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Singapore Offers Tax Measures to Aid Coronavirus-Hit Sectors

Feb. 18, 2020, 4:59 PM

Singapore on Tuesday announced a budget with the city-state’s biggest deficit in two decades and a raft of new tax breaks designed to boost an economy hit by the coronavirus.

Tax and other spending measures mean that Singapore’s deficit will balloon in fiscal year 2020 to $10.9 billion Singapore dollars ($7.8 billion) from SG$1.65 billion in fiscal 2019.

The tax proposals include a SG$400 million tax rebate for companies in 2020, capped at SG$15,000 for each company. The government also proposed a property tax rebate for licensed hotels, serviced apartments, meeting venues, and other qualifying commercial properties.

Enterprises will also get faster writedowns for investments in plants and machinery and renovations and refurbishments for one year.

“This will put more cash in the hands of our enterprises,” Finance Minister Heng Swee Keat said in his budget speech. “For example, hotels can now take advantage of this slow period and upgrade and refurbish.”

The government also said it would delay plans to raise the goods and services tax (GST) to 9% from 7% in 2021.

“After reviewing our revenue estimate and projections and considering the current environment, we decided the GST increase would not take effect in 2021,” he said, cautioning, however, that “We will not be able to put off the increase indefinitely. I will still require recurring sources of revenue to help fund our recurring spending needs in the medium term.”

The government said it would also extend a number of preferential tax regimes involving the financial sector, including a concessionary tax-rate program that provides incentive rates for global trading companies, shipping firms, and finance and treasury companies.

The government also said it would extend a withholding-tax exemption for nonresident companies.