Press release

4 Jan 2022 Singapore, SG

Wish list for Singapore Budget 2022

Ernst & Young Solutions LLP (EY) released its wish list for Singapore Budget 2022.

Press contact
Sophia Mah

Media Relations Lead (Assurance, Tax, Strategy and Transactions, Growth Markets), Ernst & Young Solutions LLP

Passionate about the influence of media, both old and new. Avid reader. Closet cynic. Loves to travel.

Related topics Tax

Ernst & Young Solutions LLP (EY) released its wish list for Singapore Budget 2022. As Singapore is still working to recover from the pandemic, the wish list focuses on short-term reliefs to help business and individuals deal with the immediate challenges, as well as longer-term measures to build a sustainable Singapore. The proposed measures centre on the following themes: 

  • Cushion the economic impact of COVID-19 pandemic

  • Enhance productivity and innovation

  • Enhance tax regime for certain sectors

  • Build a caring and cohesive society

  • Support workforce transformation

  • Build a sustainable Singapore 

Ms. Soh Pui Ming, Singapore Head of Tax, Ernst & Young Solutions LLP says:  

“The pandemic has disrupted and changed our notions of normality, with potential long-tail effects and consequences that are currently unknown and unfathomable. The only certainty is the uncertainties ahead. 

“The pandemic also brought into focus the haves and have-nots, with the issues of jobs displacement, cash flow to keep businesses going, inflation, and medical care spending under the spotlight. However, as Albert Einstein once said, ‘in the midst of every crisis lies great opportunity.’ Likewise, this pandemic has given Singapore and the world a unique opportunity to see, think and respond differently – and do what we would normally not have done. Hence, our proposals for Budget 2022, while continuing to target the immediate challenges, also examine the longer-term considerations to build a sustainable Singapore for future generations.”

Cushion the economic impact of COVID-19 pandemic

Temporary liberalisation of the loss carry-back rules

Cash is the lifeblood of businesses, particularly for small and medium enterprises (SMEs) amid the pandemic. For the year of assessment (YA) 2021, qualifying deductions (i.e., current year’s capital allowances and tax losses) may be carried back up to the three immediately preceding years of assessments. However, the carry-back losses are capped at S$100,000, which means a cash flow relief of S$17,000 in hard cash terms. 

Mr. Desmond Teo, EY Asean Private Tax Leader says:  

“We suggest an extension of the enhancement for carry-back to cover four immediately preceding years, i.e., a four-year carry-back to YA 2018, and increase the cap on qualifying deductions to S$1,000,000, or at a maximum tax revenue forgone of S$170,000 as a one-time amnesty. We further suggest this enhanced relief is sunset for YA 2022 only and extended for another year of assessment if subsequent economic conditions call for it.”

Liberalised pandemic relief on financing cost

The total asset formula determines how much of the interest expense incurred qualify for deduction. Under the total asset formula, the interest expense allocated to overseas investments is typically disallowed on basis that income from these investments is not taxable. Many businesses increased their borrowings during the pandemic. Applying the total asset formula to these borrowings in 2020, 2021 and 2022 would penalise these businesses for the wrong reasons.

Ms. Toh Shu Hui, Partner, Tax Services, Ernst & Young Solutions LLP says:  
“We suggest the Ministry of Finance (MoF) consider an exoneration of new loans and borrowings obtained in 2021 and 2022 from the total asset method (TAM). This suspension of TAM is to be only for businesses that have to draw down facilities or obtain new loans to finance their operations.” 

One-time pandemic relief to transfer cumulative unabsorbed capital allowances and tax losses of dormant or inactive companies to group companies

When group companies rationalise the legal entities in their group structures, they face a dilemma with loss-making and/or inactive companies still impregnated with unabsorbed capital allowances or tax losses (loss items) available for carry-forward. Group relief doesn’t help because it only allows the transfer of current year losses, but not the prior year accumulated losses. It is a “Hobson’s choice” – they keep these companies alive and continue to incur costs for their upkeep.

Ms. Soh Pui Ming, Singapore Head of Tax, Ernst & Young Solutions LLP says:  

“We suggest a one-time amnesty – qualifying these loss items for group relief, subject to a cap. To prevent abuse, this one-time relief is limited to group companies that are 100% owned. 

