In Focus
ECONOMY | Staff Reporter, Singapore
view(s)

Everything you need to know about the Big 4's reaction to Budget 2017

Find out what EY, Deloitte, KPMG and PWC have to say about the Budget.

Finance Minister Heng Swee Keat announced the Singapore Budget 2017 yesterday, revealing government efforts to provide more money for sports and SMEs, implement diesel and carbon taxes, higher water prices and higher motorbike prices, amongst others.

Here's what the Big Four have to say:

EY:

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“Budget 2017 is one of the most comprehensive Budgets ever delivered, touching every aspect of Singapore and its people.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“The Finance Minister is preparing Singapore and her people for tax increases to come in the near future. The commitment by Singapore to uphold its principle of a broad-based, progressive and fair tax system is exhibited in a number of the measures proposed during Budget 2017.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“Budget 2017 builds on the themes of past Budgets – strengthening the capabilities of our enterprises and building a caring and inclusive society with the recommendations of the Committee on the Future Economy.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The Budget shows great attention to detail in many areas to help businesses innovate and internationalise and Singaporeans to enhance skills.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“Collaboration for growth is a key feature of this Budget. Universities, government agencies, businesses, innovators, regulators and unions all working cooperatively for the good of Singapore.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“This Budget breathes life into many of the CFE recommendations. We see funds set aside to drive an uptick in innovation and the development of digital capabilities in corporates and individuals – which are urgent tasks at hand because these take time to bear fruit and are important to long-term competitiveness.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The overall tone of the Budget is one of prudence and a continuation of the recent policies. While this is not unexpected, many who were hoping for bolder measures in the CFE and the Budget may be disappointed. The approaches remain highly targeted. Some may have preferred the Government to take a broader approach and a more enabling role towards creating an agile and adaptive economy.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“Singapore continues to adopt a prudent fiscal policy, while providing support to businesses facing cyclical headwinds in their transition. This fiscal discipline has allowed Singapore to maintain a competitive and pro-growth tax regime.”

Mr. Adrian Ball, Partner, EY Asia-Pacific Indirect Tax Leader, Ernst & Solutions LLP says:
“In a world where the mood is inward-looking in several of the most advanced economies, Singapore reaffirms its pro-globalization and international outlook, both economically and environmentally.”

Mr. Adrian Ball, Partner, EY Asia-Pacific Indirect Tax Leader, Ernst & Solutions LLP says:
“Aiming to achieve 2-3% quality GDP growth, Singapore is clearly investing in its people and businesses to take full advantage of the higher growth in overseas emerging markets.”

Mrs. Mildred Tan, Managing Director, Ernst & Young Advisory Pte. Ltd. says:
“Budget 2017 is a future-focused Budget, so as to prepare Singapore’s economy for a digital future. To that end, there were many interesting initiatives including the ‘International Partnership Fund’ and the ‘Global Innovation Alliance’. In addition, it continued with the themes of reskilling and continuous upgrading of our workforce with ‘Attach and Train’ and ‘SkillsFuture’, and the ‘Special Employment Credit’ scheme for older workers. As the economy transforms itself in the digital age, these initiatives will enable Singapore’s workforce to be adaptable to change, resilient to disruption, and competitive in the global marketplace.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP 
“The proposed near-term Budget measures are targeted especially at helping SMEs that are going through structural changes and cyclical downturn.”

Measures to support business

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“The proposed near-term Budget measures are targeted especially at helping SMEs that are going through structural changes and cyclical downturn.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“People, funding and digital capabilities are key pillars for SMEs to achieve sustainable growth. The Government recognises their importance and has directed the 2017 Budget to tackle these issues.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“While there are various wage support schemes, these cost savings will be diluted by the increase in diesel and water tariffs and foreign worker levy, especially for companies in the construction, logistics and manufacturing industries.”

Ms. Amy Ang, Partner, Financial Services Tax, Ernst & Young Solutions LLP says:
“In challenging times, it is reassuring that the Government has not made immediate changes to raise income tax and GST. At the same time, the stage is set for impending changes over the next few years, which are required to fund the various initiatives for Singapore’s next phase of growth.”

Mr. Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The enhancement of the corporate tax rebate with a S$25,000 cap for YA2017 is indeed welcomed news and the extension of the rebate to YA 2018 with a cap of S$10,000 is a bonus to businesses.”
 

Strengthening enterprises’ capabilities

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The measures to deepen our partnerships internationally and enhance capabilities and international exposure will be widely appreciated. Given the diverse region Singapore is in and the growth opportunities ASEAN presents, fostering a close and deep understanding of the region is imperative. The extension of the global innovation alliance will allow Singaporeans to build an international mindset through greater international exposure from early on.”

Mr. Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The SME Go Digital Programme is a positive action response and recognition by the Government of the importance of our SMEs to embrace, adapt and grow digital capabilities now rather than later.”

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“The Budget sets clear direction of skills that could be core to the future workforce around digital, innovation and being globally connected. The Budget supports the heart of the local economy and employers of the majority of the local workforce – the SMEs – through the Go Digital Programme.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“The Government recognises that SMEs need a step-by-step guide to go digital to innovate and compete effectively in today’s digital era. This targeted support is expected to be more impactful and to produce results.”

Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says:
“The introduction of the Go Digital Programme for SMEs is timely. The need for SMEs to embrace and develop their digital capabilities is inevitable or they face the risk of ‘extinction’.” 

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The continued emphasis on the importance of innovation to the long-term growth of our economy will be welcomed by companies, especially with the impending expiry of the PIC. The targeted strategies to provide a stronger push for collaborations with research institutes and provide SMEs with access to IP can be a major boost for companies. The key will lie in strong implementation to identify and match such collaborations.”

Ms. Amy Ang, Partner, Financial Services Tax, Ernst & Young Solutions LLP says:
“The blueprint for Singapore’s future economy has been released by the CFE and the proposed infrastructure is boosted by the introduction of the different funds. The key to success now lies with the effective connectivity with our SMEs to achieve the desired state of innovation.”

Deepening our people’s capabilities

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“The Budget supports the upskilling of our workforce through continued assistance to enable individuals – whether through encouraging employers or employees on their own – to acquire deeper skills and competencies in new areas such as digital, and help them apply these in new and existing jobs to stay competitive and relevant.”

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“The inclusion of employers and TAC’s to receive funding support from SkillsFuture SG to develop training programmes will enable a win-win solution for both employer and employee. We expect to see a higher focus on learning and development of employees through their career.”

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“From an individual perspective, the Budget inspires a collective spirit allowing each Singaporean to chase their dream and live the can-do spirit.”

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“On top of the Wage Credit Scheme and SME Working Capital Loan, SkillsFuture Leadership Development Initiative would give Singapore leaders greater confidence and be more prepared to tackle uncertainties, understand cross border complexities and to be more agile knowing that they have the necessary support.”

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“While the extension of re-employment age from 65 to 67 helps retain skilled experienced workers within our workforce, we must continue to identify areas within the SkillsFuture initiative to enable the acquisition of new skills amongst elderly workers even as industries evolve over time.”

Capabilities and Partnerships: Industry Transformation Maps

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Solutions LLP says:
“The accelerated timeline of launching the remaining 17 ITMs will enable the acquisition of skills across sectors and thus enhancing the employability of people across sectors. Apart from developing modularized and relevant training programmes for employees, greater support can be provided to business owners, especially SMEs, to encourage greater investment in the learning and development of their staff to utilise deeper skills.” 

Carbon taxes

Ms. Angela Tan, Partner, Resources Sector Tax Leader, Ernst & Young Solutions LLP says:
“Carbon tax schemes have been in force in certain geographies in Europe as early as 90’s and since early part of this decade the trend of companies setting internal carbon pricing mechanisms is increasing. Though the 2019 carbon tax is targeted on large direct emitters of greenhouse gases, i.e., chemicals and manufacturing, companies and domestic users would also be encouraged to invest in energy-efficient equipment and tap on investment allowance schemes to obtain enhanced capital allowances. A price for carbon imminent in larger countries like China, South Africa this year, today’s move reiterates Singapore’s commitment to combat global warming.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The possibility of carbon taxes and the increase in water costs may impact Singapore's global competitiveness in this current environment where cost containment is already a challenge. It will be important that countermeasures and incentives to defray these costs and encourage ways of reducing emissions and water usage be introduced.”

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says:
“Carbon taxes will change the way energy will be produced and consumed. A more balanced use of carrots and sticks should encourage more early adopters of smart power, and green and low-carbon technology.”

Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says:
“Thumbs-up as we see the drive towards a cleaner and more environmental friendly Singapore with measures such as the introduction of carbon tax, revision to diesel taxes and the vehicular emissions scheme.”

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“Singapore takes an active stand to fight climate change with a carbon tax confirmed for the future, and changes to diesel taxes and the CEVS to encourage more environmentally friendly vehicles on our roads.”

Building a caring and inclusive society

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“Singapore continues its journey towards a more caring and inclusive society by addressing needs of people with disabilities, families and communities.”

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“As more people with disabilities and mental health issues are integrated into employment, this will create double benefits of encouraging greater inclusion in our society while enabling this group to participate more actively in the economy.”

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“Additional pre-school care places will be warmly welcomed by new parents seeking to ease the burden of returning to work after child-birth, but will this alone be enough to have a significant impact on our low birth rates?”

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“The additional first-time housing grants for resale flats will help to shift focus from BTO to resale flats, increasing demand on existing housing stocks and possibly shoring up prices on these properties.”

Mr. Grahame Wright, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:
“Singapore will continue to face challenges of an aging population in coming years, particularly with additional health care costs and problems of dementia in the community. This Budget continues to address these challenges head-on without shying away from the uncomfortable topics of mental health and disabilities.”

Ms. Kerrie Chang, Partner, People Advisory Services – Mobility (Tax), Ernst & Young Solutions LLP says:
“For workers who are older than 65 years on 1 July 2017 (when the re-employment age is raised from 65 to 67 years), it is heartening to know that support will be given to businesses to encourage them to continue to hire older workers. Apart from the existing Special Employment Credit, the Additional Special Employment Credit provides a win-win situation – it hopefully translates into continued employment for the older workers as well as helps companies to retain these workers, benefit from their experience and manage their business costs and cash flow.”

Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says:
“With more funding for sports announced in this Budget, hopefully we can achieve even greater success at the Olympics and other international sports events.”

