Yahoo Finance 9 Policy Changes Announced In 2022 That Business Owners Should Know
2022 could be a year of joy for most businesses, especially those in the food services, retail, and tourism sectors. As the COVID-19 measures of the past years were relaxed, more people were willing to shop and resume travel activities as before.
On the business front, most sectors such as the Information, communication, and technology (ICT), construction, manufacturing, and retail have expanded strongly in 2022 despite the tight labour market and continued global uncertainties affecting the global supply chain and trade.
In view of the current challenges, the government took a slew of measures to assist both companies and their workers with their cost pressures and remain competitive. Here’s a recap of the key policy changes that impacted businesses in 2022.
#1 GST Increase From 7% To 8% From 1 January 2023
Goods and Services Tax (GST) in Singapore will be raised from 7% to 8% in 1 January 2023 and to 9% in 1 January 2024.
The Inland Revenue Authority of Singapore (IRAS) reminds businesses to charge the prevailing GST of 7% if the invoice or payment for your supply is received before 1 January 2023. Conversely, you must revised the GST rate to 8% for invoice or payment received on or after 1 January 2023.
Read Also: What Businesses Need To Know About Invoices And Payments Affected By The 2023 GST Changes
#2 Retirement And Re-Employment Age Increased To 63 And 68, Respectively In 2022
Singaporeans and Singapore permanent residents (SPRs) will see their minimum retirement and re-employment ages increased to 63 and 68, respectively, from 1 July 2022.
The CPF contribution rates for senior workers will also be raised for both employers and employees in 2022 by between 1.5% and 2%. To help employers with the increase in cost, the government will provide a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contribution under the Senior Worker Support Package.
Employers who hire Singaporean workers aged 55 and above and earning below $4,000 per month will also receive the Senior Employment Credit (SEC). The SEC will take effect from 1 January 2021 to 31 December 2022 and will cover up to 8% of the wages paid, depending on the workers’ age and wage.
Read Also: Increase In Retirement Age (Along With CPF Contributions): What Employers Need To Know
#3 Progressive Wage Model (PWM) Expanded To Cover Retail Sector From 1 September 2022
Progressive Wage Model (PWM) was developed by the tripartite committees and the government to uplift lower-wage workers’ salaries.
From 1 September 2022, Singaporeans and Singapore permanent residents (SPRs) in retail jobs will be covered under the PWM. This will raise the baseline salary of retail workers to $1,850, or a gross hourly wage of $9.70.
At the same time, the Cleaning, Security, and Landscape sectors will be expanded to include their respective in-house cleaners, security officers, and landscape maintenance employees.
Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers
#4 Enhanced Grant Support For Companies In the Food Services And Retail Sectors
Rising energy costs had a significant impact on the food services sector in 2022. The following grants were enhanced to provide businesses in the sector with financial assistance to cope with the higher operating costs.
Extended Productivity Solutions Grant Support For Businesses In The Food Services And Retail Sectors
The Productivity Solutions Grant, which supports companies that adopt IT solutions and equipment to enhance business processes, will revert to a maximum support level of 70% from 1 April 2022. However, for companies in the Food Services and Retail sectors, the enhanced support of 80% will be extended to 31 March 2023.
SMEs To Receive Up To $10,000 One-Off SkillsFuture Enterprise Credit (SFEC)
The SkillsFuture Enterprise Credit (SFEC) is meant to encourage employers to invest in the transformation of their enterprise and workforce. Eligible employers will receive a one-off $10,000 credit – of which $7,000 goes towards enterprise transformation and $3,000 goes towards workforce transformation – to cover 90% of their out-of-pocket expenses on qualifying costs.
The Skills Development Levy (SDL) requirement will also be waived for the qualifying period of 1 January to 31 December 2022 to encourage more small and micro businesses to utilise the SkillsFuture Enterprise Credit. The deadline to claim this credit has been extended to 30 June 2024.
