Reactions to the Singapore Budget 2015 Statement

Reactions to the Singapore Budget 2015 Statement

1000

Related content

Tham Sai Choy, Chairman of KPMG Asia Pacific and Managing Partner at KPMG in Singapore

A strong, forward-looking Budget that underlines the Government's commitment towards the next 50 years and beyond. We applaud the various measures to provide for stronger retirement adequacy particularly among the elderly poor, as well as the sharper focus on deepening our people’s skillsets and capacity required for the future.

 

Tham Sai Choy, Chairman of KPMG Asia Pacific and Managing Partner at KPMG in Singapore

This year's Budget, at the mid-point of our economic restructuring, was an opportune time to take stock of the progress of our productivity and innovation initiatives. We are especially heartened that innovation will be more widely recognised and made more accessible to SMEs. This will position Singapore companies well for regional opportunities and competition with the advent of the ASEAN Economic Community later this year.

 

Tham Sai Choy, Chairman of KPMG Asia Pacific and Managing Partner at KPMG in Singapore

Budget 2015 underscores the Government’s resolve to raise topline growth and focus more on value-creating activities -- the demand side of the equation -- which will ensure Singapore’s relevance and competitiveness in the next 50 years. We must press on with our focus on productivity as a growth driver. 

 

Tan Wah Yeow, Asia Pacific Head of Healthcare, KPMG

While healthcare was not explicitly the centrepiece of this year’s Budget, measures to address related concerns can be seen in many of its initiatives.

The first one which struck me is the focus on developing Applied Health Sciences to transform healthcare delivery which not only develops economic advantage, including through R&D, but also benefits our people. The second involves complementing the development of healthcare infrastructure with our Smart Nation initiative, so that technology is embedded in healthcare design through to healthcare delivery.

The last is that it has to be sustainable, both by managing the cost of healthcare projects through project design and cost optimisation while keeping healthcare costs affordable for our people through healthcare assurance initiatives such as Medishield Life and the Silver Support schemes.

Taken together, I welcome this holistic approach to the future of our healthcare needs, which has considered all the important elements including technology, funding and infrastructure.

 

Tay Hong Beng, Head of Tax at KPMG in Singapore

  • A high concentration of the tax proposals are skewed towards Singapore businesses. This is a step in the right direction as we groom our businesses from productivity adoption to innovation and internationalisation. These initiatives are critical in encouraging a new generation of businesses to create value and venture abroad.

  • Enhancing the incentives to promote innovation is the right step forward as we mature from a value adding to a value creating economy. Branding has also been mentioned as a key factor in internationalisation. However, it would have been a much more complete package if there had been a new tax incentive to recognise and promote strong Singapore brands.

  • The enhanced M&A tax incentive has now made it even more compelling for businesses to come together and consolidate. This should inject much-needed interest and enthusiasm among SMEs where consolidation can result in businesses which are much more competitive, especially when venturing abroad.

  • A forward-looking budget with plenty of assistance and help for Singapore businesses. The next and most critical step is to ensure that these schemes are implemented and made available to businesses.

  • Five years into the productivity drive, we had hoped to see the PIC scheme with its “one size fits all” design re-calibrated to sharpen the focus on productivity and innovation. Although there are some proposed enhancements to the scheme to make the innovation-related incentives more accessible, a more tailor-made PIC scheme to target businesses at different stages of development and operations would have been more relevant and effective to drive business growth and create job opportunities.

  • Overall, a good budget for building a new generation of businesses to innovate and internationalise but it would have been sweeter if there were an initiative to honour our pioneering businesses that have contributed significantly to the Singapore economy as part of the SG50 celebrations. This would have helped to inspire our businesses to emulate successful pioneer businesses in their perseverance and vision. 

 

Dennis McEvoy, Tax Partner at KPMG in Singapore

The top marginal personal tax increase to 22% will only affect the top 5% of tax payers, however these individuals are typically more mobile. Any impact on attracting and retaining these taxpayers to live and work in Singapore may only be known over the longer term.

 

Gan Kwee Lian, Tax Partner at KPMG in Singapore

The Transition Support Package will be welcomed by SMEs. However, given the general high cost of conducting business in Singapore, it would have been helpful if the government could continue to co-fund 40% of wage increases given to Singaporean employees, instead of a lower rate of 20% for 2016 and 2017.

 

Alan Lau, Tax Partner at KPMG in Singapore

The increase in top-tier personal tax rate from 20% to 22% wef YA2017 is unlikely to trigger any immediate adverse impact on Singapore's ability to attract top individuals to relocate, work and live in Singapore. The country continues to be a strong draw for its clean image, strong security, good liveability and good governance.

 

Toh Boon Ngee, Tax Partner at KPMG in Singapore

  • There are no earth shattering changes in this budget, but important enhancements and fine tuning reflect a measured, holistic, multi-faceted and forward-looking approach to recalibrate the pace of change very much needed to sustain longer-term growth.

