In Focus
ECONOMY | Staff Reporter, Singapore
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Everything you need to know about the Big 4's reactions to Budget 2019

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

Finance minister Heng Swee Keat has set forth an expansionary Budget 2019 with the goal of building and maintaining "strong, united Singapore" against heightening economic uncertainties. These include higher spending on defence and security, setting aside $6.1b to cover the full cost of the Merdeka Generation Package (MGP), and an increase in excise duties for diesel. The government will continue to invest in building the digital capabilities of SMEs through the launch and extension of initiatives like Scale-up SG programme and Automation Support Package (ASP). 

Singapore also tightened rules for foreign workers as it adjusted the foreign worker dependency ratio ceiling from the current 40% to 38% on January 1, 2020 and to 35% on January 1, 2021. The SPass of the services sector will also be reduced from 15% to 13% and then to 10%. The government is also striving to retain workers past their prime through the Work Fair and Silver Support schemes.

SIngapore will also tighten import relief for travellers and alcohol duty-free concessions as it implements the GST hike. The government is also studying the use of debt as part of the financing mix for long-term infrastructure projects as Heng announces that the Changi Airport Group will take up loans to develop Changi East and the government will provide a guarantee for Changi's borrowings. 

The Community Health Assistance Scheme (CHAS) will also be extended to cover all Singaporeans for all chronic conditions regardless of income whilst an Elder Fund will be launched in 2020 to help low-income Singaporeans who need additional financing for long-term care.

Overall, Singapore had a budget surplus of $2.1b or 0.4% of GDP and a budget deficit of $7.1b or 1.4% of GDP. 

Here's what The Big 4 have to say:

EY

Ms. Soh Pui Ming, Head of Tax Services, Ernst & Young Solutions LLP says:
“Transformation is a journey, not a destination. Budget 2019 recognises this, and continues to provide support to help Singapore enterprises to deepen capabilities, innovate and internationalise in order to compete in the new global economy.”

Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:
“Finance Minister said that Singapore needs to be nimble like a mousedeer. This mousedeer needs also the boldness of a lion to do things differently, wisdom of an owl to cut through the complexity of the new economy and the care of the mother hen to leave no one behind.”

Strengthening economic competitiveness

Building deep enterprise capabilities

Mr. Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:

“Singapore Budget 2019 continues to recognise the challenges faced by SMEs to innovate and expand overseas. Measures such as Scale-up SG and SME Co-Investment Fund III help to level the playing field and ensure that no one get lefts behind as Singapore seeks to remain competitive.”

Mr. Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The simplified Enterprise Financing Scheme is a welcomed move to provide additional support to local startups and emerging enterprises to meet their funding needs and help manage their cash flow.”

Mr. Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:
“The streamlining of the existing financing schemes into a single Enterprise Financing Scheme is a welcomed move. It will reduce administrative costs for SMEs, and hopefully help them to gain quicker access to funds needed for their expansion plans.”

Building deep worker capabilities

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Advisory Pte. Ltd. says:
“The outcomes achieved with the industry transformation efforts thus far validates the country’s persistence to deepen enterprise and worker capabilities.”

He adds:
“Redesigning jobs and reskilling our people are central to this year’s Budget. A nice sweetener would have been an additional SkillsFuture credit top-up – this could have further accelerated our lifelong learning culture.”

New Professional Conversion Programme

Ms. Tan Bin Eng, Partner, Business Incentives Advisory Leader, Ernst & Young Solutions LLP says:
“Industry 4.0 is a tidal wave that cannot be ignored by all companies and workers. The imperative to retrain workers has never been more urgent than before. The extension of the Professional Conversion Programmes into more areas will be appreciated by companies and partially alleviate the costs of retraining staff in this uncertain economic environment.”

Streamlining and digitisation of trade processes

Mr. Adrian Ball, EY Asia-Pacific Indirect Tax Leader and Partner, Ernst & Young Solutions LLP says:
“It has long been perceived that the main beneficiaries of Singapore’s comprehensive network of free trade agreements (FTA) are existing multinational corporations, so it is very welcomed that the government is intensifying efforts to streamline and digitise trade processes to allow SMEs easier access to the same FTA benefits. This will help SMEs in expanding beyond Singapore’s borders.”

