2022 SINGAPORE BUDGET HIGHLIGHTS

This article serves to capture the highlights of the 2022 Singapore Budget announced on 18 February 2022.

IMPACT ON BUSINESSES
Jobs and Business Support Package

Small Business Recovery grants

Eligible firms will receive SGD 1,000 for each local employee with mandatory CPF contributions in the period from 1 November 2021 to 31 December 2021, up to a cap of SGD 10,000 per firm.

Sole proprietorships and partnerships that are run by at least one local business owner but do not hire any local employees will receive a flat payout of SGD 1,000, if the local business owner is earning a net trade income of no more than SGD 100,000 filed with Inland Revenue Authority of Singapore (IRAS) in the Year of Assessment 2021 by 31 December 2021.

The IRAS will notify eligible firms starting from June 2022.

Jobs Growth Incentive (JGI)

To be extended for another 6 months to September 2022. The extension will only cover the hiring of mature workers aged 40 and above who have not been employed for 6 months or more, persons with disabilities, and ex-offenders.

Extension of Temporary Bridging Loan Programme and Enterprise Financing Scheme

Temporary Bridging Loan

To be extended for another 6 months to 30 September 2022. The maximum loan quantum has been revised to SGD 1 million per borrower, from SGD 3 million, while the maximum loan quantum for borrower groups will be set at 20 million. The cap on the interest rate is also raised to 5.5%, from 5% previously.

Enhanced Trade Loan

To be extended to 30 September 2022, with a maximum loan quantum of SGD 5 million per borrower or SGD 20 million per borrower group.

Enhanced Project Loan

To be extended to 31 March 2023, with a maximum loan quantum of SGD 30 million per borrower or per borrower group for domestic projects and is eligible for Singapore enterprises in the construction sector.

Merger and Acquisition (M&A) Loan

To be expanded to include domestic M&A activities from 1 April 2022 to 31 March 2026.

Strengthen digital and innovation capabilities

Advanced Digital Solutions scheme

From 1 April 2022, the scheme will be expanded to include solutions that leverage Artificial Intelligence (AI) and Cloud technologies. Participating enterprises will receive up to 70% funding support for these solutions.

Grow Digital scheme

From 1 April 2022, the scheme will be expanded to provide up to 70% funding support to participating enterprises to onboard pre-approved digital platforms, B2B and B2C e-commerce platforms.

TechSkills Accelerator (TeSA) Scheme

This scheme will be expanded to build a strong Singapore core of Information and Communication Technology (ICT) talents, including:

  • Partnering with industry leaders to grow product development teams in Singapore;
  • Expanding TeSA to SMEs and startups to provide more jobs opportunities for mid-career workers; and
  • Upskilling our current digital workforce to keep their skills relevant.
Help Firms to Scale Up Training Efforts

Company Training Committees (CTCs)

To support companies that have set up CTCs, a new grant to be administered by NTUC will be given to help companies implement their training and transformation programmes.

SkillsFuture Enterprise Credit (SFEC)

The eligibility criteria have been amended, including a waiver of Skills Development Levy during the qualifying period between 1 January 2021 to 31 December 2021.  The deadline to claim SFEC will be extended to 30 June 2024 which will allow employers more time to plan for their employees’ training needs.  Eligible employers will be notified in April 2022.

Two New Schemes to help promising large local companies expand

Singapore Global Enterprise

The new initiative will provide customised assistance to promising local enterprises in areas such as innovation, internationalisation and fostering of partnership with other firms.

Singapore Global Executive Programme

The new programme will help companies with talent development through industry and overseas attachments, mentorships and peer support networks.

More details on the new schemes will be released by the relevant government agency in due course.

 Uplifting lower wage workers

Progressive Wage Credit Scheme (PWCS)

The government will co-fund salary increments given by companies to their lower-wage workers between 2022 to 2026.  For those earning less than SGD 2,500 per month, the PWCS co-funding rate will be 50% for the years 2022 and 2023.  This will be reduced to 30% from 2024 to 2025 and thereafter, 15% in 2026.

Enhancement of Workfare Income Supplement Scheme

The above scheme will be enhanced with effect 1 January 2023 to as follows:

  •  Extension to younger lower-wage workers aged 30 to 34.
  • Qualifying monthly income cap of SGD 2,500.
  • Higher annual workfare pay-outs of up to SGD 4,200.
  • All persons with disabilities will qualify for the highest pay-out tier, regardless of age.
  • Minimum qualifying monthly income criterion of SGD 500.