Personal income tax

Ms. Kerrie Chang, Partner, People Advisory Services – Mobility (Tax), Ernst & Young Solutions LLP says: 
“The absolute limit of the one-off individual income tax rebate of S$500 is lower compared to past years when a similar tax rebate was announced. Nonetheless, with the continuing challenges of a slowing economy and job security concerns, the announcement of a tax rebate is welcomed as it will lower the tax cost of all resident taxpayers.”

Digital economy
Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: 
“As more countries take steps to tax the digital economy, it may be inevitable for Singapore to adopt similar measures – introducing some form of GST registration for overseas online suppliers and removing or reducing the exemption threshold for importation of low value items. The Government will also have to evaluate whether it is time to activate the reverse charge mechanism.”

Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: 
“In deciding whether or not to impose GST on the digital economy, the Government will have to evaluate the amount of tax revenue to be collected, the need to level the playing field between Singapore suppliers and overseas online suppliers and the ease of implementing and administering any new GST rules.” 

Mr. Chester Wee, Partner, International Tax Services, Ernst & Young Solutions LLP says: 
“Countries around the world are beginning to adopt new tax laws or dramatically change the way they interpret existing laws and bilateral tax treaties for an increasingly digitized, globalized economy. The Minister has announced that Singapore is studying this area of taxation and companies should be given sufficient time to make tax-efficient transition.”

Goods and services tax
Mr. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: 
“The Minister has given the heads-up in growing the revenue base. In the coming years, with the expected higher spending on health care and infrastructure, there is room for an increase in the GST rate from the current 7%, though this is likely to be after 2020.”

Base erosion and profit shifting (BEPS)
Mr. Jerome van Staden, International Director, International Tax Services, Ernst & Young Solutions LLP says:
“Budget 2017 emphasises the importance of the OECD BEPS programme. It confirms that the Government supports the principle that companies are taxed where substantive economic activities are performed and that it is, in consultation with businesses, refining the tax regimes and implementing the minimum standards.”
 

DELOITTE:

 

Moving forward together

Low Hwee Chua, Regional Managing Partner for Tax, Deloitte Singapore and Southeast Asia:

“This year’s Budget looks forward to a promising and bright future. It is well-balanced, addressing immediate business needs, and at the same time introduces long-term measures to implement the strategies put forth by the Committee for the Future Economy. It provides avenues and creates opportunities for Singaporeans to chase their dreams and excel internationally, while also providing protection in the current uncertain climate in order to keep Singapore strong now and in the years to come.”

An innovative and connected economy

Lee Tiong Heng, Tax Partner and Innovation & Investment Incentives Leader for Deloitte Singapore and Southeast:

“It is not unexpected that the Minister for Finance will announce targeted support to encourage SMEs to embrace digital technology and be future ready for growth. The proposals recognised that SMEs are at different stages of maturity in terms of adoption of digital technology.

The targeted step-by-step support through specialised and in-person guidance provided by SME Centres and SME Technology Hub should be welcoming for SMEs. In addition, advice and funding support will also be provided to SMEs to pilot and commercialise emerging ICT solutions for wider industry usage.

The success of the Industry Digital Plan will depend on the amount of resources, the ICT knowledge and the skill sets the relevant agencies can bring to bear to help SMEs accelerate and scale up their digital capability. The plan also works on the premise that the government will scale up Spring Singapore, the SME Centres and SME Technology Hub to provide the support. The execution of the Industry Digital Plan will be critical to ensure that the benefits can be optimised.”

Daniel Ho, Tax Partner and Tax Leader for Public Sector, Deloitte Singapore:

"There has been a lot of talk about support for building scale, going digital and going international and the Government has not disappointed in this respect, with new funding schemes being announced. The SMEs Go Digital Programme is an innovative scheme to kick start local businesses' road to having an online strategy and presence.”

Lee Chew Chiat, Deloitte Southeast Asia Public Sector Leader:

“Deepening capabilities is one of the key thrusts of the CFE report. Apart from deepening capabilities needed today, it is equally important that we also deepen capabilities that are required in future. This is one way of staying ahead and remaining relevant. Does our funding model allow for this?”

Ong Siok Peng, Tax Partner, Deloitte Singapore:

“The Finance Minister had announced in the 2016 Budget that the PIC scheme will expire after the Year of Assessment 2018. The Government is moving away from such broad based incentives to a more targeted approach to help SMEs as can be seen in the 2017 Budget such as the introduction of the SME Go Digital Programme and International Partnership Fund.”

Thio Tse Gan, Deloitte Southeast Asia Cyber Security Leader:

“These proposals encourage the adoption of technology for productivity, innovation and automation, as well as research & development (R&D) and overseas expansion. There is an area that we envisage will help SMEs to strengthen their digital offerings, which lies in the establishment of a technology hub to help focus on the digital offerings around cyber security posture. Consequently, this will allow data from these digital offerings to be adequately secured.

We believe that the creation of a sandbox for such a purpose would be useful to ensure that systems are adequately protected and tested. This has the potential to mitigate cyber risks that threaten a SME’s journey to digitalisation.

Furthermore, such sandboxes, may help not only SMEs, but also MNCs in simulating and combating the borderless nature of cyber threats allowing organisations to test and subsequently adopt and implement solutions based on their level of cyber security maturity.”

Ong Siok Peng, Tax Partner, Deloitte Singapore:

“While the enhancement of the corporate tax rebate is definitely a welcomed move for SMEs, it would have been more helpful to re-introduce the SME cash grant to help businesses which are not tax paying to cope with rising business costs.