Building Singapore’s position as Global-Asia node of technology, innovation and enterprise

Ms. Tan Bin Eng, Partner, Business Incentives Advisory Leader, Ernst & Young Solutions LLP says:
“It is heartening to hear of the continued emphasis on the importance of companies leading R&D efforts. The large number of corporate R& YoungD centres set up in Singapore is reflective of the strong ecosystem that Singapore has built up over the years.”

Mr. Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:
“For Singapore to develop as a Global-Asia node, Singapore needs talents with broad global experience. The efforts to provide Singaporeans with increased overseas exposure through exchange programmes will bring out the best in our people.”

Mr. Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:
“Just as Singapore enjoys success in its roots as a port, being the ‘Asia 101’ for global multinational corporations (MNC) is in our DNA as well. The proximity, similar time zones and strong talent pool has put Singapore in an advantageous position. The next step will be to continue to stay relevant and competitive.”

Building a caring society

Personal tax rebate

Mr. Chester Wee, Partner, International Tax Services Leader, Ernst & Young Solutions LLP says:
“The personal tax rebate is huge in percentage but small in cap. It reflects a better policy to share the country’s surpluses in a more targeted fashion to help those with greater need.”

Merdeka Generation package

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility (Tax), Ernst & Young Solutions LLP says:
“As anticipated, this year's Budget was filled with a generous dose of health care benefits for all Singaporeans. In particular, the Merdeka Generation can have peace of mind for their long-term care support, which also covers additional subsidies for outpatient care.”

SG cares

Ms. Sandie Wun, Partner, Transaction Tax, Ernst & Young Solutions LLP says:
“The government leads by example in encouraging all public officers to volunteer as part of Public Service Cares initiative. Together with the one-stop platform for donations, Giving.sg, these are great initiatives in the spirit of giving back as the nation marks the Singapore Bicentennial.”

Ensuring a sustainable environment for all

Zero Waste Masterplan

Ms. Sandie Wun, Partner, Transaction Tax, Ernst & Young Solutions LLP says:
“It comes as a surprise that vehicle taxes would be reduced in Singapore. Budget 2019 however announced that as part of the Zero Waste Masterplan, diesel taxes will be restructured, including the reduction of road taxes for diesel taxis and commercial vehicles.”

GST Import Relief
Mr. Yeo Kai Eng, Partner, Indirect Tax Services Leader, Ernst & Young Solutions LLP says:
“The reduction of the GST import relief for travellers does not come as a surprise. It remains to be seen if there will be a step up in enforcement action by the authorities.”

PwC

Keeping Singapore safe and secure

Peter Le Huray, Global Tax Markets Leader, PwC, says:
The Finance Minister sees an external environment with continuing geopolitical uncertainty, a continuation of the digital revolution and slowing global growth. The Budget response is a focus on security, particularly cyber security and a targeted approach to expediting digital skills and re-skilling the workforce with less reliance on foreign manpower.

Richard Skinner, Strategy Leader, PwC Singapore, says:
Setting up a Centre of Innovation in Aquaculture is a step towards increasing food security. As fish stocks decline, fish farming becomes essential as fish is as an efficient source of protein. In addition, innovations in aquaculture could also lead to new businesses and exports for Singapore. There are some very exciting technological developments in aquaculture (including in agriculture tech) and Singapore is in a great position to help develop these further.

Skilled workforce, innovative firms, and a vibrant economy

Chris Woo, Tax Leader, PwC Singapore, says:
The Singapore Government is willing to make a longer term investment to further compel business to improve productivity. The reduction to the Dependency Ratio Ceiling (DRC) is the necessary medicine in the medium term. It will force enterprises to further invest in new technology, re-skill their existing workforce, and reduce the reliance on cheaper foreign labour.

Abhijit Ghosh, Tax Markets Leader, Healthcare Leader, PwC Singapore, says:
The Enterprise Financing Scheme will enable Small Medium Enterprises (SMEs) to overcome the financial hurdles and expand rapidly and encourage budding entrepreneurs to embark on innovative ventures.

Irene Tai, Corporate Tax Director, PwC Singapore, says:
The streamlining of financing schemes with Enterprise Singapore should be very much welcomed by companies as this would improve access to information on financial support options and allow them to select those that are most relevant to their business needs. This centralised approach should also allow Enterprise Singapore to channel the funds to where they are most needed.

