You are here

KPMG focuses on 'transformation as business' in Budget 2020 proposals

INSTEAD of a wish list or a focus on tax tweaks for Budget 2020, KPMG in Singapore has proposed that economic transformation should be seen not just as a challenge, but a business opportunity.

Its Budget 2020 proposal includes measures to promote digital adoption and sustainability, and encourage new solutions, as well as a multi-year scheme for firms which want to transform.

The aim is to turn Singapore into "the transformation capital of Asia". Beyond reducing costs, transformation can boost top lines, said deputy head of tax Ajay Kumar Sanganeria.

Firms that transform successfully can turn in-house solutions or expertise into products, creating a business out of their experience. The economy-wide transformation push will also foster consultants and solutions providers who can go into regional markets.

To foster transformation, one idea is a digital transformation package of tax incentives, including enhanced capital allowance for digital adoption and enhanced deductions for training and consultancy.

Another is a "3+5 Protect & Grow Scheme", with a three-year phase to improve productivity – providing incentives such as 300 per cent capital allowances, subject to caps, for investments in automation – and a five-year phase for growth and value creation, with 300 per cent tax deductions for research and development, and expenditure related to internationalisation or intellectual property.

Businesses can choose the start date of each phase according to their needs. This is in contrast to limited-time schemes that might cause firms to rush to board the bandwagon before the schemes expire, said head of tax Tay Hong Beng.

To reap the benefits of 5G in transformation, KPMG proposes a 5G technology and innovation fund; enhancing the R&D (research and development) tax incentive scheme to encourage new use cases for high-speed 5G networks; and tax depreciation or writing down allowances for 5G spectrum rights payments, to offset the costs to telcos so that these are not passed on to users.

Adoption of cloud-based services could be encouraged via grants for costs related to deploying technology and tax deductions for training. And to support firms in their quest for talent, grants could help support talent search and hiring costs, as well as leadership programmes.

Another aspect of transformation in KPMG’s Budget proposals was that of sustainability. Ideas included grants and incentives for sustainability strategies, including grants for setting up of in-house sustainability teams, and property tax rebates where the properties meet certain sustainability requirements.

To encourage green buildings – including existing buildings modified to be more energy-efficient – taxes on rental income could be reduced for landlords of green buildings, and tax allowances or rebates could be given for green building initiatives.

Incentives could be given for research in green-building-related proptech and autonomous vehicles. And sustainable finance could be encouraged via concessionary tax rates for sustainability bonds and loans, and tax exemptions on investors’ income from green bonds and social impact bonds.