What has the government done to help companies in 2020?
COVID-19 has impacted the whole world’s economy. Some impact of COVID-19 are as follow:
- Supply chain disrupted
- Negative GDP growth forecast in Singapore
- Working from home
- Adopting digital solutions
- Retrenchment and No Pay Leave
In order to save jobs and stabilise the economy, the Government introduced various schemes to boost the economy and helping businesses to tide over the crisis. In this article, we will discuss on the main schemes.
1) Job Support Scheme (JSS)
Probably the talk of the town for businesses, the government will provide support of 25% of the first $4,600 monthly wages (“qualifying wages”) for local employees in the “normal sectors” (i.e less severely affected sector). More severely affected sectors will receive 50% or 75% of the wages. Local employees refer to Singapore Citizen and Permanent Resident.
75% of the wages will be provided for April and May 2020’s wages for all sectors, due to the ‘circuit breaker’ period.
There are three levels of support for employers in different sectors, as shown in the table below.
| Industry | Sector (selected) | Support |
| Aviation and Tourism |
· Airlines · Aerospace related industry · Qualifying licensed hotels · Qualifying licensed travel agents · Qualifying gated tourist attractions · Cruise lines and cruise terminal operators |
75% of the first $4,600 gross monthly wages |
| Food services |
· Licensed food shops and food stall (including hawker stalls) · Retail outlets · Marine and Offshore |
50% of the first $4,600 gross monthly wages |
| Others | · All other employers | 25% of the first $4,600 gross monthly wages |
If the company is under the more severely affected sectors, but was only given 25% of the qualifying wages, the company may appeal here.
The payout schedule for each payout is given in the table below:
| Date of payment | Aviation and Tourism | Food services and retail | Others |
| Apr 2020 |
· 75% of Oct 2019 wages · 75% of Nov 2019 wages · 75% of Dec 2019 wages |
· 75% of Oct 2019 wages · 50% of Nov 2019 wages · 50% of Dec 2019 wages |
· 75% of Oct 2019 wages · 25% of Nov 2019 wages · 25% of Dec 2019 wages |
| May 2020 | · 75% of Nov 2019 wages | · 75% of Nov 2019 wages | · 75% of Nov 2019 wages |
| Jul 2020 |
· 75% of Feb 2020 wages · 75% of Mar 2020 wages · 75% of Apr 2020 wages |
· 50% of Feb 2020 wages · 50% of Mar 2020 wages · 75% of Apr 2020 wages – 25% of Oct 2019 wages |
· 25% of Feb 2020 wages · 25% of Mar 2020 wages · 75% of Apr 2020 wages – 50% of Oct 2019 wages |
| Oct 2020 |
· 75% of May 2020 wages – 75% of Nov 2019 wages · 75% of Jun 2020 wages · 75% of Jul 2020 wages · 75% of Aug 2020 wages |
· 75% of May 2020 wages – 75% of Nov 2019 wages · 50% of Jun 2020 wages · 50% of Jul 2020 wages · 50% of Aug 2020 wages |
· 75% of May 2020 wages – 75% of Nov 2019 wages · 25% of Jun 2020 wages · 25% of Jul 2020 wages · 25% of Aug 2020 wages |
Companies are encouraged to either have Paynow corporate account or have existing GIRO arrangement with Inland Revenue Authority of Singapore (IRAS) to receive the JSS payout faster.
As retail outlets are allowed to resume business from 19 June 2020, they will receive 75% of the qualifying wages from 01 June 2020 to 18 June 2020 and 50% of the qualifying wages from 19 June 2020 to 31 August 2020.
JSS was enhanced to include business owner (i.e shareholder-director) that has wages with assessable income of $100,000 or less for Year of Assessment 2019. This is assumed that the company was registered before 21 April 2020. The enhancement may be implemented so as to level the playing field as sole proprietor are eligible for Self-Employed Income Relief Scheme (SIRS). The condition to have assessable income of $100,000 or less is similar to SIRS.
Director fee and dividends are not included under the JSS scheme.
2) Protecting businesses
The government have passed the COVID-19 (Temporary Measures) Act 2020 to provide reliefs to businesses. Some reliefs including deferring contractual obligations such as paying rent and completing work. More details are available in our article: “Protecting businesses: what are the measures implemented?”.
3) Working capital loan
The maximum loan quantum for SME working capital loan has been enhanced to $1 million, with 5 years loan repayment period. In addition, SME may request for deferment of principal repayment for 1 year, subject to assessment by Participating Financial Institution (PFI).
Temporary Bridging Loan Programme (TBLP) is introduced in Budget 2020. The enhanced TBLP covers all sectors. The maximum loan quantum is $5 million with 5 years loan repayment period.
Monetary Authority of Singapore (MAS) has lent Singapore Dollars (SGD) to PFI at 0.1% per annum for TBLP and SME working capital loan. This means that SME will enjoy lower interest rate, at around 2 to 3%.
Companies that has less than 30% local shareholder (Singaporean or Permanent Resident) is not eligible for the loan.
4) Property tax rebate and cash grant
Landlords are required to pass on the property tax rebate for non-residential property that should be paid to IRAS to the tenants. More details are available in our article: “Property tax rebate: what businesses and property owners should know”.
In addition, IRAS will be disbursing cash grant of around 0.64 or 0.8 months of rental payment to the landlord from end-Jul. Landlord would then need to pass on the grant to the tenant. More details are available by end-Jun.
Our comment
The government has made great effort in saving jobs and businesses. Businesses should tap on government’s schemes to maximise their cash flow. Businesses should also be mindful of the impact of the cashflow on employee’s wages (e.g timing between paying your employee’s wages and getting the JSS payout), and whether there are sufficient funds to pay your suppliers.
Please contact us if you need to understand more on the various schemes available.