Lennon Lee, Entrepreneurial & Private Clients Tax Leader, PwC Singapore, says:
Local firms are at different phases of growth and competencies. Customised support programmes such as Scale-up SG and Innovation Agents programmes introduced in this Budget will help high growth local firms in deepening their capabilities, strategising how they should venture in new growth markets and introduce innovative products and services so that they can compete globally.

Anuj Kagalwala, Asset & Wealth Management Tax Leader, PwC Singapore, says:
The Government's mention of attracting patient capital should be music to the ears of the fund management community, especially venture capital and private equity managers. The Government has set aside an additional $100 million for investment in SMEs as co-investment with private sector investment. Big or small, all this shows the Government's positive intent and direction. Such investments have a direct co-relation to investments and employment in Singapore.

Girish Vikas Naik, Global Mobility Director, PwC International Assignment Services, says:
The re-calibration of foreign manpower policy is a timely wake-up call to the services sector that industry re-design transformation is central; undue reliance on cheap foreign labour will soon be a thing of the past. Businesses will need to accelerate industry transformation with a focus on automation, redesigning worker skillsets and employing older Singapore workers.

A global city and home for all

Richard Skinner, Strategy Leader, PwC Singapore, says:
While the vision for Singapore to be a Global 101 city is not new, given Singapore's need to be relevant to MNCs globally, this is definitely in the right direction as a way for people and firms to associate Singapore as a key node to invest in and as a springboard. Effective and efficient execution of the tactics is what is crucial, be it through extra funding or dedicated government support and advice for SMEs and start-ups.

A fiscally sustainable future

Kor Bing Keong, GST Leader, PwC Singapore, says
GST rate increase between 2021 to 2025 has become more certain than ever. A GST rate hike will increase the cost of non-compliance. It will also increase the costs for businesses which cannot claim the GST on their expenses in full especially with the implementation of the reverse charge regime from 1st January 2020.

Kor adds:
The revision of the concessions for travellers seem to signal an intention to adopt a more active approach to policing imports by travellers.

Lim Maan Huey, Real Estate & Hospitality Tax Leader, PwC Singapore, says:
APAC assets under management is set to grow faster than any other region globally. PwC expects it to rise from USD 15.1 trillion in 2017 to USD 29.6 trillion in 2025. The proposed extension of the Funds Tax Exemption Schemes (13CA/13R/13X) in Budget 2019 to 31 December 2025 and the various refinements to the tax schemes will position Singapore strongly to have a big bite of this growth. These tax changes for the asset management sectors are the results of a trusted and strong partnership between the MAS and industry players.

Koh Soo How, Asia Pacific Indirect Taxes Network Leader, PwC Singapore, says:
Apart from minor tweaks to the GST import reliefs for travellers and the extension of existing reliefs for qualifying trusts and funds, the GST takes a relatively back seat in Budget 2019 following last year's announcements on the rate hike and the GST on imported services. Having said that, the reduction in the import relief quantums could set the scene for the Government to expand the taxation of the digital economy to cover GST on the import of low-value goods below the relief thresholds in future budgets. It would also be interesting to see if the changes would mean increased examination by the customs officer on goods being brought into Singapore given the regular reminders to declare the value of goods purchased from overseas. In the meantime, the government's push for the small and medium-sized enterprises (SMEs) to adopt digital technologies and expand into e-commerce has a two-pronged benefit in terms of helping local businesses expand into new areas, and having the knock-on effect of growing the digital economy which can contribute to the GST collections from imported services from 1 January 2020.

Koh adds:
The expansionary budgetary needs in Budget 2019 and increased funding required for the Bicentennial Bonus and Merdeka Generation package could see the GST rate hike implemented earlier than later in the period 2021 to 2025, although the higher spending costs would be mitigated by the overall budget surplus of $2.1 billion for FY18 . However, we should note that the rate hike is only expected to bring in an additional $3.2 billion in tax revenues which just covers the additional $3.1 billion funding for the Long-Term Care Support Fund. Finance Minister's assertion that our GST is not high by international standards even after the planned increase to 9 per cent gives room for future increases.

The digitalising of trade documents and secure exchange of electronic trade documents would be welcomed by import-export businesses which currently need to incur costs for storage and retrieval of trade documents when they are asked to produce the documents upon audits by the tax authorities to support the figures reported in the GST returns.