Introducing the SMEs Go Digital Programme will provide practical solutions to SMEs who wish to go digital but lack the insight and expertise to do so.”

Lee Chew Chiat, Deloitte Southeast Asia Public Sector Leader:

“On raising the re-employment age from 65 to 67, it is crucial that companies and as a nation, that we all treasure the experience and expertise that our workers have acquired over the years. All too often, many people view these workers with dated skills and refuse to adopt new ways of working. While it may be true in certain cases, there are many who are loyal employees who provide stability that businesses very much need.”

Sabrina Sia, Tax Partner, Deloitte Singapore:

“The call for internationalisation continues - Singapore companies must look beyond our shores for opportunities to drive growth.”

Lee Chew Chiat, Deloitte Southeast Asia Public Sector Leader:

“The three initiatives are certainly a booster for SMEs to adopt digital in their business and operations. The crux is adoption of digital transformation in their business. We all understand the constraints SMEs face – people, expertise and cash – hence most have a short-to-mid-term view. The need to help SME owners understand the benefits of going digital and the ability to realise them within the limits of their constraints and mindset is the first few steps.

SME owners are also concerned with the operations after going digital. Will there be support, sufficient talent and resources to continue to not only sustain, but to improve and upgrade on the digital platforms?

One possibility is to get the help of the SMEs’ suppliers and customers who are larger corporations to impose digital requirements on the SMEs. With the help of the SME Technology Hub, working alongside these large corporations who are either their customers or suppliers, a sustainable eco-system is formed. There is the impetus to change and also the necessary help much needed by the SMEs. Ultimately, going digital must be for a reason – and that is to improve the bottom-line of SMEs.”

Shantini Ramachandra, Tax Partner, Deloitte Singapore:

“The ‘Attach and Train’ programme is quite novel. Workers or PMETs who are out of work should benefit from this programme as this would give them an opportunity to develop skill sets in new sectors and train for jobs of the future. In order for it to work, the companies must have structured training/internship programs in place.”

Daniel Ho, Tax Partner and Tax Leader for Public Sector:

“The International Partnership fund for the Government to co-invest with Singapore-based firms overseas is a good idea. Hopefully clear guidance can be set on the qualifying requirements and a practical approach can be taken as these firms may be put off if there is too much scrutiny on the viability of the investments. As an additional sweetener, perhaps full tax exemption could automatically be given on profits repatriated from these qualifying investments."

Lee Chew Chiat, Deloitte Southeast Asia Public Sector Leader:

“The International Partnership Fund with up to S$600m in Government capital to help Singapore-based firms scale-up and internationalise is certainly a boost for these firms – many countries are facing budget constraints. To see our Government taking this step is a breath of fresh air. The spend should be made with growth and profitability in mind, not too much regulations to comply with.”

Thio Tse Gan, Deloitte Southeast Asia Cyber Security Leader:

“The current acute shortage of skilled cyber professionals globally, requires training and development as a key driver to alleviate this issue. Programmes such as the TechSkills Accelerator, Critical Infocomm Technology Resource Programme (CITREP+) and Cyber Security Associates and Technologists (CSAT) programme, provide funding for courses and certifications to deepen IT skills as well as industry placement for on-the-job training with the purpose of creating a pool of skilled cybersecurity professionals.

We hope that the proposed certification and training program will create more a more high-quality talent pool. However, we think that it is not only talent that needs to be aware but also the leaders and C-level executives of GLC, MNCs and SMEs. It would be useful to ensure that a programme is established to raise the level of awareness among companies on the risks their businesses are prone to in the digital setting. This will ensure the awareness of individual organisations on the topic of cyber risk and their level of cyber security maturity in Singapore is increased.

Let’s not forget about the young who are more technology-savvy but may not be cyber-saavy in terms of protecting their exposure to cyber risks, such as identity theft and even cyber bullying. We should involve schools and education institutions in raising awareness on how to protect themselves against cyber threats. Senior citizens too should be given the opportunity to learn about what risks are involved in the use of digital technology.”

Sabrina Sia, Tax Partner, Deloitte Singapore:

“This Budget places a lot of focus on helping our people deepen their skillsets, acquire skills to operate overseas and to stay relevant in the workforce. However, another important aspect is the mindset of our people. Are we ready to take up the challenge?”

Thio Tse Gan, Deloitte Southeast Asia Cyber Security Leader:

“We hope that when Minister Ibrahim commences discussion at the Committee of Supply, there will be programmes and/or incentives not only to assist SMEs but MNCs, GLCs and not-for-profit organisations to right size their cyber security infrastructure based on their industry and level of maturity of cyber security to deal with the extent of the impact cyber risks have on businesses.

For example, to encourage SME and MNCs, we think that the public sector procurement could require these organisations to adopt or attain a standardised level of cyber security maturity in their IT infrastructure before they may be approved vendors to provide goods & services.

We look forward to potential tax incentives to encourage organisations to meet cyber security benchmarks and good practices on top of the existing preferential supplier panel status. Grants could be influential in encouraging innovation in the cybersecurity arena, focusing on earlier nurturing of interest in cyber by Singaporeans and Singapore startups.”

