Budget 2014: Deloitte Singapore"s reactions and comments

Deloitte Singapore’s tax specialists have put together their reactions and comments to this year’s Singapore Budget 2014 announcement:

Low Hwee Chua, Head of Tax Services, Deloitte Singapore Southeast Asia:

“This budget continues to carry the theme from 2010′s budget – quality growth based on innovation to achieve sustainable growth; and building a fair, equitable and inclusive society by giving stronger support to the less fortunate. A tough balancing act but unavoidable if we want to see sustainable wage increase for our people.”

Low Hwee Chua, Head of Tax Services, Deloitte Singapore Southeast Asia:

“Applause to the Government for increasing the quantum for parent and handicapped parent relief; but it would be a standing ovation if child relief quantum was increased as well.”

Steven Yap, Tax Partner, Deloitte Singapore:

“Budget 2014 takes a more focused approach as Singapore enters into the second half of the 10-year economic restructuring exercise which began in 2010. On a solid foundation, strengthening an inclusive growth is key to enable Singapore to remain relevant and at the same time continue to move up the value chain – together.”

Steven Yap, Tax Partner, Deloitte Singapore:

“The elderly are given special attention especially the pioneer generation for their contributions to Singapore. The lower income groups are getting more assistance and care. The middle income groups or affectionately referred to as the sandwich class – will also be receiving help. SMEs, the bedrock of Singapore’s businesses, will receive a great lift with enhanced PIC level and PIC+ to enable them to enhance their productivity through technology and innovation through RD especially with scarce skilled resources.”

Richard Mackender, Tax Partner, Deloitte Singapore:

“The fact that there was only one notable change for the Goods and Services Tax (GST) demonstrates how the Government values stability and consistency for businesses in Singapore. It also reinforces that the existing GST regime is working well and that businesses are, in general, compliant. The one change that was made is to confirm the extension of the scheme to allow funds meeting certain criteria, for example that they are managed by prescribed fund managers in Singapore, to recover the GST they incur. The scheme has been instrumental in bringing qualifying funds into Singapore, as opposed to Hong Kong for example and as such can be said to have been a success. It is therefore welcome that the Government has seen fit to extend it for a further 5 years. Again, this can be taken as a further example of the Government’s focus on creating a stable and certain business environment in Singapore, which benefits the economy and also Singaporeans, who are employed in the fund management industry.”

Michael Velten, Financial Services Industry Tax Leader, Deloitte Singapore:

“An important budget proposal for local Singapore banks is the announcement that Basel III Additional Tier 1 instruments (other than shares) will be treated as debt for tax purposes. There have been two such issuances in Singapore over the past months; and in both cases uncertainty as to the tax treatment of the instrument that was issued. This change is in line with the approach taken in the UK to these instruments; and should maintain a level-playing field for Singapore-incorporated banks.”

Ben Pickford, Director, Tax Services, Deloitte Singapore:

“There is little offering in both the budget statement and in the annexes that will be of interest to foreign MNCs looking to invest in Singapore. The extension of the PIC, RD and IPR WDA schemes are welcomed, but these are just extensions of existing schemes rather than enhancements or new schemes. That said, Singapore still remains a very attractive destination for foreign investment but this budget will neither improve nor diminish Singapore’s position as a destination for foreign investment.”

Ong Siok Peng, Director of Taxes (Corporate), Deloitte Singapore:

“The government is clearly finding a balance between personal and business expectations by raising the CPF employer contribution rate which will be channelled to the Medisave Account to help with rising healthcare costs and at the same time, providing the Temporary Employment Credit (TEC) to help businesses cope with the increase in business costs as a result of the change. Businesses are however expected to continue to improve productivity to reduce business costs in the long term as the TEC, is only a one-year scheme to help businesses cope with the change.”

