Following the release of Budget Statement 2020 last February (the ‘Budget 2020’), the global COVID-19 crisis has hugely worsened, rapidly affecting, among others, the economy in Singapore and globally.
Singapore Government has promptly reacted, implementing several measures to support Singapore companies and individuals, to save jobs and to help businesses in preserving their cash flow and operations during this period of uncertainty. Main measures were provided through the Resilience Budget, released on 26 March, the Solidarity Budget, released on 7 April, and through other ad-hoc measures released from time to time.
We highlight here below measures implemented as at the 3rd of May 2020 that may apply to small and medium enterprises and employees in Singapore:
- Automatic Deferment of Corporate Income Tax and Good and Service Tax Payment.
- Property Tax Rebates for Non-Residential Properties
- Duty to Pass to Tenant the Property Tax Rebate on Non-Residential Properties
- Rental Waivers for tenants in government-owned / managed non-residential facilities
- Individual Income Tax Deferments
- Foreign Worker Levy Waiver and Rebate
- Enhanced Job Support Scheme
- Enhancements to Enterprise Development Grant
- Option to accelerate Capital Allowances
- Accelerated Deductions of Expenses incurred on Renovation and Refurbishment
- Double Tax Deduction for Internationalisation scheme
- Carry-back Relief
Automatic Deferment of Corporate Income Tax (CIT) Payments and Good and Service Tax Return Submission
All companies with CIT payments due in the months of April, May and June 2020 are granted an automatic three-month deferment of payments. The CIT payments that are deferred from April, May and June 2020 will be collected in July, August and September 2020, respectively.
This relief measure is on top of automatic extension of two months interest-free instalments, and corporate income tax rebate of 25% of tax payable, capped at SGD 15,000 for Year of Assessment 2020, both announced in Budget 2020. No application is required: eligible companies may expect to receive a letter from IRAS by 15 April 2020.
As to GST submission due for the period 1 January – 31 March 2020, the deadline of 30 April has been automatically deferred to 11 May 2020. No application is required, and GST registered entities may immediately take advantage of the postponed deadline.
Property Tax Rebates for Non-Residential Properties
Qualifying non-residential properties will be granted property tax rebate for the period 1 January 2020 to 31 December 2020, ranging from 30% to 100% of property tax payable for the said period. Commercial properties badly affected by COVID-19 like hotels, serviced apartments, tourist attractions, shops and restaurants will receive a 100% tax rebate; other non-residential properties, such as warehouse, will get a 30% tax rebate.
Owners are not required to submit any claims for the rebate: IRAS will inform owners of qualifying properties on their property tax rebates by 31 May 2020, and they can expect to receive their refunds by 30 Jun 2020, or no GIRO deduction for a certain period starting from May 2020.
Duty to Pass to Tenant the Property Tax Rebate on Non-Residential Properties
Provided the Property Tax rebate granted to non-residential properties as mentioned in the paragraph (2) above, the Singapore Government has enacted the Covid-19 (Temporary Measures) Act, according to which owners granted property tax rebate on non-residential property have a duty to transfer the tax benefit on relevant tenants of such non-residential properties.
The manner in which the benefit may be passed may be:
- A payment of money, whether as a lump sum or by way of instalments; and/or
- An offset against or a reduction of the whole or any part of any rent fee payable by the tenant to the owner.
Rental Waivers for tenants in government-owned / managed non-residential facilities
To help alleviate costs for businesses located in Government-owned / managed non-residential facilities, the following tenants will qualify for rental waivers:
- Commercial Tenants: commercial tenants who qualified for the half-month rental waiver announced in Budget 2020 will not get three months’ worth of rental waiver in total (i.e., two months more), with a minimum waiver of SGD 200 per month. Eligible tenants may include those providing commercial accommodation, retail, F&B, recreation, entertainment, healthcare, and other services.
- Other Non-Residential Tenants. Government agencies such as Jurong Town Corporation (JTC), Singapore Land Authority (SLA), Housing and Developing Board (HDB), Urban Redevelopment Authority (URA), Building Control Authority (BCA), National Parks Board (NParks), and People’s Association (PA) will provide half a month’s worth of rental waiver to eligible tenants/lessees of other non-residential premises who do not pay Property Tax. Eligible tenants/lessees may include those in premises used for industrial or agricultural purpose, or as an office, a business or science park, or a petrol station.
In addition, all government fees and charges will be frozen for one year, from 1 April 2020 to 31 March 2021.
Employee Income Tax Deferments
Employees may defer their income tax payments due in May, June and July 2020. For Giro payments, income tax deduction will resume in August, September or October 2020 and the end-date of the instalment plan will be extended by 3 months. For lump sum payment, payment may be deferred by three months.
