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PwC submits Budget proposals on digital economy
EASE employment rules for work visas in the technology startup space. Give angel investors more tax breaks to boost funding for startups. Allow firms to deduct expenses from new ventures against profits from existing businesses.
These are some of the recommendations that PricewaterhouseCoopers (PwC) has submitted to Singapore government agencies on how to liberalise the Republic's tax regime as the country looks to develop a digital economy, encourage innovation, and promote entrepreneurship.
The recommendations were made in anticipation of next year's fiscal Budget, expected to be unveiled next February. They were submitted to the Ministry of Finance and the Monetary Authority of Singapore (MAS).
Before that, the Committee on the Future Economy (CFE) will unveil its recommendations for Singapore by end-January. The report will focus on how the digital economy, entrepreneurship and innovation can be part of the economy.
PwC says in its report that it believes digital disruptions should be embraced so that Singapore can remain competitive.
Thus, it recommends that employment rules for work visas could be eased for certain employers in the venture fund and technology startup space. "More needs to be done to build the talent pool," PwC said.
It also suggested extending the Angel Investors Tax Deduction (AITD) Scheme to venture capital firms and companies. The government could also make it easier for individual investors to qualify for the scheme.
These efforts would help in the marketing of Singapore as a global venture hub on the international stage, said PwC.
The report underscored the need for companies to conduct R&D overseas, as it may be difficult to find the right sample size and environment for them here in Singapore.
PwC thus recommends that the Income Tax Act be amended so that companies' overseas R&D activities that have a nexus to their Singapore businesses can qualify for enhanced deductions. The government should also consider raising the R&D tax deduction ceiling to at least 200 per cent so that it can be in line with the more competitive ones in other economies.
PwC also suggested liberalising the tax treatment of expenses relating to new ventures. Currently, they are not deductible, as they are considered capital in nature.
Companies should be allowed to deduct expenses incurred in respect of new business ventures against profits from existing trade or business. This would encourage businesses to take the extra step to develop innovative capabilities, said PwC.