Singapore has emerged well from a troubling couple of years due to the pandemic, growing by 7.2% in 2021. The recently announced 2022 budget aims to bring Singapore into the post-COVID world. It includes a lot of increases to social services which aim to improve the lives of Singaporeans. This is particularly aimed at those who have struggled during the pandemic and the recession that resulted.
This budget is also a significant announcement for foreign businesses and professionals working or planning to work in Singapore. Below is a summary of changes that will affect those looking to do business in Singapore.
Core Changes for International Businesses
Good and Services Tax
The Goods and Services Tax (GST) is a consumption tax based on imported goods and levied by the Singapore Customs service. It is equivalent to VAT in other countries.
GST is generally applied to the end consumer. However, those producing goods in Singapore must also factor this change into account. A higher GST will likely result in an overall increase in the cost of doing business in Singapore.
In response, the government has decided to delay the planned increase to the GST and stagger it over the next two years.
According to the 2022 budget, the GST will rise from 7% to 8% in 2023 and then from 8% to 9% in 2024.
So, you can learn more about the GST and how it works here.
Employment Pass (EP) Holders
The EP is a work visa issue in Singapore to those foreign workers who qualify as earning over SGD4500 per month. These applicants typically work as specialized managers or executives. This method is meant to ensure these employees can add their particular skills or experience to the economy.
While Singapore wishes to signal it is reopening to the world’s professionals, as of the 2022 budget, the minimum salary requirement to be eligible for the EP has been raised from SGD4500 to SGD5000.
For those foreign professionals in the financial sector, the EP requirement has been raised from SGD5000 to SGD5500.
For those looking to learn more about the EP, you can read more about it on Ministry of Manpower’s website.
S Pass and Work Permit Policies
In line with the changes to the EP, S Pass and Work Permit requirements are also rising.
The S Pass allows for mid-level foreign workers to be employed in Singapore. According to the 2022 budget, the minimum monthly salary requirement for S Pass workers will be raised to SGD3000 from the previous SGD2500.
Similar to the EP, the minimum requirement in the financial sector is higher and will be raised to SGD3500 per month.
The government has said that these monthly minimums will also rise again in 2023 and 2025.
The monthly levy that employers pay to employ S Pass workers will also rise progressively over the coming years. Currently, the Tier 1 levy for employers (with up to 10% of their workforce made up of foreign employees) is SGD330 per month per foreign worker. This will rise to SGD650 per month per employee by 2025.
For employers with over 10% of their staff as S Pass holders, the monthly levy is already SGD650.
Work Permit Reduction
Alongside these rises in cost, the government is lowering the allowance of work permits available to foreign workers in companies in the construction and process sectors from 87.5% to 83.3%.
End of the MYE
The Man-Year Entitlement (MYE) currently regulates the number of foreign workers from specific countries available to companies in the construction and process sectors. This is set to be replaced by a new levy system in 2024.
Primary Care Plans for Migrant Workers
Finally, from April, companies in Singapore hiring migrant workers who live in dormitories must purchase a Primary Care Plan (PCP). These employee insurance plans will range in price up to SGD138 per year.
To read about other changes made to the budget and see more details about their effects. You can read the official government budget summary here.
Looking to Hire in Singapore?
For companies looking to hire in Singapore, you can read our guides on the advantages of PEO (Professional Employer Organization) and RPO (Recruitment Process Outsourcing) services.
So, whether you want to transfer existing employees to Singapore or find new members for your team from the best of Singapore’s local talent, INS Global has the perfect solution to meet your needs.
What INS Global Can Do for You
INS Global’s team of overseas expansion specialists has over 15 years of experience helping companies meet their expansion goals worldwide.
Today, expanding into new markets is complicated and fraught with dangers that result from unfamiliarity with local laws and regulations. We understand how business is shaped by constant change and the need to adapt.
INS Global offers top-level HR outsourcing services to provide solutions for all of your global HR requirements. From our Singapore PEO and Employer Of Record services to payroll, contractor management, or company incorporation outsourcing, we have everything covered. INS Global has the experience and expertise you need to succeed.
Finally, our experts pay close attention to every change as it happens to ensure that you and your company always remain compliant with every aspect of local regulatory law.
So, contact our team today to learn more about what we can do to help you meet your goals.