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Singapore Budget 2021: 3 Things SMEs & Startups Need To Know
Key Highlights
S$5.2B allocated to create up to 200,00 jobs & 35,000 traineeships
GST extended to low value imported goods & services from 2023
S$60M announced for Agri-Food Cluster Transformation Fund
1. Extended Support For Employing Workers
Job Support Scheme
Tier | April – June 2021 | July – September 2021 |
|---|---|---|
Tier 1 (Aerospace, Aviation, Tourism) | 30% Wage Support | 10% Wage Support |
Tier 2 (Retail, Arts & Culture, Food Services, Built Environment) | 10% Wage Support | Not Applicable |
Up to first S$4,600 of gross monthly wages.
Jobs Growth Incentive Scheme
Type of Hire | Phase 1: September 2020 – February 2021 | Phase 2: March – September 2021 |
|---|---|---|
Non-Mature Hires (Under 40) | Up to 25% of 1st S$5,000 Wage Support for 12 months | Up to 25% of 1st S$5,000 Wage Support for 12 months |
Mature Hires(40 & Above), Person with Disabilities & Ex-Offenders) |
| Up to 50% of 1st S$6,000 Wage Support for 18 months |
Employer Eligibility Requirement | Between March 2021 and September 2021 (inclusive)
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SMEs and startups can no longer rely on the generous subsidies from the Government this year. However, there’s still much incentive you can utilise; especially for employing new mature hires. Employers can enjoy the monetary benefits of up to 50% wage subsidy for 18 months. Also, tap on the Senior Worker Early Adopter Grant and Part-Time Re-employment Grant to expand your capacity while minimising hiring costs. While the onboarding process may be rockier, experienced hires can only value-add with their seasoned perspective and business acumen.
Alternatively, if you’re looking for someone more tech-savvy, can consider engaging more experienced professionals who are making a mid-career switch or fresh graduates under the Traineeship scheme – with 80% subsidy. However, do note that trainees can choose to leave anytime if they are offered a better opportunity.
Supplementary Schemes | Details |
|---|---|
Wage Credit Scheme | 15% co-funding from the Government for monthly gross salary up to S$5,000. Gross monthly wage increases (≥ $50) previously given by the same employer continue to be co-funded if sustained in 2020 and 2021. |
Loss Carry-Back Relief | Carry-back Underutilised Capital Allowances (CA)/Trade Losses for up to 3 Years of Assessment (Up to S$100,000) |
SGUnited Jobs and Skills Package | Extended till March 2022 Up to 80% subsidy for traineeship allowance Mid-career Pathways Program Up to 80% subsidy for under 40 (S$1,600 - S$3,000 monthly) Up to 90% subsidy for 40 & above (S$1,800 - S$3,800 monthly) |
2. More Loans & New Funds For Business Transformation
Singapore Budget 2021 aims to equip businesses to ride the digital wave. With the slowdown in economic activity, traditional businesses in F&B. retail, and manufacturing can redesign existing jobs and build digital capabilities with the new initiatives in the Budget. IT and technology SMEs/startups can register as official vendors to offer IT consultancy and technology solutions, including prototyping and deployment. Businesses in the arts and sports sectors can enhance their digital and operational competencies with the $45m Arts and Culture and Sports Resilience Package.
This economic crisis is an opportunity for business transformation. Budget 2021 aims to equip businesses with full-on digital capabilities. What took years in the past, may be expedited within a matter of months. With the slowdown in economic activity, traditional businesses (F&B, Retail, Manufacturing) can take this opportunity to redesign existing jobs and build their digital competency team with the new initiatives.
The last year also emphasised the need for a more sustainable Singapore. SMEs/startups involved in sustainable solutions are poised to take the spotlight till 2023. Electric Vehicles will be a budding sector with huge incentives; including S$30m funding, waived Additional Registration Fee, and adjusted road tax.
To improve Singapore’s food resilience, a S$60m Agri-Food Cluster Transformation Fund will be available to support technology adoption in the food production sector.
Enhanced Initiatives
Initiative | Details |
|---|---|
Venture Debt Program | Loan quantum increased from S$5M to S$8M |
Scale-Up SG Program | Extended till March 2022, 80% co-funding for program participation costs |
Productivity Solutions Grant | Co-funding for Job Redesign increased from 70% to 80% till March 2022 |
New Initiatives
Initiative | Details |
|---|---|
Open Innovation Platform | Co-Funding support for prototyping and deployment Link up companies and government agencies with relevant tech solutions to resolve business challenges |
Transformation of Mature Enterprises | S$1B budgeted for adopting new technologies into business operations; costs covered include:
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Large Local Enterprises Funding Platform | S$1B Equity Investments budgeted for LLEs (with annual revenue up to S$100m) for growth |
3. Increase in Operating Expenses
You may have sourced cheaper products via overseas suppliers in the past and avoid the GST. From 2023, low-value imported goods will be subjected to GST and you can anticipate a GST hike to 9% around the same period. Businesses may consider stocking up necessary equipment and parts before the implementation.
For the transport & logistics sector, expect an immediate 10-15% hike in petrol prices. SMEs/startups will have to revise their product/service pricing to account for the increased operating costs.
Tax Increments | Details |
|---|---|
GST |
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Petrol Duty |
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It’s not all bad news. All commercial vehicles are entitled to a 100% Road Tax Rebate for 1 year to cushion the increase in petrol duty. For sectors that involve acquiring new plant & machinery (e.g. manufacturing, semiconductor, etc.), write off the acquisition costs from your taxable income for both YA 2021 & 2022. A good rebate for the business income tax filing coming up next month.
Reliefs | Details |
|---|---|
Road Tax Relief |
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Loss Carry-Back Relief | Carry-back Underutilised Capital Allowances (CA)/Trade Losses for up to 3Year of Assessment (Up to S$100,000) |
Tax treatment of Business Expenses | Option to claim for Renovation & Refurbishment expenditure extended to YA 2022 |
Write off for Plant & Machinery Acquired | Write off the acquisition cost for Plant & Machinery extended to YA 2022 |
Conclusion
The year 2021 calls for a time of innovation and business transformation. While change is inevitable, there’s a treasure trove of resources in Singapore including grants, loans, and other initiatives that are readily at your disposal. Business owners should be opportunistic opportunities in the future as these programmes serve to enhance your business capabilities for the long run.
