Singapore Budget 2020: Brief Highlights

The following are some selected highlights of the COVID-19 measures for companies. 

Corporate Income Tax (CIT) Rebate 

To ease companies’ cash flow, a CIT Rebate of 25% of tax payable, capped at $15,000, will be granted for Year of Assessment (YA) 2020 (i.e. financial year 2019). 

Automatic Deferment of Corporate Income Tax (CIT) Payments 

To further ease the cash flow need for companies in the immediate period, all companies with CIT payments due in the months of April, May and June 2020 will be granted an automatic three-month deferment of these payments. The CIT payments that are deferred from April, May and June 2020 will be collected in July, August and September 2020 respectively. 

Jobs Support Scheme 

The Jobs Support Scheme (JSS) will help enterprises retain their local employees (Singapore Citizens and Permanent Residents) during this period of economic uncertainty. It is a temporary scheme for 2020. All active employers, with the exception of Government organisations (local and foreign) and representative offices, are eligible for the JSS.

Under the JSS, the Government co-funds with between 25% and 75% wage support for the first $4,600 of gross monthly wages paid to each local employee (including shareholder-directors which wages attract mandatory CPF contribution) up to Aug 2020 and 10% to 50% of the same in the subsequent 7-month period (Sep 2020 to Mar 2021). The support levels will be tapered as the economy reopens and stabilises, and calibrated based on the projected recovery of the various sectors.

Enhanced carry-back relief system 

The carry-back relief system will be enhanced for YA2020. Companies will be allowed to carry back the unabsorbed capital allowances and trade losses of up to the three immediate preceding years of assessment (capped at $100,000). The enhanced carry-back relief is subject to the same conditions as the current carry-back relief, which include the shareholding test and same business test, as provided in section 37E of the Income Tax Act. 

For unabsorbed capital allowances of YA 2020 to be setoff against the assessable income for YAs 2017, 2018 and 2019, there must not be any substantial change in shareholders of the company (or its ultimate parent company) as at the relevant dates. 

For unabsorbed losses of YA 2020 to be set-off against the assessable income for YAs 2017, 2018 and 2019, there must not be any substantial change in shareholders of the company (or its ultimate parent company) as at the relevant dates. 

Renovation or Refurbishment Works Expenditure (Section 14Q) 

For qualifying renovation or refurbishment expenditure incurred during the basis period for YA2021, business have the option to claim the deduction in one year instead of over three year. This is also to help enterprises such as hotels take advantage of this lull period to carry out upgrading work and be better prepared for the rebound, 

Rental relief 

The government will continue to support the small and medium-sized* tenants. The occupying tenants will need to satisfy all the criteria below for the eligibility of rental relief: 

- Tenants with annual turnover not more than S$100 million, based on their corporate income tax returns for the Year of Assessment 2019 

- Substantial drop in average monthly revenue during COVID-19 (average monthly revenue from April to May 2020 on an outlet level reduced by 35% or more, compared to April to May 2019); and 

- The tenancy must be in force on 1 April 2020 and must have been: (i) entered into before 25 March 2020; or (ii) entered into before 25 March 2020 but expired and was renewed automatically, or in exercise of a right of renewal in the contract 

The cash grant will be automatically disbursed by the Inland Revenue Authority of Singapore to property owners from end-July 2020 and landlords are required to pass on the benefit to their SME tenants (up to 4 months rental). 

* Small and medium-sized (SME) refers to: 

a. Company must be registered or incorporated in Singapore 

b. Employment size (at group level) of not more than 200; OR Annual sales turnover (at group level) of not more than S$100 million 

c. At least 30% local shareholding is held by Singapore Citizens or Singapore Permanent Residents. 

Property Tax Measures 

Non-residential properties will be granted property tax rebate for the period 1 January 2020 to 31 December 2020. Commercial properties badly affected by COVID-19 like hotels, serviced apartments, and tourist attractions, shops and restaurants will receive a 100% rebate. Other non-residential properties such as offices and industrial properties will get a 30% rebate on their property tax payable. 

Foreign worker levy (FWL) rebate 

Companies in the Construction, Marine Shipyard and Process Sectors are facing high costs implementing stringent Safe Management Measures as a result of COVID-19. Singapore government set aside up to $920 million to extend foreign worker levy (FWL) rebates for the Construction, Marine Shipyard and Process sectors till end 2022. Companies in these sectors will receive a $90 FWL rebate monthly for each Work Permit Holder from August 2020 till December 2021. The Government will review this closer to December 2021 and decide if there is a need to further extend the FWL rebate by another year to December 2022. 

Financing support for enterprises during COVID-19 

Due to the COVID-19 pandemic, many business may continue to face challenges in managing cash flows, accessing to credit and meeting your loan repayments. Enterprise Financing Scheme (EFS) was enhanced to provide greater financing support as follows:-