 Adjustment to Foreign Worker Policies

The minimum qualifying salaries for new Employment Pass (EP) and S Pass applicants will rise by SGD 500 from 1 September 2022 and renewal applications from 1 September 2023, as follow:

  • Minimum qualifying salary for new EP applicants will be raised to SGD 5,000 and SGD 5,500 for financial services sector.
  • Minimum qualifying salary for new S Pass application will rise to SGD 3,000 and SGD 3,500 for the financial services sector.
  • Tier 1 monthly levy will also be progressively raised from SGD 330 to SGD 650 by 2025.
  • The dependency ratio ceiling will be reduced for the Construction and Process sectors from 1 January 2024.
OTHER TAXES

Personal Income Tax

High income earners will pay more personal income tax with effect from Year of Assessment 2024 as the top marginal personal tax rates are revised as follow:

  • Chargeable income between SGD 500,000 to SGD 1,000,000: 23%
  • Chargeable income in excess of SGD 1,000,000: 24%

Wealth Tax (Property Tax)

Property taxes for both owner-occupied and non-owner-occupied residential properties will be hiked from 2023. 

For owner-occupied residential properties, currently, the property tax rate ranges from 4% to 16% for Annual Value (“AV”) beyond the first SGD 8,000.  Under the new changes, the property tax rate for AV in excess of SGD 30,000 will be increased to 5% to 23% in 2023 and to 6% to 32% in 2024.

For non-owner-occupied residential properties, current property tax rate of 10% to 20% will be raised to 11% to 27% in 2023 and to 12% to 36% in 2024. 

Wealth Tax (Luxury Cars)

Purchasers of luxury cars will have to pay more for their cars effective this month (Second COE bidding of February 2022) as an Additional Registration Fee (“ARF”) will be levied for cars at a rate of 220% for the portion of Open Market Value in excess of SGD 80,000.

Minimum Effective Tax Rate [“METR”] Regime

The Inland Revenue Authority of Singapore (IRAS) will study the impact of the Base Erosion Profit Shifting initiatives, Pillars 1*and 2^ on the Singapore economy before making changes to the corporate tax system.  In particular, the IRAS will explore the implementation of METR which will “top-up” a multinational enterprise [“MNE”] group’s effective tax rate in Singapore to 15%.  Further updates will be released once the studies are completed.

*Pillar 1: Re-allocates profit of the largest and most profitable MNEs from where activities are conducted to where the consumers are located.

^Pillar 2: Includes rules which impose a global minimum effective tax rate of 15% for MNE groups with annual global revenues of Euros750 million or more.

Good & Services Tax (GST)

The planned GST increase will be delayed to 2023 and be implemented in phases as follows:

  • With effect 1 January 2023: 8%
  • With effect 1 January 2024: 9%

Carbon Tax

The carbon tax rate will be increased progressively from the current SGD 5 per tonne of emissions to:

  • SGD 25 per tonne from 2024
  • SGD 45 per tonne from 2026 and 2027
  • SGD 50 to SGD 80 per tonne by 2030
FILING OF PERSONAL INCOME TAX IN SINGAPORE

Individuals with an income of more than SGD 22,000 are required to file their Income Tax Returns in Singapore.  A non-resident who derives income from Singapore is required to file his Income Tax Return regardless of his income earned.

However, if an individual receives a notification from the Inland Revenue Authority of Singapore (“IRAS”) to file a tax return, he should do so regardless of the income he earned in the preceding year.  If he fails to file his income tax return by the due date, the IRAS will take enforcement actions.  In addition, the IRAS may issue a Notice of Estimated Assessment based on information provided in the past years of assessment.

Basis of assessment

Income is chargeable to tax is on a preceding year basis.

For example, Year of Assessment (“YA”) 2022 refers to the income earned in the year 2021.

Tax filing due dates

The tax filing due dates are 15 April (paper-filing) or 18 April (electronic-filing) each year.

Tax residency

An individual is regarded as a Singapore tax resident if he is:

  • A Singapore citizen or Singapore Permanent Resident (“SPR”) who resides in Singapore except for temporary absences; or
  • A foreigner who has stayed or worked in Singapore (other than a director of a company) for 183 days or more in the year preceding the YA.

For foreigners working in Singapore, they may be regarded as Singapore tax residents if the two-year or three-year IRAS administrative concession applies.

