daily wages.
The budget is proof of the fact that the country is preparing to mitigate the intense economic crisis due to the COVID-19 pandemic. In the Unity Budget introduced in February, the government had already allocated US$4.4 billion to fight the coronavirus pandemic.
However, the incentives given in that budget were only short-term. The crisis worsened after February, which has led to the introduction of Resilience and Solidarity Budgets.
Tax relief and stimulus packages
1. Support for Foreign Workers
Under the new budget, the government has decided to waive the Foreign Worker Levy for April and May to facilitate the cash flow for businesses. Accounting firms in Singapore are applauding this policy as they had already predicted economic difficulties if excessive taxes and charges were levied on workers and businesses.
2. Loans and Rental Waivers
Moreover, one month’s rent of the industrial, office and agriculture tenants of Government agencies will also be waived. The Singapore Government has also decided to ensure that tax incentives are provided to tenants and property owners through appropriate measures.
To provide support to SMEs, the Solidarity Budget includes loan schemes and new guidelines for the EFS SME Working Capital Loan. Loan applications during the period of 8th April 2020 to 31st March 2021 will be in compliance with the new policies.
3. Jobs Support Scheme (JSS)
JSS was introduced in the previous package, the Resilience Budget. The government has planned to expand JSS by paying first $4600 of gross monthly wages for every local employee in April and May 2020. The decision has been taken as the lockdown was previously extended. Moreover, JSS will now cover wages of employees of a company who are also shareholders and directors of the company (shareholder-directors).
The budget has increased the annual value threshold from $13,000 to $21,000 for the self-employed.
5. More Financial Help for Locals
Audit firms in Singapore have revealed that local businesses and workers have taken a huge hit due to the coronavirus crisis. Singaporeans above the age of 21 will get the cash payout between $300 – $900. Similarly, people with at least one child of age 20 or less will get a handout of a similar amount. People above the age of 50 will get $70.
Ministry of Power has also suggested businesses should get help from local experts, accounting and audit firms to get accurate data and predictions about the market and to make calculated decisions about the functioning of businesses.
The government is asking companies to rely on expert opinions to ensure that a minimum number of jobs are lost, and the impact of the crisis is reduced.
6. Support for Businesses
Like the previous stimulus packages, Solidary Budget also includes tax rebates and incentives for businesses in Singapore. Rental waivers, loan schemes, reduced interest rates and specialized incentives are provided for numerous sectors. Support for households is also provided in terms of subsidized loans and utility bills.
7. Impermanent layoffs
The budget has allowed employers to lay off employees for a short period. Any layoff can go on for a maximum period of one month, and after that, the employer must rehire the employee.
In a Nutshell
The Solidarity Budget is an all-encompassing package that aims to cover all sectors of the country. Along with providing the much-needed tax incentives in Singapore, programmes for retraining and rehabilitation are also introduced to get back to the regular working routine and reduce the long-term effects of COVID-19 pandemic in the country. For more information, feel free to get in touch with us.