Three Announcements in the Singapore Budget That Will Affect Investors

Singapore Budget 2018 was announced on Monday. As investors, certain regulation changes can have an impact on the performance of our assets. As such, being familiar with some of these change can help us prepare and strategise our investments going forward.

Goods and services tax (GST) to increase to 9%

The Singapore government will raise the goods and services tax by 2 percentage points to 9% some time between 2021 and 2025. GST will also be applied to consultancy and marketing services, app and music downloads. Finance minister Heng Swee Kiat said the increase is to let the government have enough to meet the future needs, without burdening future generations.

The GST hike will put inflationary pressure on Singapore. Depending on the price sensitivity of the industry, some businesses may see declining sales and increasing cost. Discretionary goods and services will perhaps be the most affected due to the inflationary pressure of the GST hike.

Having said that, the increase in GST has been long time coming. It remains to be seen what sort of overall economic impact the GST hike will have in the future.

Buyer stamp duty to increase to 4% for properties above $1 million

Buyer stamp duty is a progressive tax that home buyers need to pay. The stamp duty has been increased from 3% to 4% for properties that exceed $1 million and it took effect from 20 February 2018.

For property investors, this will have the effect of increasing the cost of purchasing a property, while putting deflationary pressure on prices. If you are looking to invest in properties, it is important to take into account the impact that these additional costs will have on your investment return.

Increase spending on infrastructure

The government will increase spending on infrastructure to $20 billion in 2018. This is more than double the $8.5 billion spent in 2011. It also aims to build Changi Airport Terminal Five to prepare Singapore for the expected increase in visitors and air travel in the region.

Construction companies that specialise in infrastructure can capitalise on the increased budget. As investors, we may wish to look at companies on the stock exchange that can benefit from the new projects.

The Foolish Takeaway

Investors should be up-to-date with any of the latest regulation changes that can impact their investments. By doing so, we can capitalise on any changes to maximise our investment returns.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.