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PwC Singapore seeks more tax breaks in Budget 2019 to spur startup scene

PWC Singapore has suggested a new tax exemption scheme for early-stage venture capital (VC) investment with a lower assets under management of about S$10 million to entice more VCs to bring overseas funds to invest in Singapore technology startups.

In its Budget 2019 proposal published on Tuesday, the audit and consulting firm said the current tax incentive under Section 13X requires a minimum fund size of S$50 million, which is too high for most venture capital (VC) funds to qualify. 

"As a form of check and balance, the incentive should be confined to VC funds which are managed by fund managers that are approved by the Monetary Authority of Singapore," PwC said. 

PwC also recommended liberalising the Angel Investors Tax Deduction (AITD) scheme to make it easier for individual investors to qualify, thereby boosting the growth of tech startups.

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This could be done by waiving the eligibility conditions and approval requirements for an angel investor under the AITD scheme such that certain classes of wealthy individuals such as accredited investors can claim tax breaks as well.

"The scheme should be extended to companies and venture capital funds that provide financing to help the qualifying startups in such industries and help them to commercialise their products or services," PwC added. "This will also help in the marketing of Singapore as a key venture hub on the international stage."

PwC also proposed for all of Singapore to be turned into a free trade zone, allowing unfettered import, storage and processing for re-export as a hub for goods moving in and out of Asean.

On the social front, PwC called as well on the government to consider tax reliefs for working mothers, and tax breaks for premiums paid on medical-related or health insurance policies.