Further, we suggest the exclusion of loss items that were previously the subject of the shareholding waiver test.”

Enhance the 250% deduction for donations

Donors qualify for a 250% tax deduction for approved donations made to Institutions of a Public Character (IPC) and other qualifying recipients from 1 January 2016 to 31 December 2021. This 250% deduction for donations was extended to 31 December 2023 in Budget 2021. The current economic uncertainty suggests that a larger swathe of our population may continue to need help.

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:

“We suggest raising this relief to 300% for approved donations made in 2022 and 2023. The pandemic made it potentially challenging for IPCs to raise funds for increased charitable efforts. We hope a limited time enhancement to the deduction relief will go some way to relieve the funding pains of the IPCs.”

One-time age relief for individuals

For the older generation, the access to personal reliefs can be limited. For example, the child relief may no longer be available to them. They also have lower CPF reliefs as the contribution rates decrease at the age bands of 55-60, 60-65 and over 65. In short, as individuals age, they get fewer reliefs while more of their income is taxed.

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:

“We urge the government to offer a new relief aimed at the older generation – the Age Relief.

With a relief quantum of S$2,000-3,000, the lower-income group in the older generation should have little or no tax to pay. This would be meaningful to the older generation who are still gainfully employed.”

Enhance productivity and innovation

Enhance section 19B of the ITA

  • Allow Section 19B on due claim basis

Section 19B grants relief to a taxpayer who incurs capital expenditure to acquire the legal and economic ownership of qualifying intellectual property rights (IPR). The law currently requires an irrevocable election to claim this relief over 5, 10 or 15 years.  

Mr. James Choo, Partner, International Tax and Transaction Services, Ernst & Young Solutions LLP says:  

“In anticipation of BEPS 2.0, we suggest offering flexibility on due claim basis, no different from section 19/19A, instead of the present rigidity on the 5, 10 or 15 years claim duration.”

  • Remove legal ownership requirement 
    Among other things, legal and economic ownerships are prerequisites to a valid claim. Economic ownership alone is insufficient.

Mr. Chester Wee, Partner, International Tax and Transaction Services, Ernst & Young Solutions LLP says:  
“Currently, full or part disposal of IPRs will trigger a full clawback of tax amortisation where Section 19B relief has been claimed. We propose for partial clawback of tax amortisation in the event of part disposal of IPRs while allowing Section 19B relief to continue for the remaining IPRs retained by the company. In addition, we propose for the clawback tax to be based on the amount of tax benefits secured, taking into consideration the foreign tax credits that may have been forgone."

R&D tax credit or cash out

  • Consider the option of a tax credit

Reducing taxable income via an R&D tax deduction does not always result in additional funds for R&D activities. Countries like Australia, Canada, Ireland, New Zealand, the UK and the US are moving from R&D deductions to R&D credits, which are treated as above-the-line for accounting purposes and can be used to offset R&D expenditure. 

Mr. Johanes Candra, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:

“Effectively, the benefit goes back to a company’s R&D team to supplement their R&D budget regardless of whether the company is in a tax-paying or tax-loss position. The existing strict tax deduction mechanism reduces the effective tax rate (ETR) of the company and may not be a helpful tool due to the territorial ETR computation proposal under BEPS 2.0 minimum tax rate.”

  • Allow companies to cash out benefit

Mr. Johanes Candra, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says: 
“We suggest allowing companies to cash out R&D benefits up to a cap if they are in a tax-loss position. This has been done in Australia, Canada, Ireland, New Zealand, and the UK.”

Special regime to give certainty in tax treatment for industry consortiums formed to develop emerging technologies

To stay resilient and relevant, like-minded industry players often come together to form consortiums to share knowledge and expertise to create industry-wide technology standards or platforms. Such consortiums are generally formed via a simple company structure, where each member takes up a small interest in shareholdings with a view to exiting eventually once the co-development of the technology is completed or if the plans are aborted.

Mr. Chai Wai Fook, Partner, Tax Services says: 
“Having certainty in tax treatment upon exit, as well as specific tax exemption on royalty payments for access to intellectual property (IP) or interest payments on funding by investors into the consortiums, can help to the co-development of IP in Singapore, strengthening our hub status. In exchange for tax certainty or tax neutrality, safeguards such as mandatory inclusion of or collaboration with relevant Singapore agencies and tertiary institutions, together with registration of the IPs created with the Intellectual Property Office of Singapore, could be considered as prerequisites.”  