Lee Chew Chiat, Deloitte Southeast Asia Public Sector Leader:

“Technology innovation must be sustained by a viable business model. Granting access to high tech equipment, user training and advice by A*STAR reduce the barrier of access initially. But technology changes so rapidly and competition is getting steeper by the day. So the question is: should the assistance or partnership be short-term or long-term?

Innovative solutions today are norms of tomorrow. The lifespan is getting shorter and shorter. Taking a longer term view and a more holistic partnership mindset to continuously transform and stay ahead is crucial. When one takes this point of view, he is not afraid of tearing down all innovations that have worked in yesteryear and create a whole new set of innovation.”

A quality living environment

Bob Fletcher, Customs & Global Trade Leader, Deloitte Singapore & Southeast Asia:

“Bluer skies and cleaner air ahead – but will impact the pocket! The Government’s announcement on a number of measures to tackle environmental pollution will have a significant impact on individuals and business that use diesel vehicles. In addition to the existing lump-sum special tax, the new tax based on diesel usage will further encourage motorists to move towards lower emission vehicles. Businesses operating commercial diesel vehicles will welcome the rebates that will, over the next three years, help them offset the additional taxation based on usage, and in turn, this defers these additional costs hitting the pocket of the consumer.”

Richard Mackender, Tax Partner and Indirect Tax Leader, Deloitte Singapore and Southeast Asia; and Bob Fletcher, Customs & Global Trade Leader, Deloitte Singapore & Southeast Asia:

“Singapore committed, when ratifying the Paris Agreement in September 2016, to taking steps to mitigate climate change, and so it is not unexpected that a carbon tax implementation would be mooted. It is worth noting that many countries have not been successful at implementing a carbon tax. However, Singapore’s approach of widely consulting with affected parties and its stated commitment to ease the transition should help Singapore to be among the successful implementers.”

A caring and inclusive society

Sabrina Sia, Tax Partner, Deloitte Singapore:

“Given the recent economic climate, any one-off personal income tax rebates given would generally be welcomed. However, looking back at the history of the Government’s announcement of tax rebates, the rebate cap of S$500 for the Year of Assessment (YA) 2017 (income year 2016) is the lowest. In contrast, previous rebate caps had been at S$1,000, S$1,500 and even at S$2,000 when the rebate was first announced in YA2008 (income year 2007).

As the rebate is 20% of the tax payable capped at S$500, an individual would only be able to fully benefit from the rebate if his tax payable is S$2,500. This translates to an annual chargeable income of approximately $67,800 (rounded) or less. Nevertheless, individuals with chargeable income higher than S$67,800 will also benefit from the rebate, but the rebate will make up a smaller percentage of their tax payable compared to the lower income earners.

Due to the cap, the rebate is expected to benefit the lower and middle income groups more than the higher income earners, which is in line with the Government’s position that more should be done to help the lower income earners rather than those who can better afford to pay taxes. However, it is still somewhat surprising that the rebate was announced, given income tax rebates generally do not provide much relief to individuals who pay little or no tax.”

Dr. Loke Wai ChionG, Deloitte Southeast Asia Heath Care Sector Leader:

“Increased government funding for community mental health will alleviate the burden on hospital and institutional care - and ultimately deliver better care at lower costs.

Community mental health initiatives also tap on valuable social capital, and grow the bonds and networks within community - multiple benefits.”

Sabrina Sia, Tax Partner, Deloitte Singapore:

“The Government has acknowledged that it is no longer enough to just use tax incentives or reliefs to encourage birth rates. The increased CPF housing grants to assist first-time applicants to buy resale flats enables couples to stay near their parents to get parental support.”

James Walton, Deloitte Southeast Asia Sports Business Group Leader:

“Singapore sports is riding a wave following the recent SEA Games, Olympics and Paralympics success: this additional funding support for both elite athletes as well as community projects, especially SportCares, will help build on that momentum and the matching for sports donations will encourage more corporates to play a part in supporting Team Singapore.

It took us 50 years to find an Olympic Gold Medallist in Joseph Schooling; with this increase in funding and community projects, we definitely won’t be waiting so long for the next one.”

Shantini Ramachandra, Tax Partner, Deloitte Singapore:

“The corporate tax rebate is only useful for companies with chargeable income. Companies in a loss position would benefit more from grants and other fiscal support.”

A sustainable fiscal system

Steve Towers, Tax Partner and International Tax Leader for Deloitte Singapore and Asia Pacific:

The government has indicated that Singapore will adopt a BEPS-compliant “IP income” tax regime, and will phase out the operation of the existing Pioneer-Services / Headquarters and DEI-Services / Headquarters incentives in regard to such IP income. The new IP regime, to be BEPS-compliant, will not apply to marketing intangibles. Instead, patents and similar IP will be the focus. However, the new regime will apply only to the extent that the relevant R&D is performed in Singapore by the taxpayer or is outsourced to a third party.

The new IP incentive will be in the form of a lower corporate income tax rate (the rate has not yet been indicated). The new IP incentive will be effective after 30 June 2017. “IP income” will cover not only royalties from the licensing of IP – it will also likely cover embedded royalties in the profit derived by a supply chain principal.

These various changes (i.e., the non-applicability to marketing intangibles, the covering of embedded royalties, and the requirement to conduct the R&D in Singapore by the taxpayer or third party outsourcing) will impact quite a number of multinationals which currently enjoy tax incentives in Singapore.

