Singapore Tax budget for 2019 will soon be revealed. It will provide a clearer perspective on the direction in which the government wishes to steer the country. As with the budget of any other year, speculation about who will most benefit from it has been rife.

Tax Budget in Singapore

 

Once a year, the Singaporean government announces its budget for the coming fiscal year. For the year 2019, this will be done on February 18. The 2019 Budget Statement will be delivered by Finance Minister Heng Swee Keat. Although the budget has yet to be announced, the government has been preparing for the day for a significant amount of time. Between December 3, 2018, and January 11, 2019, the Singaporean government conducted a feedback exercise to gather the views of the average Singaporean. People from across Singapore expressed their opinions on the budget via the Budget 2019 microsite on government feedback portal Reach, e-mail, or in person at government-organized events. The National Youth Council also organized a pre-Budget session on January 10, 2019. It is important that the citizens feel that the government has fulfilled their wishes via the national budget, as nobody wants to feel as though the government’s budget has left them out.

 

Singapore Budget 2018

When taking another look at Budget 2018, some of the ways in which Singapore Tax budget for 2019 may be able to build on the previous year’s can be seen. In Budget 2018, one of the primary points of emphasis was that the budget was meant to prepare Singapore for the financial challenges that would soon arise, given the fact that the country’s population is aging rapidly. Budget 2018 saw the corporate tax rebate raised to 40% for the 2018 year of assessment (YA). The rebate was also extended to 20% in YA 2019, subject to caps. Last year’s budget also provided for an increase in infrastructure spending. Singapore raised its spending on infrastructure to S$20 billion, of which a large portion was o be spent on upgrading the country’s public transport network. The increase in overall government spending, which emphasized care for the elderly, also granted benefits to healthcare firms. A proposed increase in levies imposed on foreign workers was also deferred, and this was good news for offshore and marine companies, who typically employ many foreign workers. In terms of government spending, around 65% of the budget was allocated to defense, transport, education, and healthcare, with defense receiving the largest portion at 19%.

Arguably the most striking feature of Budget 2018 was the announcement of an increase in the Goods and Services Tax (GST). Singapore’s GST rate will be raised to 9%, up from the current rate of 7%. This GST increase will take effect at a point between 2021 and 2025. Heng said that this move was made to boost the Singaporean economy without raising the country’s low corporate tax rates. The Singaporean government places much value on Singapore’s corporate tax rates, as they help draw investment and companies from abroad to Singapore. The increase in GST is expected to generate approximately S$600 million worth of revenue for the country every year. However, this same GST increase will also cut into consumers’ spending power. Because of this, places such as restaurants, hotels, and shops were likely to experience a drop-off in revenue. There was also an increase in the top marginal stamp duty, to be used on properties worth more than S$1 million, from 3% to 4%. This increase cast a pall over the future of the real-estate market in Singapore, as it made new real estate purchases less likely. With this being said, a Singapore Company Registration is just the right thing for you to do.

 

Singapore Tax Budget 2019 and Singapore Economy

As the release of Budget 2019 approaches, the current state of the Singaporean economy must be taken into consideration. According to the latest statistics as posted on tradingeconomics.com, Singapore’s annual GDP growth rate is 2.2%, its unemployment rate 2.1%, and its monthly inflation rate 0.2%. The GDP growth rate for the 2018 calendar year, however, was 3.3%, well above the most recent GDP growth rate. The most recent government budget statistics also show that Singapore registered a government budget surplus equal to 0.3% of the country’s GDP. However, the most recent set of forecast statistics paint a slightly more pessimistic view of Singapore’s economic condition. The forecast statistics have GDP growth rate and inflation rate trending up, unemployment rate trending down, and the government’s next budget to run at a 0.2% deficit. Now that the backdrop for Budget 2019 has been shown, some of the more salient elements that are expected to be part of the budget will be discussed.