Tax rates

A resident individual is taxed on his chargeable income (assessable income less personal relief) based on progressive tax rates ranging from 0% for the first SGD 20,000 to 22% in excess of SGD 320,000.

Employment income of a non-resident individual is taxed at a flat rate of 15% or at resident tax rates, whichever results in a higher tax liability. Other income of a non-resident individual is generally taxed at 22% unless specifically exempt or subject to a reduced treaty rate. The non-resident individual is not entitled to personal tax reliefs.

 A non-resident individual who exercises employment in Singapore for 60 days or less in a year is exempt from income tax.  This does not apply to a director of a company, a public entertainer or a professional.

 Type of Tax Returns
  • Form B1 (Tax Resident Individuals)
  • Form B (Self-Employed Individuals)
  • Form M (Non-resident Individuals)
Tax assessment and payment

The IRAS will issue the Notice of Assessment (“Notice”) to the individual after he files his income tax return.  The Notice may be downloaded from the IRAS website at myTax Portal.

If you disagree with the Notice, an objection has to be filed with the IRAS within 30 days from the date of the Notice.  Notwithstanding any objection, the income tax has to be paid within one month from the date of Notice.

Voluntary Disclosure of Filing errors

An individual who has made errors in his income tax return is encouraged to voluntarily inform the IRAS and rectify the filing errors made.  He can do so via the Voluntary Disclosure Programme (“VDP”).

Subject to certain conditions under the VDP, reduced penalties will apply as follow:

  • Within 1 year grace period from the statutory filing due date – no penalty will be imposed.
  • After 1 year grace period from the statutory filing due date – 5% of the income tax undercharged.

Whether you are an expatriate or a Singapore citizen or SPR or an employer, please contact us should you require assistance with your/your employees’ individual income tax compliance matters.

Disclosure of beneficial ownership in Malaysia companies

There has been increasing focus on issues related to beneficial ownership by several international bodies and organisation especially with media coverage surrounding data leaks in recent years.  Data leaks had shown that companies and trusts were used to hide beneficial owners of assets to disguise broad set of illegal activities including money laundering and corruption via layers of legal structures spanning multiple jurisdictions. More focus also has been made by regulators on “know-your-customer” (KYC) for financial institutions and designated non-financial businesses and professions (DNFBPs) such as lawyers, accountants and company secretaries to carry out verification on the identities of who are the ultimate persons that they are potentially doing business with.

Therefore, the Companies Commission of Malaysia (CCM) has introduced a framework on disclosure of beneficial ownership to promote transparency, a more robust reporting and disclosure requirements. On 1 March 2020, CCM has issued a Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons (“Guidelines”).

 The following are the key aspects of the beneficial ownership framework to Malaysian companies and the responsibilities:

(a)     Exempted Companies

The beneficial reporting framework applies to all companies incorporated or registered under the Companies Act, 2016 (“Act”), unless they are the following companies exempted under the beneficial reporting framework:

    • Companies that are regulated or licensed by Bank Negara Malaysia under the Financial Services Act, 2013, Islamic Financial Services Act 2013, a prescribed development financial institution under the Development Financial Institutions Act 2002 or a licensed money services business under the Money Services Business Act 2001.
    • An entity licensed or registered under the Capital Markets and Services Act 2007 (CMSA), stock exchange, derivatives exchange, clearing house and central depository, recognised self-regulatory organisation under the CMSA and a private scheme administrator approved under the CMSA.
    • Companies whose shares are quoted in a local or foreign stock exchange.
    • Companies whose shares are deposited in the central depository pursuant to the Securities Industry (Central Depositories) Act 1991.

This exemption however does not exonerate the exempted entities from the duty to provide the beneficial ownership information to other regulators, competent authorities and law enforcement.

(b)     Identification of “beneficial owner”

The Act defines beneficial owner as “the ultimate owner of the shares and does not include a nominee of any description”. Under the guideline for the reporting framework for beneficial ownership, the phrase of “the ultimate owner of the shares” covers both form the perspective of ownership and effective control. However, for companies limited by guarantee, the beneficial ownership extends only to effective control.

