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Invest in environmental protection: PwC’s wish for Budget 2020
ENVIRONMENTAL protection has made a first appearance in consultancy firm PwC Singapore's wishlist for Budget 2020, among calls for the government to enhance the Republic's tax competitiveness while remaining inclusive.
In its recently released Budget 2020 proposal titled Investing in Change for Future Generations, PwC asked the government to encourage green financing by giving enhanced tax deductions to companies issuing green bonds.
Currently, the Sustainable Bond Grant Scheme, which expires in May 2023, funds all eligible expenses attributable to obtaining an external review for green bonds, with a cap of S$100,000 for each qualifying issuance. PwC said the government can consider allowing enhanced tax deductions for expenses incurred beyond the cap.
The firm has also suggested having incentives to ensure sustainability in the supply chain. It said the government can consider extending the Land Intensification Allowance to the agriculture and fishing sectors to encourage them to upgrade and adopt the latest technologies to raise their efficiencies and productivity.
Beyond the environment, PwC has asked the government to encourage enterprise and innovation. For example, it said the government should consider setting up a collaborative integrated public-private partnership to provide support to local healthtech - including biotech and medtech - startups.
To bring in new investors, PwC said the mergers and acquisitions allowance scheme can be enhanced in several ways. For example, it could extend the scope to include instruments, such as preference shares or bonds, that are convertible to ordinary shares to give investors greater flexibility.
In the area of taxes, PwC has asked the government to re-evaluate Singapore's tax incentive regime and to improve the efficiency of its tax administration in order to stay competitive.
One suggestion is for the government to ease in the introduction of the Goods and Services Tax (GST) on imported service, set to kick in on Jan 1, 2020, by waiving penalties on non-fraudulent GST errors for the first two years.
This is because the implementation of this new rule will require "significant changes to businesses' processes and systems", PwC said, and companies are expecting teething problems. It said this was similarly introduced during the implementation of the GST and would encourage the voluntary disclosure of GST errors.
On the individual front, PwC said a further simplification of certain benefits-in-kind would increase efficiencies for employers and reduce their administrative burden. For example, soft benefits, which are insignificant and work-related, such as car-parking benefits on overseas business trips, should be tax-exempt, it said.
In addition, with the rise of telecommuting, the government could consider introducing a home office relief for employees who work from home as their residence is partially used for employment purposes.
"Singapore is deeply connected to the global value chain. While this has brought about growth for the country, it also makes it easily impacted by instability in geopolitics. In addition, other external challenges such as climate change pose a risk to the long-term security of the Republic.
"PwC Singapore's list of recommendations for Budget 2020 underlines key aspects that can enhance the city-state's competitiveness, security as well as support its enterprises and people," Chris Woo, PwC Singapore's tax leader, said.