KPMG calls for Smart Nation measures

Singapore

BUDGET 2019 should help Singapore realise its Smart Nation vision, said KPMG on Wednesday, recommending moves in financial services, real estate, healthcare and life sciences, consumer retail and technology, as well as cybersecurity.

These five sectors "hold the greatest potential to turn Singapore's Smart Nation vision into reality", said Tay Hong Beng, head of tax at KPMG in Singapore.

The financial sector should be encouraged to move from technological experimentation to deployment. Said head of financial services Leong Kok Keong: "After extensive nurturing with targeted government support, banks and fintech companies have reached a stage where a number of 'proven solutions' are now ready for deployment on a wider scale."

To drive adoption, grants could be given under the existing Financial Sector Technology and Innovation (FSTI) scheme. Grants could also be given to local fintech startups for talent search and relocation costs.

A more open immigration policy is needed to get foreign talent in areas such as data science and emerging technologies. A fintech academy with apprenticeship could also be set up.

To encourage cloud migration, KPMG suggested FSTI grants, tax deductions for qualifying expenditure, and for the FSTI scheme to recognise cloud migration.

And to aid the development of a platform that can monitor trade transactions for money laundering, the FSTI proof-of-concept scheme could be extended to provide up to 50 per cent of qualifying costs to financial institutions that have substantial trade finance businesses in Singapore.

For the real estate sector, the government should encourage going green, said KPMG. It suggested concessionary tax rates on interest income from green-building-related loans and a tax exemption for income from green bonds.

To stimulate demand and supply for green buildings, ideas include tax deductions on financing costs, property tax rebates, tax exemption on developers' gains and stamp duty rebates for such properties.

Existing property owners could be given tax allowances on capital expenditure on green initiatives, tax reduction on rental income from buildings with green renovation and retrofitting, and property tax rebates when a building is certified green.

To encourage technology adoption, KPMG suggests grants and co-funding for research and development, and a concessionary tax rate on income from "proptech" solutions.

For the healthcare sector, KPMG focused on patient data sharing. The government could set up a common, secure platform for healthcare data, give incentives for healthcare providers and life sciences companies to participate in data sharing, and liberalise enhanced research and development tax deductions.

In consumer retail, KPMG suggested ways to get retailers to go digital, including tax deductions on prescribed expenses paid to service vendors in areas such as data analytics or digital marketing; concessionary tax rates for international retail and lifestyle companies coming here; and more financial support for training the retail workforce.

In the technology sector, KPMG highlighted the Internet of Things (IoT) as a key Smart Nation enabler. To encourage IoT adoption, the government could set up a sandbox environment in regulated areas such as telecommunications. Other ideas include tax deductions for bringing in international experts; training subsidies; tax deduction for payments to service vendors; and tax allowances on related capital expenditure.

KPMG also proposed a Smart City Hub programme to provide technology, capital, talent and advisory services, with a concessionary tax rate of 10 per cent for qualifying businesses that derive income from Smart City programmes overseas.

The government could also co-fund R&D costs and extend the Angel Investor Tax Deduction Scheme to prioritise projects backed by "smart capital" from investors with a track record in large-scale public technology project implementation.

Finally, as cybersecurity is the foundation for going digital, KPMG suggested measures to help companies in this area, such as tiered tax concessions or rebates; mandatory training; and co-funding for cybersecurity solutions.