Budget 2020 & Resilience Budget: Key takeaways every small business owner should know

As part of our guest blog, Vanessa Poh, CountoTax’s expert tax partner, examines how SMEs and self-employment businesses can benefit from the recent budget announcements.

DPM Heng Swee Keat announced that Budget 2020 and the Resilience Budget will provide additional support for businesses to pull through the COVID-19 pandemic. The budget will help companies with 3 crucial items—cash flow, cost and credit.

Support for cost of E-commerce and business continuity measures:

The E-Commerce Booster Package supports local retailers to bring their business online and diversify sales channels and revenue streams beyond traditional brick-and-mortar.

• E-commerce for domestic market
  
  In partnership with Amazon, Lazada Singapore, Qoo10 and Shopee, the Singapore E-Commerce Programme supports local retailers, including heartland enterprises, to expand your reach in the domestic market.

Eligible local retailers will receive a one-time support to defray 90% of eligible costs (up to $9,000) for up to 6 months.

• E-commerce for overseas markets
  
  Retailers seeking to expand your reach overseas can apply for the Multichannel E-Commerce Platform (MEP) Programme. This enables retailers with little or no prior experience in exporting products overseas to do so using digital channels.

Eligible SMEs will receive a one-time enhanced support of 90% of eligible programme costs until 30 Sep 2020.

Additional manpower support to kick-start your e-commerce journey:

Retailers participating in the programmes can also apply for additional manpower support to drive your business’ e-commerce efforts. You will receive a one-time support of up to 90% of the qualifying manpower costs for three months. Details on how to apply for the additional manpower support will be shared by the respective e-commerce platform and solution providers.

Who qualifies?

Business entities which are registered in Singapore, with a minimum of 30% local shareholding and group annual turnover not exceeding S$100 million per annum based on the most recent audited report, or group employment not exceeding 200 employees.

How to apply?

Singapore E-Commerce Programme

Contact the appointed e-commerce platforms listed below for more information on their service offerings and to apply by 30 September 2020. Each retailer can only apply with one e-commerce platform and must not have an existing account with the chosen e-commerce platform. Applications will be assessed by the e-commerce platform providers.

Click here for more information on the e-commerce platform providers.

MEP Programme 

Contact an appointed MEP solution provider listed below for more information on their packages and apply by 30 September 2020. Applications will be assessed by the MEP solution providers.

Click here for more information on the MEP solution providers or here for more information on the E-Commerce Booster Package.

Productivity Solutions Grant (PSG)

The maximum funding support level will be raised to 80% from 1 April 2020 to 31 December 2020. The scope of Generic solutions will also be expanded to help enterprises implement COVID-19 business continuity measures:

• Online collaboration tools
• Virtual meeting and telephony tools
• Queue management systems
• Temperature screening solutions

Who qualifies?

SMEs which are registered and operating in Singapore, with a minimum of 30% local shareholding. The purchase/lease/subscription of the IT solutions or equipment must be used in Singapore.

How to apply?

• Visit Tech Depot on SME Portal to access the list of supportable solutions and identify relevant solutions that best suit your business needs.
• For IT solutions: Get a quotation from the pre-approved vendor.
  For equipment: Source for the equipment and get a quotation from the vendor
• Submit an application on the Business Grants Portal (BGP). You will need to register for a CorpPass account to transact on the portal.

Click here for more information on PSG, including FAQs.

Helping businesses to let employees stay employed:

Wage Credit Scheme (WCS)

In addition to $600 million already disbursed, there is now a further $500 million to co-fund wage increase under WCS. The government co-funding ratios for wage increases in 2019 and 2020 will be raised from the current 15% and 10%, to 20% and 15% respectively. The qualifying gross wage ceiling will also be raised to $5,000 for both years, up from the current $4,000.

Who qualifies WCS payout in 2020 and 2021?

Businesses which have given at least $50 gross monthly wage increases to Singaporean employees, up to gross wage ceiling of $5,000. The employees must have worked at least 3 months for the business, with CPF contributions from the business.

How to apply?

Application is not required. The Inland Revenue Authority of Singapore (IRAS) will notify eligible businesses by post by end March of the payout year. Businesses benefiting from Budget 2020 enhancements for the 2019 wage increases will receive a supplementary payout by end Jun 2020.

WCS payouts are disbursed through companies’ GIRO bank account to pay Income Tax/GST or PayNow Corporate. Sole-proprietorships not registered for PayNow Corporate will receive the payout to the sole-proprietor’s GIRO bank account for Income Tax/GST, or the bank account that is registered for PayNow.