Rohit Shah, Director of Taxes (Corporate), Deloitte Singapore:

“With regard to the tax incentive schemes for funds managed by Singapore-based fund managers, we welcome the 5-year extension of the schemes to 31 March 2019. We are also pleased to see that the list of investments which qualify for exemption under those schemes has been expanded. Although, the extension of the concession under which prescribed funds can claim GST incurred on expenses at a fixed rate is also welcomed, we would have liked to see a change which allowed a full recovery of such GST so that Singapore-based funds were not at a disadvantage compared to offshore funds. In addition, we would also have liked to see a change which allowed wholly-owned Singapore subsidiaries of Singapore-based qualifying funds automatically enjoying the same tax incentives as the qualifying funds themselves. These additional changes would, in our view, further enhance the tax incentive schemes for funds at a time when Hong Kong is enhancing its tax incentives for funds.”

Lee Tiong Heng, Tax Partner, Deloitte Singapore:

“No change in corporate and personal tax rates is well within expectation as Singapore strives to balance increased social spending and investments in quality growth. However, it is surprising that there is no increase in wealth taxation. Obviously, the better than expected surplus can help fund some of the additional expenditure. We should be seeing a tighter budget position in years to come and it could be a matter of time that additional tax revenue sources may be required.”

Lee Tiong Heng, Tax Partner, Deloitte Singapore:

“It is no surprise that there is no roll back of property measures at this moment given that time is needed for any measure to take effect and work its ways into the market. The run-up in property prices over the last years has outpaced general income growth. Whilst calls have been made to roll back some of the property measures given that property prices have stabilised, the government has indicated that it is still too early to relax the property measures. However, they will continue to monitor the property market and adjust measures as necessary.”

Lee Tiong Heng, Tax Partner, Deloitte Singapore:

“Calls by SMEs for more help have been answered. More support has been given in the areas of investment in productivity, innovation, adoption of Infocom Technologies, overseas expansions and financing support.

The overall sense is that SMEs are the big winners of this year’s budget. Extension of PIC scheme, PIC+ scheme, more assistance on financing and overseas expansion should assist SMEs in building capabilities for quality growth.”

Daniel Ho, Director of Taxes, Deloitte Singapore:

“From a business tax perspective, this year’s budget is focused mainly on SMEs. The PIC plus scheme which offers a higher cap for SMEs from $400,000 to $600,000 is a welcomed measure but the government could do more by increasing the cap for cash payout as well, which currently stands at $100,000. This is because the PIC deduction only helps to fund the spending if the company is paying taxes. If the company is suffering losses, it may take time to monetise the tax losses and recover the actual spending on PIC qualifying activities.”

Daniel Ho, Director of Taxes, Deloitte Singapore:

“We were looking forward to enhancing loss carry-back schemes (currently capped at $100,000) and loss transfer relief under the group relief system to include companies held through foreign parents. This would have offered more support to businesses that are suffering losses during the economic restructuring phase to help them monetise their losses. Unfortunately, no changes were announced.”

Daniel Ho, Director of Taxes, Deloitte Singapore:

“It is unusual that there were no shipping-related tax enhancements this year. Perhaps it is a sign that the shipping tax incentive regime in Singapore needs no further tweaking. However, we feel that more can still be done to streamline the definition of qualifying income and have a negative list of qualifying income similar to the fund incentive schemes, instead of specific streams of income that should be incentivised.”

Low Hwee Chua, Head of Tax Services, Deloitte Singapore Southeast Asia:

“The removal of the requirement to withhold tax on certain payments to Singapore branches is a good move; these branches file income tax returns in Singapore anyway. The waiver will ease cash flow of branches and/or eliminate the administrative hassle of making applications to IRAS.”

Low Hwee Chua, Head of Tax Services, Deloitte Singapore Southeast Asia:

“The extension of the additional 50 per cent tax deduction for 10 years is a move towards the right direction and gives certainty to companies to plan recurring RD investments and multi-year RD programmes.”

