PricewaterhouseCoopers responds to Singapore Budget 2010
SINGAPORE, 22 February 2010 – PricewaterhouseCoopers (PwC) responds to Singapore Budget 2010, just delivered this afternoon by Finance Minister, Tharman Shanmugaratnam.
As we enter into a period of gradual but steady economic recovery, Paula Eastwood, Head of Corporate Tax at PwC Services LLP (Singapore) comments:
- “An interesting carrot & stick approach to this budget with incentives to encourage increased productivity and higher foreign worker levies to push through the change.”
- “An unprecedented budget in terms of its focus on SMEs!”
- “A good response to the Economic Strategies Committee (ESC) recommendations on the need to increase productivity and hearing the SMEs’ cry for help in the form of innovation grants and incentives to help them move up the value chain”.
Abhijit Ghosh, Tax Partner
- “In line with the ESC recommendations, Budget 2010 is focused on attaining growth through development of skills and raising productivity through innovation. The tax benefits under the proposed Productivity & Innovation Credit Scheme will certainly encourage companies to create and manage intellectual property, invest in automation and upskill their employees.”
- “New tax relief to support the Design activities in Singapore is a welcome measure. While the full details will only be announced in May 2010, this should encourage Asian and international design houses to set up their design centres in Singapore.”
Elaine Ng, Tax Partner
“The Great ESCape Budget - Coming out of the worst global economic crisis in decades, the Minister has responded to the ESC’s recommendations to pave the way forward for Singapore and Singaporeans.”
Ho Mui Peng, Tax Partner
- “The enhancements to the existing R&D incentives under the Productivity & Innovation Credit Scheme, will be highly attractive to a company with other taxable income available for setting off the credits earned. If not, it can be held in a credit account until the R&D efforts can be commercialised in an income producing venture.”
- “The reduction in the withholding tax rate for non-resident entertainers from 15% to 10% may translate to lower ticket prices for the top shows coming to our integrated resorts. Exciting times ahead!”
Anuj Kagalwala, Tax Partner
“No surprises! The focus was expected to be on SMEs and the 2010 Budget has addressed that well. However, care should be taken that the caps and limits do not create unintended consequences such as over complicating legislation and leaving out the larger players”
Mergers & Acquisitions
Chris Woo, Tax Partner
“The budget’s M&A tax incentives in reaction to the ESC's recommendation to provide greater impetus to elevate Singapore based enterprises to grow inorganically in and outside Singapore. We like the desired intention to provide a 5% allowance on the acquisition value based on “simplicity” and “without seeking to distinguish between interest costs and other costs”. This strategy would give a boost to local players to compete with some bigger boys in the M&A arena.”
Frank Debets, Partner
PricewaterhouseCoopers Worldtrade Management Services Pte Ltd
“The 2010 Budget introduces a number of measures that will enhance Singapore's status as an international trading hub.
Firstly, the expanded GST zero-rating for the marine industry could significantly reduce the compliance burden for the many companies that either use or want to use Singapore and its surrounding waters as a centre for vessel upgrading or maintenance.
Secondly, the renewal and enhancement of the Investment Allowance scheme for aircraft rotables demonstrates a laudable commercial understanding by the government that despite advanced material requirements planning systems, it is not easy for many companies to track individual parts and components that go through a repair or refurbishment cycle. The enhancement will give Singapore a definite edge over other territories that maintain "non-swapping" conditions for direct or indirect tax reliefs.
Thirdly, the introduction of deferred import GST for all imports of qualifying importers, not only those using an import GST relief scheme, will be a welcome development for many importers and transshippers. It puts Singapore on a par with many developed markets who share the same practice.”
Goods and Services Tax, PACT
Koh Soo How, Tax Partner
- “The wide-ranging measures announced in Budget 2010 clearly demonstrate the Government's resolve to implement the recommendations of the ESC. The initiatives to enhance the global competitiveness of Singapore businesses through Partnerships for Capability Transformation (PACT) and increased support for business associations will help to overcome the reluctance of Singapore businesses to pursue new market opportunities in an uncertain world.”
- “The new GST scheme that allows the deferral of import GST is a welcome complement to existing import relief schemes and should enable more businesses to enjoy lower cash flow costs of having to pay import GST at the time the goods enter Singapore. However, if the details are ready to be announced in March 2010, it would have been better if the scheme can take effect earlier than the proposed date of 1 October 2010. It is also hoped that the qualifying conditions for the scheme would not be so onerous that only a small number of businesses are able to enjoy its benefits.”
- “The expansion of the GST zero-rating treatment for the marine industry is part of the government’s continuing recognition of the international character of shipping transactions and protects the global competitiveness of the industry.”
Yip Yoke Har, Tax Partner
- “Under the ESC recommendations, Singapore has a stated intention to grow as an international financial centre and the insurance sector is a key pillar of that objective. I am rather disappointed that there is little in the Budget for the insurance sector. Singapore should take bolder steps to move beyond just being an Asian insurance hub to being a key global insurance centre. More can be done to incentivise the insurance sector beyond a little tweaking at the edges and to draw global insurance players to base their operations from Singapore.”
- “The Budget is very focused on driving productivity and innovation aimed primarily at growing SMEs into global companies.”
Personal Tax
James Clemence, Partner, PwC International Assignment Services (Singapore) Pte Ltd
"Changes to the income tax regime were measured rather than bold. Headline grabbing gimmicks like tax rebates and tax cuts were avoided in favour of a few carefully aimed handouts to promote training and the Singapore family unit."
- ENDS -
Media contacts:
Gary Gan - +65 6236-4074, gary.sa.gan@sg.pwc.com
Daniel Heng - +65 6236-7262, daniel.ck.heng@sg.pwc.com
Chia Sher Ling - +65 6236-3961, sher.ling.chia@sg.pwc.com
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