Singapore’s Budget 2024 should uplift businesses, operationalise sustainability and extend care to employees. Those are among the top three recommendations released by PwC Singapore on Dec 19, in relation to the upcoming Budget 2024.
To uplift businesses, PwC suggests a framework for granting refundable credits for multinational enterprises (MNEs) with Singapore operations. For example, this should be in line with the Global Anti-Base Erosion Rules (GloBE) rules, a set of global regulations that ensure large MNEs pay a minimum level of tax on the income arising in each of the jurisdictions where they operate, to minimise impact of any top-up tax.
PwC also recommends the government to consider granting manufacturers a credit, which will be calculated using a certain percentage qualified investment cost or pegged against some measurable target. For instance, environmental, social and governance (ESG) as a payment against tax.
“This move can help promote key industry players to set up manufacturing facilities in Singapore and address the sector’s uncertain growth outlook,” the release notes.
In addition, to enable Singapore businesses to trade more effectively, PwC proposes for the government to provide specific guidance on how Singapore exporters can best manage and fulfil the Carbon Border Adjustment Mechanism (CBAM) requirements. CBAM was recently introduced by the EU which will subject Singaporean exporters to additional taxes and incurring higher export costs.
Such actions will look like increasing transparency in identifying CBAM-affected goods to defray additional costs and resources required by local exporters.
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Meanwhile, in anticipation of Singapore-based companies enjoying the Maritime Sector Incentive (MSI), PwC believes it will be helpful for the Maritime Port Authority (MPA) to provide guidance on how the gains or losses arising from the trading of such emission allowances that are ancillary to shipping activities should be treated for Maritime Sector Incentive purposes.
The government may also consider granting a tax exemption on such trading activities.
As transitioning to operating sustainably is costly for businesses, PwC proposes introducing a comprehensive Sustainability Support Scheme (SSS) administered by a single government agency to ease administrative burden.
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The SSS is proposed to be a one-stop platform that can comprise grants and tax incentives in the form of super deductions, refundable tax credits, investment allowances, concessionary tax rates, and withholding tax exemptions. This would depend on the nature of activities to be supported and the attributes of the applicant.
Finally, against the backdrop of an “increasingly restless and on-edge workforce”, PwC proposes nine actions for the government to consider to extend more care to employees.
They include increasing the maximum amount of relief claimable for taxpayers below the age of 55, and providing a one-off tax rebate; making the fixed dollar amount for the Working Mother’s Child Relief (WMCR) available; and mandatory family or parent care leave.
They also include an additional eight weeks of maternity leave in the form of flexible working arrangements; grants for employers to provide more mental health benefits to their employees; additional 30 days of sick leave for employees coping with chronic illness; among others.
PwC also has a recommendation for Singapore’s 30 by 30 food transformation.
The firm proposes for the tax rules to allow deduction for the cost of approved buildings used exclusively or almost exclusively for food farming purposes, and deduction for upfront land premiums for such buildings on land approved for farming.
“The government also can consider extending the Land Intensification Allowance (LIA) to certain sectors involved in the conversion of buildings or structures for farming purposes,” they release says. “Furthermore, and to attract investors, the government can consider allowing companies in this space to carry forward unutilised LIA.”
PwC’s executive chairman Marcus Lam notes that Budget 2024 presents an avenue to enhance the harmony between seizing opportunities in the marketplace and for the people and advancing social values.
“When we think about what Singapore can become in the future, we envision an economy characterised by care and consideration for the wellbeing of our planet, people and businesses. In a world that is prone to polarisation, we believe Singapore’s competitiveness can leverage on its prevailing strengths and on cultivating a self-resilient as well as values-driven economy,” he says.