Low Hwee Chua, Head of Tax Services, Deloitte Singapore Southeast Asia:

“As anticipated, raising productivity will be boosted with greater support schemes to help employees in SMEs upgrade their skillsets which can in turn uplift the quality of their living standards.”

Sabrina Sia, Director of Taxes (Personal), Deloitte Singapore

“As part of our Budget wishlist for 2014, we have hoped that consideration would be given towards extending the claim of parent/handicapped parent relief to multiple resident individuals who have supported their own or spouse’s parents, grandparents or great grandparents, by allowing the relief to be shared amongst children based on apportionment agreed by the relevant parties.

We are pleased to see that our above wish has been met. The change goes a lot towards emphasising on the Government’s social policy in the promotion of filial piety and focus on elderly care.”

Sabrina Sia, Director of Taxes (Personal), Deloitte Singapore

“There has been much debate in recent times on whether enough has been done to help Singaporeans cope with increasing healthcare costs in Singapore. The Pioneer Generation Package really hits it where it should, with its major focus on providing support and help to those who really need help with rising healthcare costs – our senior citizens. The increase of 1 per cent CPF rate being channelled towards our Medisave Accounts will also help the rest.”

Richard Mackender, Tax Partner, Deloitte Singapore:

“The government noted in the budget that it is expecting that a major part of its social spending over the next 10-15 years will be healthcare costs. At the consumer level, one of the elements of that cost is GST, since healthcare is subjected to standard rate GST. The Government may, in future, find that it comes under pressure to treat the supply of healthcare as GST exempt, as many western countries do. This would mean there would be no GST at the point of consumption, which on the face of it looks like a good result. However, treating healthcare providers as GST exempt would also mean that they would not be able to recover all the GST they incur on their costs. They would therefore pass on this irrecoverable GST to the consumer, so in the end, the consumer bears the GST whether it is explicit or implicit in the pricing. Despite this, there may be some benefit in studying the Singapore healthcare market to determine the potential impact of such a change. At least then the Government is fore-armed when the questions are raised in the future.”

Bob Fletcher, Customs Global Trade Leader, Deloitte Singapore and Asia Pacific:

“The increases in tax on cigarettes announced align with the government’s long-held objectives to increase excise duties on cigarettes and manufactured tobacco, after the harmonisation of excise duties on other tobacco products – which was concluded last year. It remains to be seen whether these across-the-board increases will have any material impact in reducing the numbers of smokers in Singapore. But it may negatively impact smaller tobacco companies, as margins for cheap cigarettes will be reduced.”

Lee Chew Chiat, Public Sector Leader, Deloitte Southeast Asia:

“Our country’s pioneers deserve our appreciation and respect, as they have worked hard to help build Singapore. The budget package from the Government is definitely a good gesture and the healthcare benefits and subsidies provided are something tangible that can be felt directly.”

Lee Chew Chiat, Public Sector Leader, Deloitte Southeast Asia:

“This year’s Budget has a strong focus on our society and it is heartening that there is a package that respects and honours pioneers. Ensuring that quality healthcare is easily accessible and affordable to this special first generation is paramount as their healthcare requirements increase. Industries should look into tailoring their services, technology and equipment to integrate the social and physical needs of this important group such as making available elder-friendly robotic systems, exercise machines and mobile carts.”

Daniel Ho, Director of Taxes, Deloitte Singapore:

“The more we look, the better it gets for SMEs. Not just better PIC benefits and additional mezzanine financing; they also get subsidies on fibre broadband costs!”

Bob Fletcher, Customs Global Trade Leader, Deloitte Singapore and Asia Pacific:

“Carbon Emissions-based Vehicle Scheme (CEVS) has been a positive means of reducing the impact of the changes to the Additional Registration Fee which significantly impacted motor vehicle sales.

The extension of CEVS to June 2015, with a view to extending it thereafter, will be a welcomed development for motor vehicle dealers and purchasers alike.”

Budget 2014: Deloitte Singapore"s reactions and comments

Posted in: