23 August 2021
The third Supplementary Budget 2020 (named the 'Fortitude Budget') was presented by Deputy Prime Minister and Minister for Finance, Mr. Heng Swee Keat, to the Singapore Parliament on 26 May 2020. Together with the Unity, Resilience and Solidarity Budgets (for more details, please refer to our Budget 2020 insights: https://www.taxiseasia.com/news-and-insights), the S$33-billion Fortitude Budget was introduced to provide additional economic support as Singapore exits the 'Circuit Breaker' period and embarks on the next phase of its battle against COVID-19.
| 1. | Extending wage support under Jobs Support Scheme ("JSS") |
The JSS was first introduced in the Unity Budget. The scheme provides employers with a cash grant of up to 75% (depending on sector) on the first S$4,600 of the gross monthly wage of each Singapore or permanent resident employee. To assist businesses particularly affected by COVID-19, the Fortitude Budget will increase the cash grants provided to employers operating in certain sectors to the following levels: • aerospace – 75%; The Fortitude Budget will also extend JSS for one additional month (up from nine months previously) to cover wages paid in August 2020. Employers will receive this additional pay-out in October 2020. To ensure that businesses can cope with staff costs during the phased reopening of economic activities during the post-'Circuit Breaker' period, businesses that cannot resume operations immediately will continue to receive a 75% wage support for Singapore and PR employees until August 2020 or when they are permitted to resume operations, whichever is earlier. |
| 2. | Job creation under the SGUnited Jobs and Skills Package |
The SGUnited Jobs and Skills Package aims to support employees affected by COVID-19 through the creation of more than 40,000 public and private sector jobs and more than 25,000 traineeships for both first-time job seekers and mid-career job seekers. To enhance workforce quality and provide opportunities for re-skilling, the Government will allow around 30,000 job seekers to enrol in training courses and provide them with a training allowance of S$1,200 per month for the duration of their training. |
| 3. | Salary support for hiring eligible employees who have completed eligible traineeships and training schemes | Under the SkillsFuture Mid-Career Support Package, the Government will provide 40% salary support to employers for each eligible employee aged 40 and above for a period of six months, subject to a S$12,000 cap. For eligible employees under 40, this incentive will provide 20% salary support for a period of six months, subject to a S$6,000 cap. |
| 4. | Extending waiver and rebate of Foreign Worker Levy ("FWL") |
The Solidarity Budget granted a waiver of the monthly FWL due in April 2020 and a FWL rebate of S$750 in April 2020 for the levies already paid in 2020 for each work permit or S-Pass holder. The Fortitude Budget will extend the waiver and rebate of FWL for up to two months for businesses that cannot resume operations immediately during the post-'Circuit Breaker' period. In particular, the FWL waiver will be set at 100% in June and 50% in July, and the FWL rebate will be set at S$750 in June and S$375 in July. |
| 5. | No CPF contribution hike in 2021 | The Government will defer the previously announced increase in CPF contribution rates for senior workers by one year to 1 January 2022. |
| 6. | Expanding rental relief for small and medium-sized enterprises ("SMEs") |
To offset the rental costs incurred by SME tenants, the Government will provide the following support: (a) a cash grant of about 0.8-month rent to qualifying SME tenants of qualifying commercial properties (e.g. shops); and (b) a cash grant of about 0.64-month rent to qualifying SME tenants of other non-residential properties (e.g. industrial and office properties). To ensure that property owners (i.e. landlords) pass on these cash grants (which will be disbursed by the Government to them) to their SME tenants, the Government has introduced the COVID-19 (Temporary Measures) (Amendment) Bill 2020 (first read on 5 June 2020) in the Singapore Parliament to give this policy legal effect. Separately, SME property owners who are engaged in a trade or business on the property that they own will similarly be eligible for cash grant. Crucially, such property must not be vacant property or land under development. |
B. TRANSFORMING BUSINESSES
Recognising the disruptions brought about by the COVID-19 pandemic as an opportunity for Singapore businesses to rethink their practices, the Fortitude Budget incentivises the adoption of digital solutions by businesses and also seeks to encourage start-up activities by Singaporeans.
| 1. | Providing start-up financing | In addition to the S$300 million set aside under the Unity Budget for deeptech start-ups, the Government will allocate S$285 million in funds to support promising start-ups by co-investing with private sector actors. |
| 2. | Incentivising adoption of epayment systems | IMDA, NEA, JTC, HDB and Enterprise Singapore will provide a bonus of S$300 per month over a five-month period (i.e. S$1,500 in total) to incentivise more stallholders in hawker centres, wet markets, coffee shops and industrial canteens to adopt e-payment systems, such as the Singapore Quick Response Codes for contactless payment. |
| 3. | Digital Resilience Bonus |
Eligible businesses in the food services and retail sectors can receive a payout of up to S$5,000 for implementing certain prescribed e-commerce solutions (such as PayNow Corporate and e-invoicing). Food services and retail businesses that incorporate advanced solutions (such as data mining and analytics) may qualify for an additional S$5,000 of pay-out. The Government will also set aside S$250 million to help businesses digitalise by collaborating with digital platform solution providers and industry leaders. This would apply to activities such as developing offline-to-online business models to access new domestic revenue streams and international demand. |
C. SUPPORTING HOUSEHOLDS, BUILDING AN INCLUSIVE COMMUNITY
The Fortitude Budget will provide enhanced support for households and the broader community to mitigate the economic effects and uncertainties brought on by the COVID-19 pandemic.
| 1. | Additional funding for the COVID-19 Support Grant |
The COVID-19 Support Grant was first introduced in the Resilience Budget to help qualifying workers who become unemployed due to COVID-19 by providing them with a grant of S$800 per month (for three months) as they seek new jobs or attend training to better their employment prospects. Under the Fortitude Budget, the Government will set aside another S$800 million for the COVID-19 Support Grant to fund the programme and strengthen financial support for unemployed Singapore workers. |
| 2. | Solidarity Utilities Credit | The Government will grant a one-off S$100 Solidarity Utilities Credit to each family with at least one Singapore citizen, irrespective of the type of property they are living in. |
| 3. | Increasing matching for Enhanced Fund-Raising ("EFR") programme |
Under the EFR programme, eligible donations raised between 1 April 2020 and 31 March 2021 will qualify for a dollar-for-dollar matching, subject to a cap of S$250,000 per charity. The Fortitude Budget will also inject an additional S$100 million into the EFR programme. |
D. OUR OBSERVATIONS
On top of providing temporary economic relief to taxpayers through these challenging times, the Fortitude Budget seeks to provide workers with the right skill set to position them for a post-COVID-19 labour market. Businesses can also take advantage of the down time and the support provided by the Fortitude Budget to review their business models and strategies, and to consider investing in their employees' training so that they may better seize the opportunities presented by the next economic uptick when it finally comes about.
For further information, please contact:
Eugene Lim, Co-Founder and Principal, TaxiseAsia
