ANNOUNCED AS TEMPORARYNo
Tax or social insurance relief
On 25 February 2013, Deputy Prime Minister and Minister of Finance, Tharman Shanmugaratnam, held the 2013 budget speech in the Singaporean parliament. Among the biggest changes was the introduction of the 3-year-long Transition Support Scheme, consisting of a 3.6 billion SGD (on that day, 1 USD equalled 0.8066 SGD) Wage Credit Scheme, a 450 million SGD Productivity and Innovation Credit Bonus and a Corporate Income Tax Rebate worth 1.3 billion SGD.
Wage Credit Scheme
Under this scheme, the government will finance 40% of the wage increases for Singaporeans over the three years, if the employee concerned does not earn more than 4'000 SGD per month. Over the course of these three years, the wage increase will be cofinanced even if it is increased multiple times, e.g. in 2013 and 2015.
As this scheme directly affects the competitiveness of foreign workers in Singapore, it shall be classified as a migration measure.
Productivity and Innovation Credit Bonus
Under the PIC Bonus, companies investing at least 5'000 SGD in a given year will receive a dollar-for-dollar matching cash bonus. This means, each company may obtain up to 15'000 of bonuses if they invest the minimum amount in each of the three years.
Corporate Income Tax Rebate
Shanmugaratnam also said in his budget speech: "besides higher manpower costs, businesses also face other cost pressures such as higher rentals. To help companies cope during this period of transition, I will provide a special Corporate Income Tax rebate from YA 'year of assessment' 2013 to YA 2015. I will give a rebate of 30% of tax payable up to $30,000 per Year of Assessment. This is expected to cost $1.3 billion over three years."
The Deputy Prime Minister further announced a number of migration policies. One of them were "selective further Dependency Ratio Ceiling (DRC) cuts for sectors where there has continued to be significant growth in foreign worker numbers, and where productivity levels are still well behind international productivity leaders".
The tighter regulations include an increase in fees for both low-skilled permit holders and firms that employ low-skilled foreign workers, a reduction in foreign worker quotas and stricter guidelines for qualification. The announcement comes after rising concerns among locals over the growth of employment of foreign workers. The key changes have been outlined by the Ministry of Manpower on 26 February 2013 and are expected to enter into force on 1 July 2013.
In the 2015 budget speech, the Wage Credit Scheme and PIC Bonus were prolonged for another two years. However, as the state aid levels in those prolongation were lowered, they are classified in a separate measure.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
The list of affected trading partners concerns the migration part of this measure.
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