KPMG

Building the digital capabilities of SMEs 

Leong Kok Keong, Head of Financial Services, KPMG in Singapore, says:
“Banks have been digitising their consumer banking operations rapidly over the past few years. This Budget’s continued push for SMEs to adopt digital technology should see SME business banking go digital as well, especially in areas of digital payments and trade/cash management.”

Jonathan Ho, Head of Enterprise Market, KPMG in Singapore, says:
"The government’s taking up to 70% risk on bank loans to companies less than 5 years old, and the extension of SME working capital loan scheme will help catalyse start-ups with innovative ideas, as these companies may need a certain amount of gestation period.”

Tay Hong Beng, Head of Tax, KPMG in Singapore, says:
In deepening enterprise capabilities, it’s important that the Government has recognised the need to provide and tailor-make support and assistance to businesses based on their differing stages of development and needs. This is a good departure from the traditional broad brush approach which may not meet the needs of businesses.

Leong Kok Leong, Head of Financial Services, KPMG in Singapore, says:
Peer to peer lending platforms have been emerging as a new class of lending; it is unfortunate that loans made by them to SMEs will not be covered by the Enterprise Financing scheme. It is thus anticipated that these P2P fintechs would form partnerships with banks in order to avail themselves to this scheme.

Daryl Pereira, Head of Cyber Security, Management Consulting, KPMG in Singapore, says:
The measures to support digitalisation of business is welcome, but the freedom and convenience provided by digital transformation comes at a price – the widening of the digital surface increases the likelihood of cyber-attacks. The measures to transform the private security industry will help, but government support could also have been extended to help businesses address cyber threats through tax incentives or grants to adopt stronger cyber security practices.

Jonathan Ho, Head of Enterprise Market, KPMG in Singapore, says:
The expansion of SMEs Go Digital Programme and the extension of the Automation Support Package by another 2 years will further entrench digital capabilities in our enterprises. This is provided that there are increased levels of awareness, including helping SMEs to road-map their digital journey.

Juvanus Tjandra, Head of Technology, Media & Telecommunications, KPMG in Singapore, says:
Singapore has to provide an enhanced and differentiated experience to attract enterprises and technology players to Singapore. The Global Asia Node programme is truly a programme that differentiates us – we build up the capabilities of Singapore companies, and then our people will be able to export this talent globally.

Government use of debt for infrastructure financing 

Sharad Somani, Head of Infrastructure, KPMG in Singapore
"For major projects like Changi East Airport, Government will provide guarantees to Changi Airport Group for debt issuance, thereby bringing down borrowing costs. This is an important step to ensure accountability, while benefiting the project with sovereign support."

Somani adds:
"Provision of government debt as part of a financing mix for long term infrastructure projects implemented by the government and statutory boards would bring more financial prudence. Also, the government should consider tapping on private sector financing to complement the government infrastructure delivery. Furthermore, as more and more statutory boards that build infrastructure need to raise funds to finance projects, there is a need to further strengthen systems and processes – risk management, reporting and treasury - in these statutory boards. "

Workforce developments

Jeya Poh Wan Suppiah, Head of Consumer and Retail, KPMG in Singapore, says:
“The Consumer & Retail industry must build deep capabilities to upskill and transform its staff capabilities to stay resilient as Singapore advances as a node of technology, reducing the reliance on foreign talent which may not be sustainable over the longer term.”

Chiu Wu Hong, Head of Tax Market & Solutions, KPMG in Singapore, says:
"The reduction in the Dependency Ratio Ceiling (DRC) and S-Pass quota for the services sector over the next two years means that businesses would need to adjust to a lesser reliance on foreign workers. The early announcement would allow businesses in the services sector time to plan for upskilling of existing employees, redesigning work processes and investing in automation. The extended funding support on the Enterprise Development Grant and Productivity Solutions Grant should help SMEs cope with this proposed change."

Ageing and healthcare costs 

Karen Lee, Head of Healthcare, KPMG in Singapore, says:
“The Merdeka Generation Package comes in timely for this resilient and independent group of Singaporeans. It will help them defray healthcare costs, and give them a sense of comfort and protection.”