This deferment option is not automatic, but a request must be submitted – and approved – by IRAS. Taxpayers must sign up for the deferment option by 31 July 2020. The amount of income tax payable remains the same.
Foreign Worker Levy Waiver and Rebate
A waiver for payment of Foreign Worker Levy (FWL) for March and April 2020, which is due in April and May 2020, respectively, has been granted to employers, to ease labour costs of those entities employing foreign workers.
Employers will also receive a one-off FWL rebate of SGD 750.00 for each work permit or S Pass holder employee, for levies paid in 2020.
Enhanced Job Support Scheme
The Jobs Support Scheme (JSS) was released to help businesses to retain local employees (Singapore Citizens and Permanent Residents) during this period of uncertainty. Eligible employers will receive as follows:
- 75% cash grant on the gross monthly wages of each local employee for the months of April and May 2020, subject to a monthly wage cap of SGD 4,600 per employee.
- 25% cash grant on the gross monthly wages of each local employee for 7 months (i.e., October to December 2019, and February, March, June and July 2020), subject to a monthly wage cap of SGD 4,600 per employee.
Employers do not need to apply for the JSS. The grant will be automatically computed pursuant to CPF contribution data. Employers can expect to receive the first JSS payment from IRAS by 30 April 2020, and subsequent payments in May, July and October 2020.
Enhancements to Enterprise Development Grant (EDG)
The EGD provides customised support to local enterprises which undertake projects in the following three areas: (i) Core Capabilities; (ii) Innovation and Productivity; and (iii) Market Access.
The current maximum support level was up to 70%; Resilience Budget has raised such a level up to 80%, from 1 April 2020 to 31 December 2020, with a further raise up to 90% for enterprises that are most severely impacted by COVID19, on a case-by-case basis. Enhanced support will be granted to eligible enterprises that plan to refresh their business models and find new opportunities.
To qualify for the EDG, enterprises will need to fulfil the following criteria:
- be registered and operating in Singapore;
- have a minimum of 30% local shareholding; and
- be in a financially viable position to start and complete the project.
In addition, in order to qualify for the enhanced EDG effecting from 1 April 2020, companies must commit that the benefits of enterprise transformation are passed on to the employees by improving staff outcomes, such as wage increment, job creation, job re-design, or training for existing staff.
Option to accelerate Capital Allowances
Companies that incur capital expenditure for purchase of plant and machinery (not for resale) in the basis period for YA 2021 (i.e., financial year 2020) shall have the option to accelerate the write-off of such an expenditure over two years, namely 75% write-off of the cost incurred in YA2021 and 25% of the cost incurred in YA2022.
Accelerated Deductions of Expenses incurred on Renovation and Refurbishment
Certain qualifying capital expenses incurred for the renovation or refurbishment works done in the business premises can be claimed as a tax deduction against the income derived from that business.
Such expenditure, which was deductible over three consecutive years subject to a cap of SGD 300,000.00, may now be deducted in a single year. Once made, the election is irrevocable.
The acceleration of deductions can provide immediate cash tax savings to profitable businesses; nevertheless, non-profitable businesses will not benefit from this option because no deferment of claims is allowed under this scheme.
Double Tax Deduction for Internationalisation scheme
Under the current Double Tax Deduction for Internationalization Scheme (“DTDI”), businesses are allowed a deduction up to 200% of qualifying expenses incurred for certain market expansion and investment development activities. The DTDI scheme, which was to expire on 31 March 2020, has been extended to 31 December 2025 and enhanced to include a wider list of eligible costs.
Companies that incur capital expenditure for purchase of plant and machinery (not for resale) in the basis period for YA 2021 (i.e., financial year 2020) shall have the option to accelerate the write-off of the expenditure over two years, i.e. 75% write-off in YA2021 and 25% in YA2022.
Automatic double tax deduction can be claimed up to SGD 150,000; for qualifying expenditure exceeding the mentioned threshold, approval must be sought with the Singapore Tourism Board.
The carry-back relief scheme has been enhanced to allow qualifying deductions for YA 2020, to be carried back for up to three immediately preceding years of assessment, capped at SGD 100,000 of qualifying deductions and subject to certain conditions (e.i., shareholders continuity test for loss utilization).
The changes to the carry-back relief scheme would allow a Singapore company that has qualifying deductions in YA 2020 to obtain a cash refund utilizing these deductions against the prior three years of assessment assessable income.
Should you have any queries as to how your business may benefit from the above measures, please do not hesitate to contact Fidinam Singapore.