  • The drive for productivity has broadened to include not just hardware but "heart"ware with a strong focus on the deepening of skills and lifelong learning at every level so pivotal for the long-term transformation of Singapore’s economy.

  • The Jubilee Budget addresses the concerns of the nation and meets the needs of many. Minister Tharman has laid out measures which are well considered. What is now needed is a detailed roadmap for effective and successful implementation without compromising on the need to simplify rules and ease compliance.

  • Increasing the tax allowance from 5% to 25% and relaxing of the 50% shareholding requirement to 20% will allow more flexibility in restructuring and M&A for SMEs. This will enable SMEs to merge and grow, especially needed in the tougher global and regional business arena.

  • Minister Tharman responded to calls from SMEs to provide support for internationalisation especially in areas of double tax deduction for salary costs. However the effectiveness of this initiative will be in the details.

  • Although co-funding by the Government of the Wage Credit Scheme will reduce from 40% to 20% for 2016 and 2017, the extension of the scheme is a welcome move to help address rising labour costs for businesses. The gradual phase out will push businesses to restructure in the tight labour market.

 

Harvey Koenig, Tax Partner at KPMG in Singapore

  • The renewed commitment to encourage pervasive innovation, first mentioned as far back as Budget 2008, will be important especially for SMEs.

  • Electronic marketplaces and new ways of using data as examples of innovation rightly recognises the current drivers in business transformation which all businesses would need to invest in.

  • A commitment to help businesses invest in innovation will enhance their ability to build new capabilities for the future.

  • The continuation of the Transition Support Package will help businesses cope with increased business costs and an uncertain global environment.

  • Discontinuance of the PIC Bonus is sensible and should not affect the productivity momentum; it should also reduce motivation for abuses of the PIC scheme.

  • Encouraging innovation in SMEs through the Capability Development Grant is a top-down approach which could have limited reach; instead, a broad-based market-driven incentive would have been a better tool to encourage all types of innovation.

  • The enhancements to the Mergers and Acquisition Allowance is welcome and recognises that many SMEs may not have the financial muscle nor ability to take majority stakes in other companies.

 

Mak Oi Leng, Tax Partner at KPMG in Singapore

  • The Government should empathise with the service sector as the tightening of foreign worker quotas has a real impact on the service levels at restaurants and retail outlets. Singapore needs to remain top in these areas to attract tourists as no machine or robots can replace the personal touch.

  • The introduction of the new international growth scheme is welcomed but details on how to distinguish the foreign-sourced income vis-à-vis Singapore sourced income for the purpose of computing the incremental qualifying income should be clearer. This will prevent future disputes with the tax authority.

 

Gan Hwee Leng, Tax Partner at KPMG in Singapore

  • The SkillsFuture credit is innovative. It paves the way for every citizen to stay relevant in this changing economy.

  • The extension of GST concession to REITs with fund raising SPVs is an icing on the cake for REITs, recognising substance over form.

  • Extension of income tax & GST concessions for REITs is a welcome relief. It secures Singapore as the preferred country for public listings.

 

Leonard Ong, Tax Partner at KPMG in Singapore

  • The extension of the corporate tax rebate for a further 2 years of assessment is a welcome boost for SMEs as Singapore continues to transform itself in the current prolonged sluggish growth in the global economy.

  • The extension of the income tax and GST concessions for S-REITs for another 5 years is much anticipated and welcomed by the S-REIT market. This will ensure Singapore’s continued dominance as a hub for Reit listings in Asia in the foreseeable future.

  • The non-extension of the stamp duty remission for S-REITs buying Singapore properties will certainly add to the costs for S-REITs buying Singapore properties. This will in turn affect the yield of such S-REITs for investors.

 

Gordon Lawson, Tax Partner at KPMG in Singapore

  • Singapore has reached a watershed in its development. The transition to a new chapter in its history requires a more focused investment on enhancing the welfare of its people, as well as on their education and training.

  • Singapore maintains its international competitiveness by reinvesting the dividends of its past success in the future development and welfare of its people.

  • Singapore recognises that its international competitiveness is dependent on its efforts to continue developing a highly educated, adaptable and innovative workforce, with access to the best education and retraining opportunities. The path ahead for Singapore is vested in the development of its people.

 

Alan Lau, Tax Partner at KPMG in Singapore

  • The SkillsFuture credit scheme is a very innovative way of underpinning the importance of skills upgrading for Singaporeans. More importantly, it clearly empowers the individual to take charge of the nature and timing of enhancing and upgrading of his or her own skills. The Government clearly feels that the individual best knows his own training needs.

  • By lowering the corporate tax rebate to $20,000, the GGovernment clearly wants to focus the benefits of the rebate mainly on the SME sector, as opposed to the previous scheme which benefitted a wider spectrum of corporate taxpayers.

