⚡️This article covers support packages: the Resilience Budget (the 2nd one released) and the Solidarity Budget (the 3rd one). For the information on the Unity Budget (the very 1st one), refer to What's up with the 2020 Budget Business-wise
The Singapore government developed 2 sets of measures to help people and local companies survive the economic slump caused by the COVID-19 outbreak.
The state initiatives are aimed at helping companies maintain healthy cash flow, cut the costs, and preserve access to credit no matter how hard they are hit.
Below we list the initiatives that will save you thousands of dollars and help to protect your staff.
The state will co-fund your local employees’ salaries
The Jobs Support Scheme was first introduced in Budget 2020, and now it got a boost.
Under the Jobs Support Scheme (JJS), the state will reimburse up to 25% of every salary you pay to your local employees — citizens and permanent residents.
⚡️The April wage subsidy will compensate you as much as 75% of every local employee’s salary.
The monthly wage cap is now set at S$4,600. Here’s how it works:
- If your employee’s gross monthly salary is less than or up to S$4,600, you will get 25% funding of what you pay them.
- If your employee earns more than S$4,600, you will get the maximum payout — a quarter of S$4,600, or S$1,150.
The most affected industries will get more support:
- Food & Beverage — a 50% funding;
- Aviation — a 75% funding;
- Travel (including licensed hotels, gated tourist attractions, and MICE venue operators) — a 75% funding.
The exception will be the businesses owners on payroll — their salaries won’t be co-funded regardless of the industry.
Companies are signed up for the Jobs Support Scheme automatically, so there’s no need to apply. IRAS will notify you about the payments and then transfer money in May, July, and October 2020.
IRAS will calculate your JSS payouts using the CPF contributions data — so make sure your company transfers these in time.
⚡️The state will support you in supporting your foreign workers
Here’s what you’ll get:
- a waiver of monthly foreign work levy due in April 2020;
- a foreign worker levy rebate of $750 for every Work Permit or S-Pass holder based on the previous levies paid in 2020.
Your income tax payments are postponed for 3 months
Companies get a 3-month deferment from income tax. The payments will start in July 2020.
“If you made money last year and need to pay tax this year, you will delay paying for 3 months, so you can use the cash to meet other urgent needs,” Singapore Finance Minister Heng said.
The tax payments are postponed automatically — there’s no need to apply for it.
You will pay less or no property tax in 2020
Hotels, service apartments, tourist attractions, shops, and restaurants will pay no property tax.
Businesses in other non-residential properties (e.g. offices) that are subject to property tax will pay 30% less than before.
⚡️They will let you put some contractual obligations on hold
Businesses and individuals will be able to temporarily defer some of their contractual obligations, for example:
- paying rent;
- repaying loans;
- completing work;
The Ministry of Law will soon introduce a bill addressing this scenario. This bill will also ensure that property owners pass on the property tax rebate in full, making rent more affordable for the tenants.
All government fees and charges will be frozen for 1 year
The Ministry of Finance freezes all government fees and charges for 1 year, from 1 April 2020 to 31 March 2021.
It means that the fees and charges will not be increased for one year, from 1 April 2020 to 31 March 2021. You’ll still need to pay them during this period but at the current rates.
⚡️UPD: Frequently Asked Questions
What are some examples of Government fees and charges that will not be increased?
Generally, all fees and charges imposed by Ministries, Organs of State, and Statutory Boards will not be increased. For businesses, some examples are LTA and STB licence fees, SFA food import permits, ACRA company registration fees, NEA inspection fees, and fees for certification of government documents.
Why isn’t the Government waiving all fee collections during this period?
They simply chose a different way of supporting us — they provide cash payouts, rebates, rental waivers, etc.
The state protects your access to credit
It’s important that businesses have access to credit during these hard times. Here are the programs that were enhanced:
The Loan Insurance Scheme helps a company get short-term trade financing by insuring banks against the company going under.
- Subsidies to businesses for loan insurance premiums under the Loan Insurance Scheme increase to 80%.
Enterprise Financing Schemes (EFS)
EFS – Trade Loan finances trade needs.
- You can now borrow up to S$10 million.
- The Government’s risk-share goes up to 80%.
EFS –SME Working Capital Loan finances daily operational needs.
- You can now borrow up to S$1 million
Under the Temporary Bridging Loan Programme, enterprises can borrow up to S$5 million with the yearly interest rate of up to 5%. The Government provides 80% risk-share on these loans.
- The programme is now available for companies from all industries, not just from tourism
- The maximum supported loan is now S$5 million
⚡️If you apply for the loan under the Temporary Bridging Loan Programme, EFS Working Capital Loan, or EFS Trade Loan before 31 March 2021, the government’s risk share will be 90% instead of 80%.
⚡️MAS & the banks will help you with credit obligations
The Monetary Authority of Singapore teamed up with the banks to help you “ride through the storm” as they put it.
A halt on principal payments on secured term loans
SMEs may defer principal payments on their secured term loans up to 31 December 2020. Put simply, one will only be paying the interest, not actually giving back the money they borrowed.
SMEs will also be able to extend the tenure of their loans by up to the corresponding principal deferment period.
It’s not an auto opt-in relief: the banks and finance companies will assess how reliable an SME is and make a decision. They promise to give the green light to SMEs that continue to pay interest and maintain a healthy relationship with their banks and finance companies (no more than 90 days past due).
SMEs are encouraged to turn to their banks and negotiate to alter their loan repayment schedules for other types of loans.
Lower interest rates for SMEs
This one is still in development, but here’s what we know by now: the state will be funding the loans granted under Enterprise Singapore’s Working Capital Loan scheme and Temporary Bridging Loan Programme.
The banks and finance companies will have to apply for these funds. To get them, the financial institutions need to make the conditions more favourable for SMEs, which may drive down the interest rates.
Assistance with Insurance Premium Payment
SMEs holding general insurance policies that protect their business and property risks can apply for instalment payment plans and pay the premiums on smaller amounts.
The coverage will be in place for the paid-up period.
Stay strong, guys
Singapore is now pouring more money into supporting us than it did during the financial crisis of 2009. However, Singapore won’t be able to isolate itself from the global economic downturn. Tough times are here.
But who knows, maybe the COVID-19 problem is an opportunity in disguise. Digitised businesses with online services will be the most comfortable during the global lockdown. It looks like now more traditional companies have an incentive to evolve and catch up.
Other countries are already learning their COVID-19 lessons. It turns out that most of the office work can be done remotely, big offline meetings are useless 90% of the time, and the traditional education with all those textbooks and classrooms is obsolete. Singapore can't help but draw its own meaningful lessons from the pandemic.
And for now, let us try to stay active and support each other, both as companies and as people.