Sustainable urban development 

Toh Boon Ngee, Partner, Tax, KPMG in Singapore, says:
"The Budget highlighted the need to incorporate environmental factors such as air quality, climate change, waste management, etc. into the longer term Singapore urban development plan. One will expect that such factors will also contribute to the eventual evolution of the Singapore taxation system, changes of tax base and design of tax incentives. For example, the immediate visible effect is that carbon tax system is being fine-tuned in the drive to achieve better air quality. "

Tay Hong Beng, Head of Real Estate, KPMG in Singapore, says:
“Buildings are one of the major contributors to carbon emission in the country. Green buildings are highly relevant to Singapore’s sustainability initiatives as it aims to have 80% of its buildings to be green by 2030. It is a bit of a let-down that the Budget does not provide any impetus to directly stimulate the demand and supply for green buildings. It is only when we are able to establish a direct correlation between building sustainability and its occupancy, rental and valuation that greening of buildings can be driven by market forces rather than a top-down approach by the government.”

Deloitte

Total Defence

Low Hwee Chua, Regional Managing Partner for Tax at Deloitte Singapore and Southeast Asia, says:
“As the Finance Minister promised, SG Budget 2019 is progressive and builds on the measures and initiatives put in place in the past couple years. It continues the recent focus on driving enterprise innovation and growth; increasing productivity of Singaporean workers and strengthening the social framework. The Budget also recognises the on-going challenges that impact Singapore’s security and liveability, and this can be seen from the attention paid towards strengthening our total defence, steps to tackle climate change, and measures to help the lower income and elderly, in particular in terms of healthcare and subsidising the cost of living.”

Thio Tse Gan, Cyber Risk Leader for Deloitte Southeast Asia, says
“As Singapore transforms and embraces Industry 4.0, a strong digital defence is critical. By making digital defence the sixth pillar of the nation’s Total Defence, along with the announcement of the Home Team Science & Technology Agency and significant investments to support our defence, security and diplomacy efforts, it will allow Singapore to strengthen its capabilities and safeguard itself against both physical and cyber threats.”

Tax 

Richard Mackender, Tax Partner and Indirect Tax Leader at Deloitte Singapore and Southeast Asia, says:
"The reduction in the value of goods that travellers can import into Singapore from S$150 to S$100 if the trip is 48hrs and from S$600 to S$500 if the trip is longer is expected. Travellers should be aware that Singapore Customs will be paying close attention over the coming holiday season.”

He adds:
“The Minister has confirmed the proposed increase in GST to 9% between 2021 and 2025, while highlighting that 9% is low compared to many other countries. The Government shows that it hears public concern on the increase of GST, but also offers a bigger picture view on rates elsewhere. It is pertinent that the Minister mentioned that the Government will continue to absorb GST on subsidised health and education costs, so helping to reduce the overall impact of the eventual increase. It is clear that the Government remains committed to the rate increase after 2021.”
 

Sabrina Sia, Tax Partner and Leader of Global Employer Services at Deloitte Singapore, says:
“The announcement of the 50% personal income tax rebate, subject to a cap of S$200, for the Year of Assessment 2019 was interesting. The cap of S$200 is the lowest in the history of individual tax rebates granted, and really demonstrates the intention to ensure and enhance the progressivity of the tax system, since the middle income earners will be the biggest beneficiaries of the rebate.”

She adds:
“The key focus of Budget 2019 is really on transformation - transformation of the workforce, transformation of SMEs, transformation of organisations to cope with techologies in the new digital world. While the Government will help Singapore and Singaporeans cope with the tide of transformation, it is important that Singapore and Singaporeans stay relevant to keep up with the times.”

“The lapsing of the Not Ordinarily Resident (NOR) is unexpected as that was a scheme which was introduced in Budget 2002 with the objective of attracting foreign talent with regional and global responsibilities to relocate to Singapore. As Singaporeans and Singapore Permanent Residents (SPRs) typically do not benefit from the tax savings available under the NOR scheme, it has been in our Budget wishlist for the Government to consider allowing Singaporeans and SPRs with similar roles to enjoy such concession, so as to provide incentives for them to step up to similar roles. Interestingly, the Government has levelled the playing field for all by removing the NOR tax concessions. This is probably in line with the Government’s intention to ensure and enhance the progressivity of the tax system, as well as to ensure that the foreign workforce acts as a complement to the local workforce.”

Lee Tiong Heng, Tax Partner and Leader of Global Investment and Innovation Incentives at Deloitte Singapore and Southeast Asia, says:
"The extension of writing down allowances on qualifying IPRs for another five years will certainly aid in deepening Singapore’s IP capabilities and maintaining its attractiveness as a hub for innovation. Though businesses would be a bit disappointed that the scope of qualifying IPRs has not been widened to, for example, include customer lists which are quite critical for digital businesses, and also that there is no automatic waiver of legal ownership requirement. "

Daniel Ho, Tax Partner and Tax Leader for Public Sector at Deloitte Singapore, says:
“The government’s initiative to provide dollar-for-dollar matching for donations made to IPCs in FY 2019 under the Bicentennial Community fund is expected to motivate organisations to give more generously back to society, as every dollar of their donations made will translate to twice the amount given to IPCs, while continuing to enjoy 2.5 times tax deduction on the amount donated. Although the 2.5 times tax deduction for qualifying donations made was extended in the Budget 2018, perhaps more could be done by also increasing such tax deduction to 300%, similar to the 2015 SG50 budget, to further encourage corporations to donate. This would then certainly be a win-win-win situation for organsations, IPCs and beneficiaries alike.”

Ho adds:
"As the economy marches towards a digital future, the emphasis on developing a world class workforce cannot be understated. The Minister’s attention to both ends of the workforce spectrum in this budget: local and overseas internship opportunities for young students and emphasis on redesigning jobs and reskilling older workers for the digital economy are testament to the fact that the Minister is indeed walking the talk."

“The extension of the fund incentives is expected, but the inclusion of Singapore sourced interest income as qualifying income is welcomed as it provides an added incentive for PE or VC funds to provide loans to Singapore-based borrowers and is in line with the Government's intention to support such companies to innovate and grow internationally.”

Wong Meng Yew, Tax Partner and Global Trade Advisory Leader at Deloitte Singapore and Southeast Asia, says:
“As Mr Heng has aptly pointed out, responsibility of a sustainable future is on both Singapore’s corporate and individual citizens. Although the increase in excise duty rate on diesel will result in increased costs for businesses and individuals, it is a step towards ensuring that Singapore’s current green cover is not taken for granted. This measure will also complement Singapore’s efforts to further build and rely on the public transportation infrastructure.”

Low Hwee Chua, Regional Managing Partner for Tax & Legal at Deloitte Singapore and Southeast Asia, says:
“As the Finance Minister promised, SG Budget 2019 is progressive and builds on the measures and initiatives put in place in the past couple years. It continues the recent focus on driving enterprise innovation and growth; increasing productivity of Singaporean workers and strengthening the social framework. The Budget also recognises the on-going challenges that impact Singapore’s security and liveability, and this can be seen from the attention paid towards strengthening our total defence, steps to tackle climate change, and measures to help the lower income and elderly, in particular in terms of healthcare and subsidising the cost of living.”

Keeping Singapore safe and secure

Thio Tse Gan, Cyber Risk Leader for Deloitte Southeast Asia, says:
“As Singapore transforms and embraces Industry 4.0, a strong digital defence is critical. By making digital defence the sixth pillar of the nation’s Total Defence, along with the announcement of the Home Team Science & Technology Agency and significant investments to support our defence, security and diplomacy efforts, it will allow Singapore to strengthen its capabilities and safeguard itself against both physical and cyber threats.”

Skilled workforce, innovative firms, and a vibrant economy
Lee Chew Chiat, Government & Public Services Industry Leader at Deloitte Southeast Asia, says:
“To reduce dependency on foreign manpower, companies must adopt a transformative mindset. The government can fund one-off initiatives to cushion cost impact on the companies. However in order for work processes to change, these companies must challenge their current operating model. For example, they should think about not having, say half of their manpower, and what changes must take place to continue their business.”

Lee adds:
"The government is one of the largest employers in Singapore. The government should also transform itself and reduce dependency on manpower where possible.”
 

Lee Tiong Heng, Tax Partner and Leader of Global Investment and Innovation Incentives at Deloitte Singapore and Southeast Asia, says:
"The extension of writing down allowances on qualifying IPRs for another five years will certainly aid in deepening Singapore’s IP capabilities and maintaining its attractiveness as a hub for innovation. Though businesses would be a bit disappointed that the scope of qualifying IPRs has not been widened to, for example, include customer lists which are quite critical for digital businesses, and also that there is no automatic waiver of legal ownership requirement."

