The Singapore Budget 2018 was presented by FM Heng Swee Keat. Singapore’s GDP has seen a steady increase by 3.6 per cent – up from the 2.4 per cent in 2016. Productivity and real median income also increased last year. For the next fiscal year, key measures focused on developing an innovative economy, a smart and green city, a caring and cohesive society, and a fiscally sustainable future were announced.

Following are the highlights of the Budget announcements:

1. GST will increase to 9% from existing 7%

It is over a decade that the GST rates have not undergone a change in Singapore. It stayed constant at 7%. Now, it has been announced that GST rates will be increased by 2%. The increased GST will be implemented sometime from 2021 to 2025.The timing of the raised GST will depend on the state of the economy, how much expenditures grow, and how buoyant existing taxes are, said FM Heng. To help lower-income households cope, the permanent GST voucher scheme will be topped up by $2 billion. Currently, $800 million is given out a year. GST on publicly subsidised education and healthcare will continue to be absorbed.

 

2. E-Services GST to be introduced

From Jan 1, 2020, digital services from overseas suppliers will be taxed, even if they do not have a physical presence in Singapore. Some examples of imported services include music and video streaming, apps, listing fees on electronic marketplaces, software, and online subscription fees. The GST will also cover imported services for businesses here, such as marketing, accounting, IT and management services. However, the move will not affect e-commerce for goods.

 

3. Help for households

Apart from the permanent GST voucher scheme being topped by $2 billion, other announcements for households also include increased Proximity Housing Grants for families and singles, and the extension of Service and Conservancy Charges rebate for another year.

4. Buyer’s stamp duty rates for residential properties to increase

The top marginal Buyer’s Stamp Duty (BSD) will increase from 3 per cent to 4 per cent. The new top marginal rate will apply to the portion of residential property value which is in excess of $1 million. The change will apply to all residential properties acquired from Tuesday (Feb 20), he added. Rates for non-residential properties remain unchanged at 1 per cent to 3 per cent.

 

5. Extended measures to help businesses with costs

The Wage Credit Scheme, which helps co-fund wage increases for Singaporean employees up to a gross monthly wage of $4,000, will be extended for another three years. More than $800 million will be paid out to more than 90,000 firms, for wage increases for more than 600,000 employees. Rebates under the Corporate Income Tax scheme will also rose from 20 to 40 per cent this year. The cap will be raised from $10,000 to $15,000. The scheme will also be extended to next year, where firms will receive 20 per cent rebate capped at $10,000.

 

6. Foreign worker levy increases to be deferred

The earlier-announced increases in Foreign Worker Levy rates will be deferred for the marine shipyard and process sectors, which still face weakness.           There will be no changes in the increases in rates for all other sectors.

 

7. New Enterprise Development Grant

Among the new measures include a productivity solutions grant to be introduced to make it easier for companies to access support to adopt off-the-shelf technology and productivity solutions.

The tax deduction on licensing payments for the commercial use of intellectual property will also be raised.

Local enterprises looking to build deeper capabilities, scale up and internationalise can do so with a new Enterprise Development Grant (EDG) come April, Minister of Finance Heng Swee Keat said in his Budget 2018 speech on Monday (Feb 19).

The EDG is made up of two existing grants – SPRING Singapore’s Capability Development Grant (CDG) and IE Singapore’s Global Company Partnership Grant (GCP). It will provide funding support for up to 70 per cent of qualifying costs from financial year 2018 to 2019.

Businesses can apply for the EDG through the Business Grants Portal from the fourth quarter of 2018. Before then, businesses can continue to apply for the existing CDG and GCP grants through the portal.

 

SPRING and IE will also merge in April to form a new statutory board under the Ministry of Trade and Industry.

The new statutory board Enterprise Singapore will be administering the new grant.

 

8. Carbon tax to be introduced

All facilities that produce 25,000 tonnes or more in greenhouse gas emissions a year will be taxed on their total emissions. The carbon tax will be $4 per tonne of greenhouse gas emissions from 2019 to 2023, by which the tax rate will be reviewed. The Government plans to increase the rate to between $10 and $15 per tonne of emissions by 2030. Households will receive additional $20 under the Utilities-Save GST voucher for three years, to help offset the impact of the carbon tax on electricity and gas consumption.

 

9. Save and borrow for infrastructure expenditure

Where possible, the Government will save ahead to prepare for costly infrastructure investments, such as the Changi Airport Development Fund set up in 2015 for the upcoming Terminal 5. It is also considering borrowing by statutory boards and government-owned companies that build infrastructure, to help spread the cost of larger investments over more years.

10. Hongbao from FY 2017’s budget surplus

All Singaporeans aged 21 and above will receive a “hongbao” of up to $300 this year, depending on their annual income. Those who earn $28,000 and below a year will receive $300, while those earning $28,001 to $100,000 will receive $200. Singaporeans who earn more than $100,000 a year or who own more than one property will receive $100.The bonus, which will cost the Government $700 million, comes from this year’s Budget surplus of $9.6 billion.

11. Corporate Income Tax

The corporate tax rebate for this year has been doubled to 40 per cent of tax payable and capped at $15,000, up from $10,000 previously, Minister for Finance Heng Swee Keat announced on Monday (Feb 19). The scheme, which subsidises wage increases for Singaporean employees earning up to $4,000 monthly, will extend 20 per cent co-funding for 2018, 15 per cent for 2019 and 10 per cent for 2020.

12. Increase in tobacco excise duty

A 10 per cent increase in excise duty for all tobacco products will kick in from Monday (Feb 19), announced Finance Minister Heng Swee Keat.

This change in tax is aimed at discouraging the consumption of tobacco products, he said.

Excise duty is levied on goods manufactured in, or imported into, Singapore.