KPMG calls for clarity over wealth taxes, policies to spur green investments in Budget 2023 wish list

CLARITY on whether Singapore will be introducing wealth taxes in the near future and policies to spur greater green investments were among the proposals recommended in KPMG’s Budget 2023 wish list on Thursday (Jan 12).

The audit, tax and advisory firm also called for targeted grants for some goods and services tax (GST) registered businesses, such as small and medium-sized enterprises, to address concerns over higher costs from complying with the two-step rate hike.

Singapore has been raising the progressivity of its tax policies in a calibrated manner, but concerns remain over the possibility of a new wealth tax or a reintroduction of estate duty or inheritance taxes, said Ajay Kumar Sanganeria, partner and head of tax at KPMG in Singapore. He called for the government to be “decisive in addressing these speculations”.

Separately, the firm called for the government to implement a national framework to spur the growth of blended finance “to address the trilemma of security, affordability, and sustainability”. The framework could include broad-based schemes with low entry thresholds and targeted initiatives for emissions-intensive industries or transition projects.

The government could also consider funnelling investments into large-scale alternative energy projects in Asean countries under a “generate and transfer model”, to accelerate the nearshore import of renewable energy and decarbonise the grid at a quicker pace, said KPMG.

To attract more top talent to Singapore, KPMG called for the government to extend the tax exemption days for foreign employees working in priority sectors to 90 days. “This will attract talents who may not wish to relocate but are still eager to be based in Singapore on a short-term basis,” said Sanganeria.

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But even as the Singapore continues to woo top talent, new challenges have emerged. KPMG proposed that Singapore initiate an Asean-wide framework, to address tax issues that may arise for Singapore companies with remote workers in another country.

This framework can also address issues including the creation of a permanent establishment in an overseas jurisdiction and taxing rights over the salaries and related remuneration of remote workers.

Singapore will also need to demonstrate how it can bolster its fiscal resources while protecting prospects for growth as it enters challenging times, said KPMG. “To stay ahead, the country should step up its support for businesses to digitalise, transform and seize new markets.”

To remain attractive to multinational corporations (MNCs), KPMG proposed that a percentage of collections from Pillar Two of the Base Erosion and Profit Shifting (BEPS 2.0) initiative be channelled into a pool of funds that would be used to attract and retain investments from global and local MNCs affected by the new rules.

“This pool of funds can provide flexibility to economic agencies to provide targeted programmes to both global and local multinationals,” said Sanganeria.