Background:
The Base Erosion and Profit Shifting (BEPS) project, which is now four years old, is the most significant change in the world of international tax ever.

Launched by the OECD and G20 countries in 2013, it is now being progressed by a coalition of countries (called the Inclusive Framework) numbering close to 100. Singapore is a member of that coalition.

Lee Tiong Heng, Tax Partner and Innovation & Investment Incentives Leader for Deloitte Singapore and Southeast:

“Despite concerns of BEPS, government continues to enhance our tax incentives (for global financing and global trading sectors) rather than doing away with incentives. Looks like tax incentives are here to stay.”

Richard Mackender, Tax Partner and Indirect Tax Leader, Deloitte Singapore and Southeast Asia:

“Looks like the Government may well join countries such as Australia and New Zealand in applying GST on cross border downloads of digital services such as music and games.

The Government is also looking more widely to address the need to maintain a wide tax base - GST rate rise may not be that many years away after all.”

KPMG:

Ong Pang Thye, Managing Partner at KPMG in Singapore
This year’s Budget didn’t deliver fireworks, but what’s more important is that Minister Heng has brought fuel to the flame, and the fire is being stoked with measures supporting education, internationalisation and digitalisation, and a review of the tax system for the long term.

Minister Heng spoke about creating a caring and inclusive society. We’ve seen the ill effects in societies where ever-widening gulfs between the haves and the have-nots have opened a Pandora’s Box of unintended consequences. Lifelong learning and inclusive employment are concerns dear to KPMG, and we welcome Minister’s attention to these areas.

Chiu Wu Hong, Head of Tax at KPMG in Singapore
The International Partnership Fund will help Singapore-based companies to expand globally. While they venture overseas and raise the “made by Singapore” flag, it is also crucial to keep them anchored in Singapore.

Toh Boon Ngee, Tax Partner at KPMG in Singapore
The Budget has addressed targeted issues with very focused measures. For example, the plan to provide better support and care for the community is timely especially in view of the challenges brought about by the aging population.

Tan Chee Wei, Tax Partner at KPMG in Singapore
By providing support to enable companies to grow, workers will ultimately be the beneficiaries as they become more productive. The initiatives targeted at the individual level, such as the Global Innovation Alliance and SkillsFuture Leadership Development Initiative, will help Singaporeans skill up to gain experience in a global world. These are in line with recommendations under the recent Committee for the Future Economy (CFE) Report.

Innovation & Digitalisation

Larry Sim, Tax Partner at KPMG in Singapore
The Go Digital Programme is a welcome move for SMEs. As we live in an increasingly globalised world, the creative employment of technology is necessary for Singapore to retain its competitiveness as a cutting-edge economy. SMEs can use these incentives to harness the digital space, which will spur value creation and support Singapore’s position as a global hub.

Harvey Koenig, Tax Partner at KPMG in Singapore
The Government has demonstrated its commitment to supporting SMEs with the introduction of the SME Go Digital programme. This is welcome news for SMEs, and provides a good start to their digitalisation journey.

The measures to strengthen SMEs capability to innovate is a good start and builds on the strength of our agencies. However this is only the beginning as many SMEs are only commencing their innovation journey. They will need even more help along the way to navigate issues such as working with innovation partners, protecting their intellectual property and commercialising their ideas. SMEs should look to schemes such as the Capability Development Grant and R&D tax incentives to fund their innovation projects.

Angelia Chew, Tax Partner at KPMG in Singapore
Digitalisation and innovation will be key for enterprises to be efficient and productive. The adoption of digital tools and analytics are key to be competitive in the international stage.

Lyon Poh, Head of Digital + Innovation at KPMG in Singapore
The proposed Global Innovation Alliance will help to drive Singapore’s vision to build innovation launchpads for start-ups and corporates in the region and globally.

The Go Digital Programme for SMEs is a further step in the right direction as it focuses on embracing digital rather than acquiring technology.

As many industry sectors are converging, it’s important that the Industry Transformation Maps go beyond industry silos and foster cross sector innovation.

Intellectual Property

Ajay Sanganeria, Tax Partner at KPMG in Singapore
The introduction of a separate incentive regime for intellectual Property (IP) income sounds similar to the “patent box regime” adopted by many European countries. This will help Singapore to compete at a global level and attract innovation and IP to Singapore.
Corporate Tax

Alan Lau, Tax Partner at KPMG in Singapore
The Government's decision to increase corporate tax rebate to $25,000 will certainly be welcomed by corporates in Singapore. However, this may not sufficiently help businesses, as many are still grappling with rising business costs on all fronts.

Harvey Koenig, Tax Partner at KPMG in Singapore
The extension of the corporate income tax rebate is welcome, but it does not provide any relief to loss-making businesses.

Mak Oi Leng, Tax Partner at KPMG in Singapore
This year's budget focus is very much on helping our home grown enterprises to grow and expand overseas. However, MNCs may be disappointed that there wasn’t much targeted at retaining and attracting them.

Individual Tax

BJ Ooi, Head of Personal Tax & Global Mobility Services at KPMG in Singapore
Singapore’s highest personal income tax rate of 22% will continue to be closely watched, especially when that rate is compared to Hong Kong’s more attractive 15%. Any future increase beyond 22% could possibly erode our advantage over Hong Kong as far as personal tax on senior executive compensation goes.