(c)     Beneficial Ownership Disclosures

Companies would need to undertake the following steps to disclose Beneficial Ownership Information:

    • Identify – Take reasonable steps to identify the beneficial owner based on the criteria in the guideline.
    • Obtain – Obtain the beneficial ownership information through notices pursuant to section 56 of the CA 2016.
    • Verify – Receive and verify the beneficial ownership information.
    • Enter – Enter the verified information into the register of beneficial owners.
    • Notify – Notify CCM of the beneficial ownership information
    • Update – Keep accurate and up-to-date beneficial ownership information in the said register and updating CCM correspondingly
    • Access – Give information access to competition, authorities, law enforcement agencies, the beneficial owner and persons authorised by the beneficial

(d)     Responsibilities of the Directors, Members and Company Secretary

In the case of a company, the roles and responsibilities of the various parties with regards to the Beneficial Ownership information are as follows:

Board of Directors

The board of directors is ultimately responsible in ensuring that the company has exercised its powers under subsection 56(1), (2) or (3) of the CA 2016 in obtaining the BO information. The obligation also extends to ensure that the Beneficial Ownership information must be entered into a separate part of the register of members as stated under subsections 51(1) and 56(4) of the Act.

Members

If a member of a company receives a notice issued under subsection 56(1) or (3) of the Act, the member is obligated to inform the company whether he is the beneficial owner as defined by the Act or met at least one of the criteria identified under the Guideline. The member must also provide the particulars of the persons for whom the member holds the voting shares or the parties to the agreements or arrangements, as the case may be, to the extent that such other persons can be identified.

A person who fails to comply with a notice issued under section 56 or has provided a false information or has made a statement recklessly commits an offence as stated under subsection 56(7).

 Any Other Person Given Notice under Section 56(2) of the CA 2016

This person has the obligation to inform the company whether he is the beneficial owner as defined under the Act or has met at least one of the criteria identified under the Guideline. Similar to a member of the company, this person must provide the particulars of the persons for whom the member holds the voting shares or the parties to the agreements or arrangements, as the case may be, to the extent that such other persons can be identified.

A person who fails to comply with the notice issued under section 56 or has provided a false information or has made a statement recklessly commits an offence as stated under subsection 56(7).

 Company secretary

In line with the duty of a secretary under subsection 102(1) of the Act, the secretary must ensure that the beneficial ownership information is entered and lodge the beneficial ownership information to the CCM.

 (a)    Who can access to beneficial ownership information?

The Company must ensure that the beneficial ownership information in the register of beneficial owners shall only be made available to specified competent authorities and law enforcement agencies (such as the Royal Malaysian Police, Malaysian Anti-Corruption Commission, Bank Negara Malaysia and Securities Commission), a beneficial owner whose name is recorded in the register of beneficial owners and persons authorised by the beneficial owner. This is to ensure that such information will be kept confidential and not be publicly available.

 (b)     Legal implication for non-compliance

A person who contravenes Section 56(1), (2) or (3) of the Act or in purported compliance with such a notice, essentially, makes a false or reckless statement commits an offence. This can amount to a false or misleading statement under section 593 of the CA 2016 that carries a heavier penalty of a maximum 10-year jail term or a maximum RM3 million fine or both.

 If you have any questions or require any additional information, please contact us.

 The above have been extracted from the Guidelines issued by the CCM and is for general information only. It is not a substitute for professional advice.

Employment Pass

An Employer may apply with the Ministry of Manpower (MOM) for an employment pass for foreign professionals to work in Singapore. The foreign professionals with acceptable qualifications must be working in managerial, executive or specialised jobs earning minimum fixed monthly salary of SGD 4,500 (Qualifying Salary). For candidates in the financial service sector, the minimum Qualifying Salary is SGD 5,000.

The Qualifying Salary for older and more experienced candidates in their 40s shall double the minimum Qualifying Salary mentioned above.

In their evaluation of employment pass applications, MOM will consider whether an employer has prioritised local PMETs in their hiring efforts and been responsive to the government initiatives to help recruit and train more Singaporean PMETs.

Employers must have fairly considered all candidates and met the Fair Consideration Framework’s requirements which includes advertising jobs on MyCareersFuture.sg, unless exempted to do so.

Mandatory Retrenchment Notifications

With effect from 1 November 2021, companies with at least 10 employees are required to notify the Ministry of Manpower (MOM) of any retrenchments. Notification is required to be filed by an employer within five working days after providing notice of retrenchment to the affected worker(s). Failure to comply may result in a fine up to SGD 2,000.

Companies with fewer than 10 employees are encouraged to notify MOM voluntarily.

Companies are also encouraged to inform MOM in advance for major retrenchment exercises involving high number of workers.

