More grants supporting local enterprises, tax incentive packages catalysing digitalisation and business transformation, as well as special propositions enhancing the skills of Singapore’s workforce, are some items on professional services firm KPMG’s wish list for the upcoming Budget 2021.
“Our proposals for Budget 2021 will further strengthen existing policies as well as propel Singapore to emerge from the crisis stronger than ever,” says Ajay Sanganeria who heads the tax division of KPMG Singapore.
Singapore’s Budget 2021 will be announced by Deputy Prime Minister and Finance Minister Heng Swee Keat on 16 Feb. There is much anticipation on what it will entail as it follows the unprecedented five packages amounting to close to $100 million announced in 2020.
As Singapore positions itself for a recovery, Sanganeria predicts a deeper venture towards being a smart nation through initiatives incentivising the development and adoption of 5G technology.
“We propose tax depreciation for spectrum rights payments to offset costs to telcos. If left unaddressed, such costs may potentially be priced into products and services for consumers,” he elaborates.
Such tax deductions could be up to 200% or 300% of businesses’ investments in digital technology or training, Sanganeria explains.
SEE: Singapore economy looks to rebound in 2021; experts caution against addiction to grants
Aside from this, he says that a 5G technology and innovation fund be set up to provide grants of up to 50% of expenditure for the prototyping and innovation of 5G-enabled solutions.
Another strategy Sanganeria has is for Singapore to explore rendering support for the incubation and adoption of supply chain models which are “independent with parallel processes, structured in a simple way, and have strategic category segmentation.”
One way this can be done is to support a ‘connected enterprise’ model that enables businesses to connect their front, middle and back offices to enable their supply chains to function more effectively and efficiently, he explains.
Meanwhile, more grants and subsidies can go towards helping the nation maximise its potential as a green finance hub in Asean.
This could involve facilitating sustainable finance deals or offering special grants of up to $250,000 for investments in platforms linked to decarbonisation, says Sanganeria.
The way he sees it, supporting the development of green economy-related projects, businesses and services could potentially create sustainable jobs in a range of different sectors. Such opportunities include cleantech, green buildings, waste management and green transportation.
Sanganeria is also proposing grants to co-fund half of the salaries of sustainability teams in organisations as well as a property tax rebate for green buildings.
Another move he is championing is urban farming done through existing real estate respirces and possibly alternative sources of protein. This move will help create resilience In Singapore’s food supply chains – which faced some strain amid the lockdowns and movement control restrictions imposed globally in a bid to curb the spread of Covid-19 infections.
To facilitate this, Sanganeria is calling for tax incentives for companies operating in agritech and aquatech. He is also has suggestions to make several enhancements to the R&D tax incentive scheme such as allowing for capital expenditure on plant and machinery and utilities.
Aside from this, Sanganeria is proposing new tax incentives such as a tiered concessionary income tax rate which is based on the production capacity, nutrition value and property rebate for facilities used for food production.
The way Sanganeria sees it the proposals put forth will – collectively - tide businesses through the bleak outlook and facilitate a better recovery in Singapore’s economy. With some 35,000 entities having shut down between January and October 2020, these strategies may just be the panacea needed for firms.