GST

Lam Kok Shang, Head of Indirect Tax at KPMG in Singapore
The Singapore GST rate at 7% is low compared to the average rate in Asia Pacific. The last rate increase was in 2007. A progressive increase in the Singapore GST rate is consistent with the rationale for introducing the tax in 1994, to encourage entrepreneurship and support foreign direct investments.

The proposal to study the imposition of GST on imported digitised services in Singapore is consistent with the OECD recommendations. This is to create a level playing field for local businesses supplying digitised services vis-a-vis overseas businesses which are not GST registered.

Tax structures

Ajay Sanganeria, Tax Partner at KPMG in Singapore
The Budget recommendations to support the OECD's BEPS initiative adds credence to Singapore as a jurisdiction which promotes substance-based tax structures. Singapore will definitely stand out as a low tax yet BEPS-compliant market to MNCs looking for jurisdictions in which to invest.

Real Estate

Tay Hong Beng, Head of Real Estate at KPMG in Singapore
It is not entirely surprising that there was no lifting of the residential property cooling measures, especially in ABSD. The Government may be concerned that the existing economic conditions with generally lower interest rates and relative affordability of the residential properties may create an unmanageable spike in demand from both foreign and local investors.

Despite nothing being mentioned on the lifting or recalibration of the property cooling measures in the Budget, there is nothing to stop the government from reviewing the situation at a later stage. Changes to the rules could probably be brought about in a gradual manner in order not to unintentionally create an immediate spike in demand in the property market.

Given the challenges faced by local property developers and owners, it’s disappointing that there is no relief on property tax for vacant land and properties or land slated for development. Any reduction in property tax would certainly help developers and owners of vacant properties cope with the slowdown in the property market.

Leonard Ong, Tax Partner at KPMG in Singapore
It's disappointing that Budget 2017 did not provide a tweaking of the property cooling measures put in place a couple of years ago. With the measures in place for the last few years, property prices have moderated somewhat and the real estate industry was hoping for some reprieve in the current Budget.

Carbon & Diesel Tax

Chiu Wu Hong, Head of Tax at KPMG in Singapore
One interesting announcement in Budget 2017 is the introduction of carbon tax and the change in diesel tax to one based on usage. The message is clear - we need to keep pace with international standards on environmental sustainability. It is also a good gesture for the Government to provide some rebates in road tax in the interim for car owners impacted by the car taxes.

Ian Hong, Partner, Sustainability Advisory & Assurance at KPMG in Singapore
It is not surprising to see concrete steps to manage water prices and carbon and diesel taxes, as well as vehicular schemes being introduced. This brings home the reality that for businesses, climate change has a real impact on daily operations and can affect profitability and margins in the longer term. Businesses need to innovate their processes, products and services to respond to the changing environment effectively.

Toh Boon Ngee, Tax Partner at KPMG in Singapore
The introduction of carbon tax and diesel tax changes is not unexpected for a sophisticated and developed economy. UK, for example, has long been having environmental taxes to help address environmental issues more effectively. The introduction also signifies the need for a modified tax structure and a gradual shift of tax base, from the traditional direct tax system to one with more targeted indirect taxes to help achieve more desired effects.

Leonard Ong, Tax Partner at KPMG in Singapore
The proposed introduction of a carbon tax that will take effect in 2019 is a step in the right direction for Singapore. With carbon emissions issues becoming of increasing concern, it is only right that Singapore, as a responsible global city, should take the lead in this region, and aim to avoid an excessive carbon footprint.

Others

Satya Ramamurthy, Partner and Head of Infrastructure, Government & Healthcare at KPMG in Singapore
KPMG’s Change Readiness Index 2015 placed Singapore at number one on Enterprise and Government Capability, but also showed room for improvement in the People and Civil Society pillar. It is therefore heartening to see the recent budget providing impetus for the community to take greater initiative in building a better future for Singaporeans. 

PWC:

A multivitamin budget aimed to encourage more innovative activities, develop future ready talent and help in going global.
Abhijit Ghosh, Tax Markets Leader, PwC Singapore

No surprises. Budget 2017 is part two to the CFE recommendations, where government support is available, only if the SMEs take up technology that increases productivity, embrace innovation and digitisation with a move of going international.
Lennon Lee, Entrepreneurial & Private Clients Tax Leader, PwC Singapore

Innovation, inclusiveness and development of sports and culture - we are moving towards a truly well rounded advanced economy.
Irene Tai, Corporate Tax Director, PwC Singapore

A prudent Budget touching on many right themes of digital transition, innovation and internationalisation to shape Singapore's future!
Sunil Agarwal, Technology, Media & Telecommunications Tax Leader, PwC Singapore

(1) Economy and businesses
Innovation, productivity, transformation are the key themes underpinning this year's budget. An aspiration of 2-3% GDP growth is to be delivered through a series of targeted incentives to build deeper capabilities to innovate and compete in the global economy.
Peter Le Huray, Global Tax Service Networks and Markets leader, PwC

It is interesting for the Finance Minister to announce YA2018 Corporate Tax Rebate cap being reduced to $10,000 (for YA2017 at $25,000). This is a signal that the government is shifting from broad based tax measures such as corporate tax rebate and PIC (which expires in YA2018) to a targeted government scheme and incentives.
Lennon Lee, Entrepreneurial & Private Clients Tax Leader, PwC Singapore