Click here for more information and FAQs on WCS.

Jobs Support Scheme (JSS)

Providing wage support for businesses to retain their local employees during this period of economic uncertainty, the JSS will co-fund the first at least 25% of $4,600 of gross monthly wages paid to each local employee for 9 months

Who qualifies?

Businesses which have made CPF contributions for their Singaporean and Permanent Resident employees will qualify, except employers in the exclusion list.

How to apply?

Application is not required. IRAS will notify eligible businesses by post of the amount of JSS payout payable. Three JSS payouts will be received in May, July, and October 2020.

Click here for more information and FAQs on JSS.

Measures to help offset tenants’ rental expense:

Property Tax Rebate

Property tax rebate of 30% to 100%  will help businesses to ease cashflow as landlords are expected to fully pass on the rebates to their tenants.

How much rebate?

60% of the property tax payable for Marina Bay Sands and Resort World Sentosa.

100% of the property tax payable for:

• Hotel or function room of a registered hotel under the Hotels Act
• Serviced apartment or serviced apartment function room
• Premises of prescribed Meetings, Incentive Travel, Conventions and Exhibitions (MICE) venues (Namely Suntec Singapore Convention and Exhibition Centre, Singapore EXPO, and Changi Exhibition Centre)
• Premises of a prescribed international cruise or regional ferry terminal (Singapore Cruise Centre, Marina Bay Cruise Centre Singapore and Tanah Merah Ferry Terminal)
• Shops and restaurants
• Premises of tourist attractions

30% rebate for other commercial and non-residential premises which are not related to any carpark or facilities for residents.

How to apply?

No application is required as IRAS will inform owners of qualifying properties on their property tax rebates by 31 May 2020. Refunds can be expected by 30 Jun 2020.

Click here for more information on property tax rebate.

Support measures for cash flow and financing:

Enterprise Financing Scheme (EFS)

The Enterprise Financing Scheme (EFS) has been enhanced with the maximum loan quantum for EFS-Trade loan increasing to $10 million and the EFS-SME working capital loan increasing to $1 million.

Who qualifies?

A business entity that is registered and physically present in Singapore, with at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership. The business entity must also have a Maximum Borrower Group revenue cap of S$500 million for all companies.

How to apply?

Click here for trade loan and here for SME working capital loan.

Click here for more information on Enterprise Financing Scheme (EFS)

Loan Insurance Scheme (LIS)

The subsidy for loan insurance premium has been raised to 80%.

Who qualifies?

A business entity that is registered and physically present in Singapore, with at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership. Group revenue also cannot be higher than S$100 million or total employees cannot be more than 200.

How to apply?

Interested enterprises may approach any of the following Participating Financial Institutions (PFI) to apply for trade loan backed LIS. List of Participating Financial Institutions:

For more information on LIS, click here.

Temporary Bridging Loan Programme  

The Temporary Bridging Loan programme (TBLP) provides access to working capital for business needs. It has been expanded to include all sectors and increased to $5 million.

Who qualifies?

A business entity that is registered and physically present in Singapore, with at least 30% local equity held directly or indirectly by Singaporean(s) and/or Singapore PR(s), determined by the ultimate individual ownership

How to apply?

Click here to see how to apply.

For more information on TBLP, click here.

Tax measures of Budget 2020 to help businesses:

For companies, there will be a corporate tax rebate of 25%, capped at $15,000, for Year of Assessment (YA) 2020. Companies need not factor in the Corporate Income Tax Rebate when filing the Estimated Chargeable Income and the Income Tax Return (Form C-S/ C) as IRAS will compute it and allow the rebate automatically.

In addition, companies on GIRO arrangement with IRAS to be granted 2 months automatic extension of interest-free instalments for payment of tax arising from timely filing of Estimate Chargeable Income.

To obtain a tax refund, estimated deductions arising in YA 2020 may be opted by companies to be carried back up to 3 preceding YAs.

To have a lower tax liability, businesses may opt for capital allowances of plants and machineries bought during FY2020 to be written off over 2 years. It is also possible to opt for deduction of qualifying renovation done during FY2020 to be written off over 1 year, to offset tax payable.

To further help companies tide through any cash flow issue, IRAS will grant automatic 3 months deferment of income tax payments for businesses and self-employed persons. For more information on this deferment, please click here.

To access the Budget speech and information, please visit the Budget 2020 website or see the Resilience Budget booklet.

Need a reliable tax solution? Find out how Counto can take care of your taxes and bookkeeping, all in one place. Contact us today!

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