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E A S I E R • F A S T E R • B E T T E R

Likely Outcomes of Singapore Tax Budget 2019

Leading accounting organization Deloitte does not foresee any major changes to the strategies implemented by the Singaporean government in 2017. These strategies were put in place by the Committee of the Future Economy. According to Deloitte, this is the case because Singapore’s domestic economic concerns are dominated by healthcare and the question of how to handle its aging population. The financial impact of an aging population is most likely to be felt with regard to income tax collection, healthcare spending, and welfare spending. Income tax collection is expected to increase significantly because the Singaporean government took the fact that an older population would have generally accumulated more personal income over the years into consideration. Healthcare and welfare spending would also increase because as people age, they often become more susceptible to health problems while also becoming less able to support themselves. How we can help you on Tax planning Budget 2019?

With regard to international tax developments, Singapore’s budget is likely to see it utilize a more cautious approach. The approach which is most likely to be taken by Singapore is one of observing, connecting, and influencing so as to adequately play its role in shaping global tax policy. This is because of the OECD’s new BEPS project, which has brought about many notable tax reforms around the world. This project has caused various countries to attempt to claim benefits associated with BEPS.

During a pre-Budget discussion held on January 9, 2019 which was organized by the Institute of Singapore Chartered Accountants, the panellists mentioned that the government needs to do more to help small and medium enterprises (SMEs) benefit from the government’s industry transformation maps (ITMs). ITMs were introduced in Budget 2016 as a way to transform Singapore’s industrial sector. ITMs were progressively rolled out, with the last of them having been released in March 2018. However, many SMEs in Singapore are still unsure about how to reap the most benefits from ITMs. Thus, there is a possibility that Budget 2019 may see some modification of ITMs and how they work.

This same discussion also raised the point that the five-year limit that developers have to sell all units at their residential projects should be reconsidered. Developers are currently subject to a non-remissible 5% Additional Buyer’s Stamp Duty (ABSD) upon purchase of properties intended to be redeveloped. The remissible ABSD is 25% and can only be waived if all the units in the new development are sold within the immediate five-year period following the purchase. Many developers have expressed their concern regarding this current ruling. Their main hope is that more significant and costly projects will be given a longer period. Hence, with this in mind, the Singaporean government might make it a point to be addressed during Budget 2019.

There have also been some calls for the income threshold for personal income tax to be raised. Proponents of such a move believe that it would be of significant benefit to Singapore’s middle class. Professional services network PricewaterhouseCoopers backed this raise before Budget 2018, but its wish was not fulfilled as the income threshold remained at S$20,000. Security issues have also been an issue of concern, and the Singaporean government has responded. The government plans to monitor public areas such as neighborhood centres and hawker centres by installing cameras in the areas.

 

Singapore Tax Budget 2019 and Singaporean Politics

Budget 2019 may also have notable political implications. Many observers believe that the budget will offer indications on when the next round of general elections will be held. If elections were to be held in 2019, the government is likely to come forth with a budget loaded with “gifts” for the citizens in an attempt to consolidate the power of the ruling People’s Action Party (PAP). Political observer Eugene Tan also noted that even if elections are not held in 2019, the government could use the budget to tip public opinion in favour of the PAP. There are also two issues which are of concern to both the election and Budget 2019: cost of living and the rise in income inequality. In fact, polls recently conducted across Singapore showed that the issue that concerns the average Singaporean the most is cost of living, an issue of which Singaporeans claim to be less satisfied with now than in previous years.

 

Theme

One other question about Budget 2019 which will weigh on the minds of many is what the overarching theme of the budget will be. For example, Budget 2009 was about taking steps to deal with the ongoing global recession, while Budget 2006 dealt with upgrading and restructuring the Singaporean economy. The pre-Budget feedback exercise mentioned earlier may shed light on areas that the Singaporean government plans to emphasize, as it was centered around five topics related to the budget. These topics were healthcare for the elderly, spending on pre-school programmes, innovation for firms, security and external relations, and philanthropy and volunteerism.

 

Conclusion

Budget 2019 will be pivotal for the Singaporean economy. Because of the current economic conditions, a well-planned, carefully-constructed budget will be necessary to ensure that Singapore retains the high level of financial stability it has historically had. It will be interesting to see who in Singapore stands to gain the most from Budget 2019 and in what ways.