Sabrina Sia, Tax Partner and Leader of Global Employer Services at Deloitte Singapore, says:
“The key focus of Budget 2019 is really on transformation - transformation of the workforce, transformation of SMEs, transformation of organisations to cope with technologies in the new digital world. While the Government will help Singapore and Singaporeans cope with the tide of transformation, it is important that Singapore and Singaporeans stay relevant to keep up with the times.”

Sia adds:
“The lapsing of the Not Ordinarily Resident (NOR) is unexpected as that was a scheme which was introduced in Budget 2002 with the objective of attracting foreign talent with regional and global responsibilities to relocate to Singapore. As Singaporeans and Singapore Permanent Residents (SPRs) typically do not benefit from the tax savings available under the NOR scheme, it has been in our Budget wishlist for the Government to consider allowing Singaporeans and SPRs with similar roles to enjoy such concession, so as to provide incentives for them to step up to similar roles. Interestingly, the Government has levelled the playing field for all by removing the NOR tax concessions. This is probably in line with the Government’s intention to ensure and enhance the progressivity of the tax system, as well as to ensure that the foreign workforce acts as a complement to the local workforce.”

Rohan Solapurkar, Tax Partner, and Consumer Industry Tax Co-Leader Deloitte Singapore, says:
"The Dependency Ratio Ceiling (DRC) will be phased from the current 40% to 35% by 2021 under a two-stepped approach. In order to assist corporations to adjust to these changes in the foreign worker policy, the Government has enhanced the level of funding support through the Enterprise Development Grant and expanding the scope of the Productivity Solutions Grant.

Solapurkar adds:
While it is laudable that the Government recognises that reliance on foreign workforce needs to be reduced in the long term and action steps need to be put into place to mitigate the impact of the reduction address the issue, the Government should perhaps also look beyond these measures and consider how to encourage corporations to shift Singaporeans’ perception and attitude towards working in certain industries currently not commonly taken up by Singaporeans, e.g. via re-designing certain jobs, or deploying technology to increase efficiency, and accord further tax deduction/allowances on costs incurred in this respect. ”

Daniel Ho, Tax Partner and Tax Leader for Public Sector at Deloitte Singapore, says:
"As the economy marches towards a digital future, the emphasis on developing a world class workforce cannot be understated. The Minister’s attention to both ends of the workforce spectrum in this budget: local and overseas internship opportunities for young students and emphasis on redesigning jobs and reskilling older workers for the digital economy are testament to the fact that the Minister is indeed walking the talk."
 

Ho adds:
“The extension of the fund incentives is expected, but the inclusion of Singapore sourced interest income as qualifying income is welcomed as it provides an added incentive for PE or VC funds to provide loans to Singapore-based borrowers and is in line with the Government's intention to support such companies to innovate and grow internationally.”

A caring and inclusive society

Ong Siok Peng, Tax Partner and Tax Leader for Transportation, Hospitality & Services sector at Deloitte Singapore, says:
“The extension of Special Employment Credit (SEC)/ Additional SEC signifies the government support for our ageing workforce, to allow them to stay employable and ride together in the fourth industrial revolution. This also ties in well with the Merdeka Generation Package initiatives.”

Lee Chew Chiat, Government & Public Services Industry Leader at Deloitte Southeast Asia, says:
“The Social Ministry spending has doubled in last decade. To be more effective, the government should take the view of health and social together – meaning from citizen’s and family’s standpoint. A family with disadvantaged person typically has more pronounced healthcare expenditures.”
 

Lee adds:
“First we had Pioneer Generation Package to honour the pioneers who built SG. Now, we have Merdeka Generation Package to recognise those who were the first few batches to serve NS, built the public services and modernised our economy. Will Singaporeans expect other “packages” in the future? The country can only afford these if our economy continues to thrive and our people are valued in this ever-changing world.”

Richard Mackender, Tax Partner and Indirect Tax Leader at Deloitte Singapore and Southeast Asia, says:
“The Minister has confirmed the proposed increase in GST to 9% between 2021 and 2025, while highlighting that 9% is low compared to many other countries. The Government shows that it hears public concern on the increase of GST, but also offers a bigger picture view on rates elsewhere. It is pertinent that the Minister mentioned that the Government will continue to absorb GST on subsidised health and education costs, so helping to reduce the overall impact of the eventual increase. It is clear that the Government remains committed to the rate increase after 2021.”

