Deloitte Releases Singapore 2015 Budget Wish List
Friday, January 2, 2015
Deloitte Singapore has released its annual tax policy wish list, which has
been compiled in response to an ongoing Ministry of Finance pre-2015 Budget
consultation on tax and spending measures.
Deloitte said the list focuses on achieving "sustainable, inclusive
growth and a forward-looking, competitive business environment for Singapore,"
and, to that end, the Government should "consider revisiting" some
of the tax incentives currently available for investors.
For example, the wish list proposes an increase in the partial tax exemption on chargeable
income for small- and medium-sized enterprises (SMEs) to the first SGD600,000
(USD452,700) from the current SGD300,000. The effective tax rate for SMEs with
chargeable income of SGD600,000 would then drop to 7.8 percent, from the current
To raise productivity and innovation, Deloitte believes that the administrative
burden of the Productivity and Innovation Credit (PIC) scheme could be lowered
by combining the cap for a PIC cash payout, which is currently limited to
SGD100,000 per year of assessment (YA), across the relevant YAs until
2018, similar to the provision available for PIC enhanced deductions.
In addition, to offer more support for SMEs, it suggests that the PIC cash
payout conversion cap should be increased to SGD200,000 per YA, while an enhanced
deduction for qualifying PIC spending for SMEs could be increased to 400 percent
(from 300 percent), making a total of 500 percent tax deduction.
The wish list also proposes a number of GST changes, including the introduction of a reverse charge mechanism. It also proposes waiving the requirement to report zero-rated purchases and increasing the value
threshold for simplified invoices from SGD1,000 to SGD3,000.
The firm has said Singapore should also undertake a review of the measures in place for key industries, including for financial services, shipping, telecommunications, and real estate investment trusts. Last, Deloitte recommended that there should be a reduction in
domestic interest withholding tax rates from the current 15 percent to 10 percent,
so as to reduce the cost of financing for Singapore companies. A thin capitalization
rule could be implemented to mitigate the possible impact of this change on the
Singapore tax base, it said.