BUDGET 2022 should make clear exactly when the upcoming Goods and Services Tax (GST) hike will occur, so that businesses can plan accordingly, said Deloitte in a list of recommendations released on Tuesday (Nov 23).

Amid global tax developments in the area of base erosion and profit shifting (BEPS), Singapore should also review its tax incentives, said Deloitte.

While Budget 2021 focused more on immediate survival, Budget 2022 may tackle a broader range of immediate, short- and long-term issues "as the economy begins to recover and businesses transition from responding to Covid-19 to thriving in Covid-19", said Low Hwee Chua, Deloitte Singapore tax and legal leader and Deloitte South-east Asia regional managing partner for tax and legal.

The government has previously said that the hike from 7 per cent to 9 per cent will occur between 2022 and 2025, subject to the economic outlook.

Deloitte Singapore indirect tax leader Richard Mackender, said: "With only three years left, it would be very helpful for the government to give a clear indication of the expected date of implementation so that businesses can plan effectively."

Meanwhile, with the impending implementation of global anti-base erosion rules - which aim to ensure multinationals pay a fair share of tax wherever they operate - Singapore should review current tax incentives to see if they need to be recalibrated in light of this, said Deloitte.

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"Singapore will have to consider how best to adjust its tax system, particularly the effectiveness and relevance of tax incentive awards in light of the BEPS 2.0 initiatives, to ensure that Singapore remains an attractive inbound destination for foreign-headquartered MNEs (multinational enterprises), while safeguarding its taxing rights," said Deloitte South-east Asia global investment and innovation leader Lee Tiong Heng.

To aid the ongoing economic recovery, suggestions include more flexible tax rules for mergers and acquisitions; allowing more types of intangible assets to count as intellectual property; and reassessing research and development tax regime to allow more companies to benefit.

Deloitte also gave sector-specific proposals for fund management, insurance, and finance, including a greater emphasis on green finance and ESG (environmental, social and governance) initiatives.

One suggestion was made in light of Singapore's transition to endemic Covid: allowing the cost of Covid-19 testing to be fully deductible for tax purposes and not subject to the existing medical expense restriction, when said cost is not fully subsidised by the government.

READ MORE: GST hike could feature in Budget 2022, kick in as soon as July: economists