Daniel Ho, Tax Partner and Tax Leader for Government & Public Services Industry at Deloitte Singapore, says:
“The government’s initiative to provide dollar-for-dollar matching for donations made to IPCs in FY 2019 under the Bicentennial Community fund is expected to motivate organisations to give more generously back to society, as every dollar of their donations made will translate to twice the amount given to IPCs, while continuing to enjoy 2.5 times tax deduction on the amount donated. Although the 2.5 times tax deduction for qualifying donations made was extended in the Budget 2018, perhaps more could be done by also increasing such tax deduction to 300%, similar to the 2015 SG50 budget, to further encourage corporations to donate. This would then certainly be a win-win-win situation for organsations, IPCs and beneficiaries alike.”

Sabrina Sia, Tax Partner and Leader of Global Employer Services at Deloitte Singapore, says:
“The announcement of the 50% personal income tax rebate, subject to a cap of S$200, for the Year of Assessment 2019 was interesting. The cap of S$200 is the lowest in the history of individual tax rebates granted, and really demonstrates the intention to ensure and enhance the progressivity of the tax system, since the middle income earners will be the biggest beneficiaries of the rebate.”

A global city and home for all

Wong Meng Yew, Tax Partner and Global Trade Advisory Leader at Deloitte Singapore and Southeast Asia, says:

“The increase in excise duty rate for diesel is significant and will weigh in on business operators and diesel car owners’ decisions on whether to make a switch to petrol vehicle ownership. Taking an example of private vehicle owners who have vehicles with full tank capacity of 45 litres to 65 litres, a $0.10 increase will amount to an additional $4.50 to $6.50 per full tank filled. Assuming further a full tank of diesel a week, this works out to between $18.00 to $26.00 per month or $216.00 to $312.00 a year. Whilst this may not immediately push a private vehicle owner to switch out his diesel vehicle, this increase will certainly become a factor to consider during the next vehicle purchase. In relation to taxi companies, the financial impact of the increase will be compounded due to the number of vehicles operated and refueling frequency. However, there is already a trend of taxi companies moving towards more energy efficient and less polluting vehicles, due to various factors (e.g. additional costs of ownership though the tariff structure and maintenance costs) and as such, the increase in excise duty rates will now likely further accelerate the preference to shift out of diesel cars."

Wong adds:
The reduction in annual special tax for diesel cars and taxis is likely meant as a cushion against the impact of the increase in excise duty rates. However, since the increase in excise duty rate is significant (i.e. a 100% increase), the reduction in annual special tax will cushion only a minor cost arising from the overall annual increase in costs, especially for commercial vehicle operators. The reduction in annual special tax is however a welcomed move towards helping diesel vehicle owners transition out to more energy efficient and less polluting vehicles during the interim period.”

“As Mr Heng has aptly pointed out, responsibility of a sustainable future is on both Singapore’s corporate and individual citizens. Although the increase in excise duty rate on diesel will result in increased costs for businesses and individuals, it is a step towards ensuring that Singapore’s current green cover is not taken for granted. This measure will also complement Singapore’s efforts to further build and rely on the public transportation infrastructure.”

A fiscally sustainable future

Richard Mackender, Tax Partner and Indirect Tax Leader at Deloitte Singapore and Southeast Asia and Danny Koh, Tax Partner Deloitte Singapore, says:
“The extension of the GST remission for expenses incurred by S-REITS and Singapore listed RBTs and for expenses incurred by qualifying funds managed by prescribed fund managers in Singapore, beyond March 2019 to 31 December 2024 and 31 December 2025 respectively will be welcomed by the Financial Services Industry. The extension shows Singapore's continued focus on ensuring a competitive environment for funds and fund managers.”

Mackender adds:
“For e-commerce taxes on goods, whilst there was no announcement in the budget, we understand that IRAS is continuing to look into the best way to effect any change. Countries such as Australia have removed the low value import threshold completely, but Singapore is studying the options to make sure that any change can be effectively administered and policed. It is notable that the travelers GST free allowance was reduced in this budget, so it would seem likely that any change will be by way of a reduction and not an easement in the threshold values.”

“The reduction in the value of goods that travellers can import into Singapore from S$150 to S$100 if the trip is 48hrs and from S$600 to S$500 if the trip is longer is expected. Travellers should be aware that Singapore Customs will be paying close attention over the coming holiday season.” 

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