Retrenchment exercises should be managed responsibly and fairly, in line with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

Senior Workers’ CPF contribution Rate

From 1 January 2022, the CPF contribution rate of senior workers’ age above 55 to 70 will be increased by up to two percent.

Employee Year-end Tax Return

Employers are required by 1 March annually to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S, where applicable, for employees who are employed in Singapore.

From Year of Assessment 2022, every employer in Singapore with five or more employees is required to join the Auto-Inclusion Scheme (AI) for employment income. Employers who have less than 5 employees are encouraged to join AIS. Employers can register for YA 2022 submission from 1 April 2021 to 31 December 2021.

Common reporting errors made by employers in year-end tax return are:

  • Deducting the amount of payment in-lieu of notice paid by employee for insufficient resignation notice
  • Not declaring free shares granted/awarded to employees from parent or local company
  • Incorrectly reporting gains from employee stock option or employee share ownership with imposed selling restriction
Retirement and Re-employment Ages for Singapore Workers

Effective 1 July 2022, the retirement age and re-employment age for Singapore workers will be raised to 63 and 68 respectively and progressively increased to 65 and 70 years old by 2030.

We provide HR & payroll services to clients and will be happy to share our experience with you. Come talk to us today at enquiry@ledgengroup.com.

About Ledgen Group

Ledgen Group offers a well-rounded suite of statutory compliance services in Singapore, Hong Kong and Malaysia.

We provide value-for-money services to our clients by assisting in their company set-up, corporate secretarial, accounting, tax compliance, as well as HR and payroll outsourcing needs.

Ledgen Singapore Pte. Ltd. is formerly known as Ecovis Bizcorp Pte. Ltd.

Visit our website at www.ledgengroup.com.

View PDF here: Singapore-HR-Payroll-Newsletter-Nov-2021

    Common non-compliance matters in HR & Payroll

    Are you aware of the following?

    1. Under the Skills Development Levy (SDL) Act, employers are required to pay SDL, at different contribution rates, for every employee they hire. This applies to all permanent, casual, part-time, temporary or foreign employees rendering their services wholly or partly in Singapore.
    2. Bonuses are considered additional wages (AW) and the amount of AW for the year which attracts CPF contributions is subject to an annual AW ceiling.
    3. With effect from 1 April 2016, employers must issue written key employment terms and itemised pay slips to employees covered under the Employment Act. Failure to comply will attract penalties.
    4. CPF contribution rates are lower for Singapore Permanent Resident (SPR) employees who are in their first or second year of obtaining SPR status. Employers should apply the correct CPF contribution rates for their SPR employees. HR & Payroll Newsletter – March 2021
    5. Allowances, commission, bonus, overtime and incentive payments are also subject to CPF contribution. We need to determine whether they are classified as ordinary wages (OW) or AW and apply the correct formulae. The amount of AW for the year which attracts CPF contributions is subject to an annual AW ceiling.
    6. Overpayment or underpayment of CPF contributions may arise due to application of the wrong formula. As an example, for a salary of SGD 4,000 and bonus of SGD 4,000, the correct CPF contribution should be based on total wages of SGD 8,000 and not capped at OW of SGD 6,000.
    7. Benefits-in-kind are generally taxable and need to be included in Form IR8A. For example, service excellence awards (cash or non-cash) granted to an employee in recognition of his/her good service is not taxable if the value of the benefit does not exceed SGD 200. However, if the award exceeds the exemption threshold of SGD 200, the entire value is taxable.

    How can we assist you?

    We guide our clients to ensure they are compliant with the latest regulations. We offer comprehensive HR and payroll services to suit the needs of our clients. Regardless of the size of your company, you can expect:

    1. High quality and professional advice from our dedicated HR & Payroll Department.
    2. Accurate and timely payroll services to relieve our clients from any hassle and give them peace of mind to focus on growing their businesses. We can also offer digital HR and payroll solutions to facilitate our clients’ needs for electronic approval of leave and expense claim submissions.

    About Ecovis Bizcorp

    Ecovis Bizcorp offers a well-rounded suite of statutory compliance services in Singapore. As a member company of Ecovis International, we share our network’s vision of providing value-for-money services to our clients by assisting in their company set-up, corporate secretarial, accounting, tax compliance, as well as HR and payroll outsourcing needs.

    View PDF here: HR-Payroll-Newsletter-March-2021