Deloitte hopes Budget 2023 will include re-evaluation of Singapore’s tax incentives
Sharon See
PROFESSIONAL services company Deloitte has a list of features it would like to see in Budget 2023, and on this list released on Wednesday (Jan 18) are a re-evaluation of Singapore’s tax incentive landscape amid changes brought by global tax reforms, and policies to accelerate Singapore’s green transition.
Singapore was among the more than 135 countries and jurisdictions that signed a landmark tax deal led by the Organisation for Economic Co-operation and Development (OECD) to create a fairer tax system.
The tax deal, called the Base Erosion and Profit Shifting (BEPS 2.0) initiative, has two pillars. The OECD said last month that it would release said its administrative guidance on Pillar Two Global Anti-Base Erosion Rules early this year.
Deloitte said that Pillar Two, which calls for a minimum tax rate of 15 per cent from large multinational entities (MNEs), is high on many of its clients’ agendas, given its potential impact, and that concern over this aspect is expected to deepen.
This comes as the government said last year that it was considering implementing a Minimum Effective Tax Rate (METR) that would top up MNEs’ effective tax rate to 15 per cent.
The professional services firm said it would not be in Singapore’s best interest to be the first mover in enacting Pillar Two rules, and that waiting for international consensus on implementation options would be “more prudent”.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
It also suggests that the government commission a study of what similar tax jurisdictions are doing in response to a post-BEPS environment.
Yvaine Gan, global investment and innovation incentives leader at Deloitte Singapore, said: “This study could explore the potential pros and cons of using Qualified Refundable Tax Credits (QRTCs), Research and Development (R&D) tax credits and other fiscal and non-fiscal support to attract investments.”
The firm added that it may be worthwhile to evaluate whether the Development and Expansion Incentive – a key tool Singapore uses as a magnet for foreign investments – would require an overhaul, or whether it could be offered in conjunction with other forms of support, such as grants.
Turning to the other item on its Budget wish list – policies to speed up Singapore’s green transition – Deloitte is proposing that the government extend the application deadline for the Enterprise Financing Scheme-Green, which is accepting applications only until Mar 31, 2024.
Deloitte said that Singapore should consider extending the application deadline to spur innovation and investment in Singapore’s sustainability scene in the long term. Doing this would enable Singapore to capitalise on the global demand for green solutions, said the company.
It is also calling on the government to invest in green skills and continue its support of green businesses to create “good green jobs”. It also recommends further investment in instilling green skills in existing jobs that are not traditionally green in nature.
Further transparency is needed in several sections in the recent Draft Carbon Pricing (Amendment) Bill, Deloitte also said. These include details on what makes an “eligible carbon credit”.
It is asking the government to provide clarity on the eligibility criteria of businesses deemed to be of “sufficient economic or strategic importance” that are granted allowance.
On immigration matters, Deloitte is proposing that the government offer a Long-Term Visit Pass (LTVP) for same-sex partners on the basis of a recognised marriage or common-law status in the home countries of these individuals. It added that the “lack of options” for same-sex partners remains a barrier to attracting talent to Singapore.
Meanwhile, it is also asking for a Letter of Consent to be made available again to spouses that are holders of the Dependant’s Pass, as it would enable them to stay and work in Singapore.
Other areas the government should continue to focus on include strengthening the intellectual property ecosystem as well as the finance services sector, to enhance Singapore’s competitiveness in the digital economy, Deloitte said.
Copyright SPH Media. All rights reserved.