With all the funding and support to strengthen enterprise and people capabilities as well as our social safety net, the budget has to balance and continue to be prudent. The Finance Minister has to find other sources of government revenue which he has done so through indirect tax like water ratio hike and carbon tax.
Lennon Lee, Entrepreneurial & Private Clients Tax Leader, PwC Singapore

Digitalisation is critical for businesses to successfully scale up in an effective way. The targeted measures in Budget 2017 takes strong strides in this direction. Encouraging more broad-base adoption will be key!
Vivienne Ong, Tax Global Structuring Director, PwC Singapore

The Global Innovation Alliance, a Skills Future Leadership Development Initiative, as well as support for persons with disabilities will support Singapore companies, address their skill gap challenges by encouraging greater diversity and inclusion in the workplace.
Karen Loon, Territory Diversity Leader, PwC Singapore

Traditional businesses can now leverage on initiatives from Budget 2017 to cope with digital disruption.
Lim Hwee Seng, Tax Global Structuring Partner, PwC Singapore

(2) Industry sectors

I applaud the move towards specific stimulus to address cyclical and structural weaknesses faced by the various sectors. Deferring the Foreign Worker Levy increase for the marine industry is sensible given the extremely difficult time they are facing.
Elaine Ng, Transport & Logistics Tax Leader, PwC Singapore

Public-private partnerships can provide the important thrust to help companies leap-frog into the next level of advancement. My first reaction on the Tech Access Initiative is that it could work like the Institute of Microelectronics for the semiconductor industry where A*Star, the universities and private companies come together. The Tech Access Initiative would then be targeted at helping companies from all industries. Providing access to costly equipment would be a big welcome for SMEs as budget constraint is a common pain point for them.
Tan Ching Ne, Digital Tax Leader, PwC Singapore

'Go Digital' initiatives must be enforced not only by SMEs but by all businesses across sectors. Singapore needs to be two steps ahead if it wants to position itself as the Digital Hub for the region.
Sunil Agarwal, Technology, Media & Telecommunications Tax Leader, PwC Singapore

The extension of the working capital loans offered by Participating Financial Institutions andco-shared by the government is a welcomed update. This is especially useful for SMEs on their path towards transformation in an uncertain environment. Banks in Singapore will have to continue to factor the co-sharing of risk by the government in their risk appetite and loan policy, and balance that with supporting their corporate customers.
Antony Eldridge, Financial Services Leader, PwC Singapore

(3) Workers and job seekers

Ability to acquire new skills have kept people employed through past disruption. Enhancement to the Skills Future Programme provides Singaporeans opportunity to acquire deeper and practical skills to remain adaptable and relevant. #CFE recommendations
Girish Vikas Naik, Global Mobility Director, PwC International Assignment Services

(4) Vibrant & connected city
Continued investments in economic infrastructure such as the Malaysia-Singapore high speed rail will enlarge Singapore's market size.
Irene Tai, Corporate Tax Director, PwC Singapore

(5) Environment

The introduction of the carbon tax, the diesel tax changes and increase in water prices is two pronged; it tackles the environmental issues as well as reflects a global shift to indirect taxes other than GST as a growing source of revenue for the government.
Koh Soo How, Asia Pacific Indirect Tax Leader, PwC Singapore

In addition to current measures aimed at reducing carbon emission and in line with practices in other countries, the government intends to implement a carbon tax by 2019. The anticipated pricing of S$10-20 per tonne is in line with other countries which have adopted the carbon tax initiatives. This is a responsible and forward looking step for Singapore as a member of the global community fighting climate change. The key is that carbon emissions from direct large emitters can be monitored effectively without excessive administrative burden.
Fang Eu-Lin, Sustainability Leader, PwC Singapore

As a small country, water security is of utmost importance. Demand for water will be expected to increase. Increasingly water security is sought from alternative sources such as NEWater plants. These are costly but necessary to safeguard our water supply. The increase in water prices will better reflect the real cost of water and advocate sustainability from both a resource and financial standpoint. However, it is heartening to note that lower income households will obtain help to defray the stepped increase in water prices.
Fang Eu-Lin, Sustainability Leader, PwC Singapore

(6) Household
The personal tax rebate was an expected and a welcome step and will help tax payers especially at the lower end of the income spectrum. There was hope, though that the capping would be offered at 50% of tax payable, with an overall cap of $1,000, as it was in the past.
Girish Vikas Naik, Global Mobility Director, PwC International Assignment Services

(7) Community
Overall a budget that aims to build social cohesion to face future challenges.
Nicole Fung, Transfer Pricing Leader, PwC Singapore

(8) Fiscal sustainability
While we have been spared an increase in the GST rate in Budget 2017, the Finance Minister has confirmed that the government is studying the introduction of a GST on digital supplies received from abroad, which means that we'll need to prepare ourselves to pay GST on music and video downloads from overseas and possibly low value goods purchased from abroad. This is significant as the e-commerce market is expected to grow to US$5.4 billion by 2025 of which it is estimated that 55% comprise cross-border sales.
Koh Soo How, Asia Pacific Indirect Tax Leader, PwC Singapore

Reaffirmation of OECD BEPs initiative in Budget Speech reiterates the Singapore government commitment to continue upholding international standards towards building a fair and balanced tax system.
Vivienne Ong, Tax Global Structuring Director, PwC Singapore

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.