LIVE UPDATES: Singapore Budget 2023
Finance Minister Lawrence Wong said the budget will be about “Moving Forward in a New Era.”
Singapore Business Review is tracking developments from Singapore’s 2023 budget statement live as they are announced by Finance Minister Lawrence Wong.
In a Facebook post, Wong said the budget will be about “Moving Forward in a New Era.”
“The budget sets out how we will secure our prospects in a troubled world — to help Singaporeans seize new opportunities, to strengthen our social compact and give assurance for families, while we build our collective resilience as one people,” he wrote.
The formal presentation of the budget kicks off at 3:30 pm today, 14 February. Follow us live!
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Prime Minister Lawrence Wong arrives at the Parliament House.
Wong delivers the budget for the financial year from 1 April 2023 to 21 March 21 2024.
FISCAL 2022 OVERVIEW
- The Singapore government expects a slight deficit of $2b or 0.3% of GDP for FY22.
- For FY23, the government expects a slight deficit of $0.4b or 0.1% of GDP.
- Wong says the government will no longer need to make any draw from the past reserves in this year’s budget.
- The government will reduce the balance of Contingencies Funds from $16b to $6b.
SUPPORT FOR BUSINESSES
- Government extends the current enhancements to the enterprise financing scheme until 31 March 2024 which include the 70% government risk share for trade loans, enhanced maxim quantum for trade and working capital loans, and support for domestic construction projects via project loans.
- Government extends the Energy Efficiency Grant until 31 March 2024 to provide continued support for businesses in the food services, food manufacturing, and retail sectors to invest in energy efficiency and reduce the impact of higher electricity prices.
- Government introduces Enterprise Innovation Scheme. The scheme will enhance tax deductions for five key activities in the innovation value chain: R&D conducted in Singapore, registration of intellectual property, acquisition and licensing of intellectual property rights, innovation carried out with polytechnics and ITE, and training via courses approved by SkillsFuture Singapore and align to the Skills Framework.
- Tax deductions raised to 400% of qualifying expenditure on each of the five above-mentioned activities. The qualifying expenditure is to be capped at $400,000 for each activity, except for innovation carried out with polytechnics and ITE for which expenditure will be capped at $50,000.
- Businesses can enjoy tax savings of nearly 70% of their investment with the tax deduction scheme.
- Firms that have yet to turn profitable will have the option to convert 20% of their total qualifying expenditure per year of assessment into a cash payout of up to $20,000 to help smaller firms defray the cost of their innovation activities.
OFFSETTING GST HIKE IMPACT
- Government will offer two-pronged support for Singaporeans amidst the GST hike: a permanent GST voucher or the GSTV scheme and an assurance package to cushion the impact of the hike.
- The GSTV scheme is targeted at lower- to middle-income Singaporeans.
- Government increases GSTV cash quantum for individuals residing in homes with annual values of $13,000 and below to $700 in 2023 and to $850 in 2024.
- GSTV cash quantum for individuals residing in homes with annual values of abode $13,000 and up to $21,000 will increase to $350 in 2023 and to $450 in 2024.
- Government increases the AP cash by between $300 to $650 for eligible Singaporeans over the remaining years of the Assurance Package. The increase will bring the total AP cash payments received by adults to around $700 to $2,250 over five years.
- CDC vouchers to increase by $100 to $300 in 2024.
COST-OF LIVING MEASURES
- Government introduces one-off support measures for 2023, offering a cost-of-living special payment of $200 to $400 for eligible adult Singaporeans, and $200 to $300 for citizens aged 55 and above.
- Government doubles U-Save rebates for households over the next three tranches of disbursement in 2023. Eligible households can expect to receive up to $760 in U-Save rebates this year.
- Households with children aged six and below will receive a top-up of $400 for each child to their Child Development Account. Meanwhile, for every child above six years old, households will receive a top-up of $300 to their Edusave account.
- All enhancements will cost $3b. The total amount of the assurance package is to increase from $6.6b to $9.6b.
MAKING SG MORE COMPETITIVE
- Government tops up the National productivity fund with $4b and expands the scope of the fund to include investment promotion as a supportable activity.
- The fund will be used to anchor more quality investments in Singapore.
- Wong says the government has committed $25b from 2015 to 2021 in R&D to catalyse research, innovation, and enterprise.
- The government sets aside an additional $150m via the SME Co-investment fund to invest in promising SMEs. It also aims to catalyse an additional $300m of private investments to support SMEs.