  • Budget 2015 will probably be remembered as one where the Government not only took advantage of the strong economic performance and benign international environment to strengthen the social security net for Singaporeans through the Silver Support scheme, but also invested wisely in the long-term future of the nation by laying the foundations for T5 of Changi International Airport.

  • The Government clearly recognises that one of the main stumbling blocks that hampers the development of local entrepreneurial spirit is the the challenging funding gap currently faced by many start-ups and SMEs. More importantly, under the new scheme, the Government steps in to co-share the funding risk together with private sector financial institutions. Such co-sharing of risk is not only an innovative feature, but also lowers the commercial risk faced by banks involved in such early-stage funding business. 

 

Chiu Wu Hong, Tax Partner at KPMG in Singapore

  • The freezing of levy of manufacturing and construction sectors is welcomed. It will give companies time to restructure.

  • The extension of wage credit scheme and tax rebates for another two years is good news for local enterprises tackling wage costs. Rental costs also plaque many SMEs, and some form of assistance in rental costs would be helpful.

  • SMEs can now go to SPRING to apply for Capability Development Grant to fund their R&D study (projects below $30k). Application and approval process will be a lot easier. This is a good scheme that encourages SMEs to undertake R&D projects. Under the current R&D PIC scheme, not all SMEs are profit making to enjoy immediate benefit, it is better to get a grant from SPRING than to enhance tax deduction under the PIC scheme.

  • I welcome the support for internationalisation grant - from 50%-70% support for the next 3 years and am looking forward to the new growth scheme.

  • New international growth scheme of 10% concessionary tax rate from incremental income of qualifying activities and enhanced double tax deduction for internationalisation scheme to cover salaries of Singaporeans posted overseas are encouraging news for SMEs thinking of venturing abroad.

  • On the enhancement of M&A scheme, it'll be interesting to see if there will be a corresponding increase in M&A activities among local enterprises. Many of the local enterprises have been playing on the sidelines. Hopefully this enhancement will entice SMEs to consider M&A in their strategic growth plans.

 

Larry Sim, Tax Partner at KPMG in Singapore 

  • This year’s Budget is a balanced one. While there are initiatives to enhance the support on lifelong learning and developing Singaporeans, and a further focus on productivity and innovation schemes to help SMEs, the Government has also introduced tax incentives to provide more targeted support for larger SG companies to internationalise.
     
     
  • An innovative catalysing enterprise financing scheme was announced by the Government with co-sharing of risk between the Government and the Financial Institutions under the scheme. A boost for SME who is looking to go offshore on the funding front.
     
     

 

Satya Ramamurthy, Head of Government & Infrastructure at KPMG in Singapore 

One of the four pillars outlined by the Finance Minister to build for the future is investing in economic and social infrastructure. The airport, seaport and land transport infrastructure will be significantly enhanced to support Singapore’s competitiveness over the next decade. 

 

Lam Kok Shang, Head of Indirect Practice at KPMG in Singapore 

The progressive social support will need to be financed and paid for by an eventual increase in the GST rate. This is expected as the current Spore GST rate is already low, compared to the rates globally and especially in the Asia Pacific.

 

BJ Ooi, Partner and Head of Global Mobility Services at KPMG in Singapore 

  • A tax rebate of 50% for the sandwich class sounds great but the cap of $1,000 is much lower than in previous Budgets

  • Tax increases for the top 5% of taxpayers but the good news is the change will only take effect in YA2017 ie for calendar year 2016.

  • With the proposed tax rates hitting our top taxpayers in YA2017 - we may lose some of our tax edge against Hong Kong but there are other advantages to living in Singapore of course! 

 

Anna Low, Tax Partner at KPMG in Singapore

  • Generous and revolutionary investment in training and developing Singaporeans to be future ready.

  • Meaningful increase in M&A allowance. Reducing the percentage of shareholdings acquired to at least 20% encourages SME to take small steps in expanding through acquisition.

 

Lim Li Peng, Tax Partner at KPMG in Singapore

  • Singapore is widely regarded as a vibrant and diversified maritime centre, offering a wide range of ancillary services. The various MSI enhancements are evidence of the Government’s continued commitment to support shipping operators in Singapore.
     

     
  • The automatic WHT exemption on finance leases, HP arrangements and loans used to finance equity injection or intercompany loans to wholly-owned SPVs for the SPVs’ purchase/ construction of vessels, containers and intermodal equipment will be well received. This is given the significant commitments required in the maritime industry, and this move would bring tax certainty to costs of financing. In contrast, the current position is such that an WHT exemption on finance leases or charges is granted on a case-by-case basis.
     

     
  • The extension of the MSI-SSS award for another 5 years provides welcome certainty for current award holders. However, some may be compelled to reconsider continuing participation given the requirement of ‘higher economic commitments’. 
     

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.