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KPMG’s Budget proposal: fintech adoption, cyber resilience and R&D

INVESTMENTS to drive fintech adoption, tax policies to increase cyber resilience and the adoption of new technologies, and enhance R&D (research and development) are among KPMG's suggestions for Singapore Budget 2019.

It has called for measures to help companies in five key sectors -  financial services, real estate, healthcare and life sciences, consumer retail and technology - that have substantial upsides for Singapore to realise its Smart Nation vision. 

FINANCIAL SERVICES

KPMG has suggested a new Financial Sector Digital Deployment scheme to facilitate the deployment of fintech solutions on a wider scale as more could be done to help financial service companies that still face deployment challenges such as time, financial costs and resistance in implementing new technologies.

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It has proposed extending the Monetary Authority of Singapore’s S$225 million Financial Sector Technology and Innovation (FSTI) grants based on 50 per cent of outlay incurred for deployment, to drive the adoption of digital payments, blockchain, cloud, data and analytics, as well as artificial intelligence and machine learning.

It also proposed extending the FSTI proof-of-concept scheme to provide up to 50 per cent of qualifying costs to financial institutions that have substantial trade finance businesses in Singapore to aid early-stage development of a platform for monitoring trade transactions and proliferation financing activities.

KPMG said these schemes would drive sector growth and "move fintech deployment from an experimentation to implementation phase”.

TECHNOLOGY

In addition to tax reductions and allowances to encourage the development and adoption of the Internet of Things (IoT), it suggested mandatory training for boards and senior management, as well as tiered tax concessions or rebates for corporations that enhance governance, risk management and vigilance to boost cyber resilience. 

It has suggested funding small and medium enterprises (SMEs) up to 70 per cent for investment in cybersecurity solutions, and up to 50 per cent for other types of companies that develop cybersecurity-related capabilities.

REAL ESTATE

KPMG has proposed incentives to encourage private sector adoption of technology (proptech) to build a more sustainable green property ecosystem.

To support green loans and mortgages, it has recommended a 5 per cent concessionary tax rate for financial institutions on interest income from loans for the acquisition and development of green residential and commercial properties.

Another suggestion was to increase demand and supply for green properties by offering a 200 per cent tax deduction on financing costs and 30 per cent property tax rebate for green property owners.

To create a market premium for green buildings, KPMG said a 50 per cent tax exemption on gains by developers from the sale of commercial and residential green buildings, along with a 50 per cent rebate on stamp duty on conveyancing of green properties could be considered.

HEALTHCARE

Its suggestions for healthcare include a common “data lake” to facilitate the synchronisation of healthcare data, as well as a risk-reward framework for healthcare providers and life sciences companies to participate in data sharing.

To attract and retain R&D talent, the firm suggested tax deductions of 150 per cent of costs on R&D conducted in Singapore for a multinational group’s associated foreign entities.

Currently, the 250 per cent R&D tax deduction is only available for R&D performed in Singapore, and where the taxpayer is the beneficiary of these activities. It calls for overseas R&D to be included in this deduction as long as it is linked to local R&D activities.

CONSUMER RETAIL

KPMG has called for more digitalisation among retailers. To encourage more lifestyle innovation, it has suggested a 250 per cent tax deduction for local spending for prescribed expenses made to Singapore-based service vendors, and a 200 per cent tax deduction for payments for prescribed expenses made to overseas service vendors in the adoption of new fields such as data and analytics.