- Government sets aside $1b to boost Singapore Global Enterprise Initiative.
UPLIFTING THE WORKFORCE
- “I will focus on ensuring that training translates into good employment outcomes,” says Wong.
- Jobs-Skills Integrators are to be appointed to develop labour market intermediaries to optimise training and job placement. Wong says integrators can be existing institutions. The government will pilot the Jobs-Skills Integrators in the precision engineering, retail, and wholesale trade sectors.
- Government extends the Senior Employment Credit until 2025 to support employers that hire senior workers. Part-time re-employment grant is also extended until 2025 to encourage employers to offer part-time re-employment to senior workers.
- Government tops up Progressive Wage Credit Scheme (PWCS) by $2.4b. PWCS was introduced in the 2022 budget.
- To support employers who hire PWDs, the government will enhance the Enabling Employment Credit to cover a larger proportion of wages for a longer duration for PWDs who have not been working for six months.
- Government introduces the Uplifting Employment Credit in the form of a time-limited wage offset to encourage firms to employ ex-offenders.
HOUSING FOR SINGAPOREANS
- Government increases CPF Housing Grant to $80,000 (+$30,000) for First-Timer families purchasing four-room or smaller resale flats and to $50,000 (+$10,000) for those purchasing five-room or larger flats. The additional grant will be credited to the CPF account of eligible homebuyers.
- With the CPF Housing Grant and Proximity Housing Grant, eligible families can receive up to a total of $190,000 in grants when buying resale flats.
SUPPORT FOR SINGAPOREAN FAMILIES
- Government changes the Working Mother’s Child Relief (WMCR) to a fixed dollar relief. The change will take effect from the year of Assessment 2025. Only Singaporean children born or adopted on or after 1 January 2024 are affected by the change. Given the change, eligible working mothers will be able to claim the following amo
- Baby Bonus Cash Gift increased by $3,000 for all eligible Singaporean children born from 14 February onwards. Additionally, the government will enhance the Baby Bonus Cash Gift disbursement.
- Government will increase contributions to the Child Development Account (CDA) which parents can use to directly offset preschool and healthcare expenses. First Step Grant will increase to $5,000 from $3,000.
- The co-matching cap for the CDA will also increase, rising by $1,000 each to $4,000 for the first child, and $7,000 for the second child.
- Government extends a one-off Baby Bonus Support Grant of $3,000 to children born from 1 October 2022 to 13 February 2023.
- Government doubles the paid paternity leave to four weeks for eligible fathers with children born on or after 1 January 2024. Previously, fathers were only given a two-week paid paternity leave. The extra leaves will be given on a voluntary basis.
- Unpaid care leave increased from six days to 12 days per year, for each parent in the child’s first two years. The leave will be available for those who have been working for their employer for at least three months. The rule will apply on 1 January 2024 for those with children aged two years and under.
- Taken together, the enhancements will increase parental leave from 22 weeks to 26 weeks.
- Government provides additional support for lower-income families, by topping up ComCare Endowment Fund by $300m.
SUPPORT FOR THE AGEING POPULATION
- Government tops up ElderCare Fund by $500m and MediFund by $1.5b.
- Community Silver Trust topped up by $1b.
TAX SYSTEM ADJUSTMENTS
- Government will implement higher buyer stamp duty (BSD) rates for higher-value residential and non-residential properties.
- For residential properties, the portion of the value of the property in excess of $1.5m up to $3m will be taxed at 5%, whilst that in excess of $3m will be taxed at 6%, up from the current rate of $4. The changes will affect 15% of residential properties.
- For non-residential properties, the portion of the value of the property in excess of $1m and up to $1.5m will be taxed at 4%, whilst that in excess of $1.5m will be taxed at 5%. These changes will affect 60% of non-residential properties.
- Changes in the regime will apply to all properties acquired from 15 February.
- Government adjusts the Additional Registration Fee (ARF) tier for Higher-end and luxury cars. Buyers of cars with an open market value (OMV) of more than 40,000 will pay higher marginal ARF rates. For the highest OMV tier, the revised ARF rates will be 320%.
- Preferential ARF (PARF) rebates are capped at $60,000.
- Government increased Tobacco Excise Duty by 15%. The increase will generate $100m additional revenue for the government.
- BEPS 2.0: Singapore to implement Pillar II of BEPS 2.0 in 2025.
Wong ends Budget speech.