15 April, 2020
The Singapore government announced a grand supplementary budget less than a month after the regular annual budget to combat the destabilising effect of the COVID-19 pandemic on its economy. Also termed the Resilience Budget, it will introduce over S$48 billion in new and enhanced measures focused on protecting jobs, helping enterprises with immediate challenges, and strengthening economic and social resilience.
Less than two weeks later, a subsequent Solidarity Budget was announced to further support and tide families and businesses through the Circuit Breaker phase.
The two supplementary budgets aim to support businesses with a four-pronged approach:
- Helping with cash flow & costs
- Helping with credit
- Providing sector-based support
- Jobs Support Scheme
1. Helping with cash flow & costs
Firstly, to ease cash flow for businesses in the immediate period, an automatic deferment of income tax payments for companies of three months is granted.
Secondly, to lower cost, qualifying commercial properties that have been badly affected by the COVID-19 outbreak, including hotels, serviced apartments, tourist attractions, shops and restaurants, will pay no Property Tax. Businesses in other non-residential properties such as offices and industrial properties will also enjoy a 30% Property Tax Rebate for the year 2020. The Inland Revenue Authority of Singapore will inform owners of qualifying properties on their property tax rebates by 31 May 2020. The newly introduced Temporary Measures Bill also ensures that property tax rebates must be passed to tenants in full and failure to do so will result in a fine of up to S$5,000 for the landlords.
Further, office, industrial, and agriculture tenants of government agencies will enjoy a 1-month rental waiver. In addition, all government fees and charges will be frozen for 1 year, from 1 April 2020 to 31 March 2021.
Monthly Foreign Worker Levy (FWL) due in April 2020 is also waived, and employers will enjoy a FWL rebate of S$750 from levies paid this year for each Work Permit or S Pass holder.
2. Helping with credit
To enhance financing schemes so that businesses will continue to have access to credit, the previously announced Enterprise Financing Scheme (EFS) – Trade Loan by increasing the maximum loan quantum from S$5 million to S$10 million. The maximum loan quantum of the EFS – SME Working Capital Loan is also increased from S$0.6 million to S$1 million.
Subsidies to businesses for loan insurance premiums under the Loan Insurance Scheme will also be raised from 50% to 80%. The Temporary Bridging Loan Programme is also expanded to cover all sectors and the maximum supported loan is increased from S$1 million to S$5 million.
The government’s risk share is also raised to 90% for the EFS-Trade Loan, the EFS-SME Working Capital Loan, and Temporary Bridging Loan Programme. This applies to loans initiated from 8 April 2020 till 31 March 2021.
3. Providing sector-based support
Aviation sector: A S$350 million enhanced aviation support package is introduced to fund measures such as rebates on landing and parking charges, and rental relief for airlines, ground handlers, and cargo agents. This is aimed to help Singapore retain a minimum level of connectivity to the world, enable Singaporeans overseas to return home, and keep our supply lines for essential goods open.
Tourism Sector: S$90 million is set aside to help the tourism industry recover after the pandemic blows over.
Land Transport Sector: Eligible taxi hirers and private-hire car drivers will receive Special Relief Fund payments of S$300 per vehicle per month until end-September 2020. To help private bus owners, a one-year road tax rebate, and six-month waiver of parking charges at government managed parking facilities will be provided, costing S$23 million in total.
Arts & Culture Sector: A S$55 million support package was announced to provide additional support to major companies and leading arts group. The National Arts Council (NAC)’s Capability Development Scheme for the Arts, to deepen skills and support professional development of arts organisations and practitioners. The digitalisation efforts will also be stepped up, by building the sector’s digital capabilities and establishing more digital arts platforms which can reach out to new audiences.
4. Jobs Support Scheme (JSS)
In addition to these measures, the two budgets will enhance and extend the JSS. For the month of April 2020, the government will pay for 75% on the first S$4,600 of monthly salaries for every local employee. From May 2020 till end-2020, firms in the food services sector will receive support at 50% of wages, and firms in the aviation and tourism sectors, the most badly affected from the lockdowns, will be supported at 75% of wages, while firms in all other sectors will receive support at 25%, up to a monthly wage cap of S$4,600. The JSS payouts will start from April 2020, followed by May, July and October 2020.
(Special thanks to trainee Lim Neng Fang for her contribution to the article)
For further information, please contact:
Marcus Chow, Partner, Bird & Bird
marcus.chow@twobirds.com