Local SMEs In The Food Industry Can Tap On Energy Efficiency Grant (EEG) For Up To $30,000
From September 1, 2022, to March 31, 2023, companies within the Food Services, Food Manufacturing or Retail sectors can get up to 70% grant support (up to $30,000 per company per year) under the Energy Efficiency Grant (EEG) on pre-approved energy-efficient equipment like LED lighting, air conditioners, cooking hobs, refrigerators, water heaters, and clothes dryers.
Read Also: How Businesses Can Tap On NEA’s Energy Efficiency Fund (E2F) To Reduce Their Electricity Usage
#5 New Local Qualifying Salary (LQS) Will Determine Business’ Foreign Worker Quota
From 1 September 2022, companies employing foreign workers will be required to pay all their full-time local employees at least the Local Qualifying Salary of $1,400 per month or $9 per hour for part-time employees.
A local employee earning the LQS will be taken as 1 count towards the computation of the foreign worker quota. Whereas, a local worker earning half the LQS of between $700 and $1,400 per month will be counted as 0.5.
To help businesses with transitional wage support the Progressive Wage Credit Scheme (PWCS) was introduced in Budget 2022. The government will co-fund the wage increase of eligible resident employees from 2022 to 2026. Businesses will receive an enhanced co-share of up to 75% for workers earning up to $2,500 (first tier) and up to 45% support for workers earning between $2,500 and $3,000 (second tier).
Read Also: Progressive Wage Credit Scheme (PWCS): What Businesses Need To Know
#6 Enhanced Mandatory Medical Insurance Coverage Requirement For Migrant Workers In 2023
Employers are currently required to buy medical insurance coverage of at least $15,000 per year for their Work Permit (including migrant domestic workers) and S Pass holders for the duration of their contract to cover their inpatient care and day surgery.
By the end of 2022, the medical insurance (MI) requirements for Work Permit (including Migrant Domestic Workers) and S Pass holders will be enhanced to an increased annual claim limit of at least $60,000. This enhancement is expected to better support employers in managing large medical bills.
#7 Mandatory Primary Care Plan (PCP) For Foreign Workers
From 1 April 2022, employers hiring migrant workers who live in dormitories or work in the Construction, Manufacturing or Process (CMP) sectors must buy a Primary Care Plan (PCP) for their workers.
The PCP, which costs between $108 and $138 per worker per year, will provide migrant workers with affordable and accessible healthcare services near their place of residence.
Read Also: What Employers Need To Know About The Mandatory Primary Care Plan (PCP) For Foreign Workers
#8 Higher Minimum Qualifying Salary For New Employment Pass And S Pass Applicants
As announced in Budget 2022, the minimum qualifying salary for new EP applications will increase from $4,500 to $5,000 from 1 September 2022 and will take effect for renewals from 1 September 2023.
Additionally, the Ministry of Manpower (MOM) will assess new EP applications under the Complementarity Assessment Framework, or COMPASS, starting from 1 September 2023. The points-based framework was introduced as a more transparent system, giving businesses more clarity and predictability for their manpower planning.
The minimum qualifying salary for new S Pass applicants will also increase from the current $2,500 to $3,000 from 1 September 2022 and may increase to at least $3,150 from 1 September 2023. These changes will take effect for renewal applications one year after respective dates.
Read Also: Guide To Work Passes In Singapore: Work Permits, S Pass and Employment Pass (EP)
#9 Higher S Pass Levy Rates And Lower S Pass Quota In 2023
The tier 1 levy rates for S Pass holders will be increased from $450 to $550 from 1 September 2023, while the tier 2 levy rates will remain at $650.
Additionally, the S Pass quota for the CMP sectors – Construction, Marine, Manufacturing Process – will be reduced from 18% of the total workforce to 15%.
Read Also: Foreign Worker Quota In Singapore: What Is It And How To Calculate It For Your Business
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