Enhance tax regime for certain sectors

Financial services

  • Expansion of qualifying activities within Financial Sector Incentive – Standard Tier (FSI-ST) 

EY proposes including transacting in or providing services relating to digital tokens (including cryptocurrencies), as well as providing services, including as an intermediary, in connection with transactions relating to financial products or instruments, as part of the qualifying activities of the FSI-ST Incentive so as to keep it relevant and attractive.

Ms. Amy Ang, EY Asia-Pacific FSO Tax Leader says: 

“The Monetary Authority of Singapore has started to grant licenses to players offering digital payment token services, and banks can trade on the Chicago Mercantile Exchange for futures in relation to cryptocurrencies. With cryptocurrency emerging as a class of financial asset and to reinforce Singapore’s position as a regional financial hub, it is timely to review and cover activities pertaining to such financial assets under the ambit of FSI-ST.

“As customers become more sophisticated, they have higher demands for comprehensive banking and financial advice, services, products or instruments. Hence, banks in Singapore have more tie-ups or enter strategic partnerships with other entities to provide such services to these clients. For greater certainty, we suggest adding as a separate qualifying activity the provision of services, including as an intermediary, in connection with transactions relating to financial products or instruments.”

Building a caring and cohesive society

Support for families – personal reliefs

With the changing demographic and the need to build a cohesive and inclusive society, we recommend the following:

  • Extension of reliefs for working mothers to their spouses 
    Child-raising is the joint responsibility of both parents. Hence, reliefs, such as the Grandparent Caregiver Relief (GCR) and Working Mothers Child relief (WMCR), which are traditionally provided only to working mothers, should be shared with the husband, with the condition that the wife is working.

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:

“Extending these reliefs to be shared with the husband reflects the equal and inclusive society that Singapore consistently strives for as well as acknowledges the teamwork in providing for a family.”

  • Special tax deduction for caregiver expenses for the aged or family members with special needs

Specialised caregivers and nursing aides are increasingly being employed by families to help with caring for aged family members or those with special needs. A special tax deduction on the costs associated with hiring these specialised caregivers and aides will help to defray the costs in caring for such family members.

Ms. Kerrie Chang, Partner, People Advisory Services – Mobility Tax, Ernst & Young Solutions LLP says:

“We propose that a tax deduction of up to S$10,000 be granted to taxpayers who incur costs to hire specialised caregivers and aides to take care of their family members. The deduction claim may be restricted to the lower of S$10,000 and the actual costs incurred to hire specialised caregivers and aides.”

Support for individuals for medical-related insurance policies and health relief

  • Tax relief for medical-related insurance policies 
    Currently, there is no relief for medical insurance premiums. Most Singaporean or Singapore permanent residents would be covered under medical insurance purchased through Medisave. However, there are gaps in coverage.  

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says: 
“It is now more common for individuals to obtain private health insurance coverage for more comprehensive cover in any unexpected events. Allowing relief on the premium (up to a cap) would be beneficial to the man on the street.

  • Tax relief for health screening

By 2030, 14% of the total population are expected to be 65 years old and above. Coupled with declining population growth rates, it is likely that the burden to care for aged parents with chronic health issues and who need long-term care will be heavier for the next generation.

Mr. Panneer Selvam, Partner, People Advisory Services – Mobility, Ernst & Young Solutions LLP says:

“To encourage preventive health care, we suggest a tax relief for medical costs incurred by those, for example, over 50 years old for health screening every other year, with a cap to prevent any abuse of the relief.”

Support workforce transformation

To emerge stronger from the COVID-19 crisis, enterprises must transform their workforce. It is crucial to put on a people’s lens when building enterprise resilience, with a focus on upskilling and capability development to build a future-ready workforce.

Strengthening SkillsFuture with a National Skills Index

Today, citizens can access to search for courses relevant to their upskilling and access to find and apply for appropriate open job roles.

Mr. Samir Bedi, Partner, People Advisory Services, Ernst & Young Advisory Pte. Ltd. says: 
“The LifeSG app can be enhanced with a National Skills Index to allow individuals to log and take stock of their skills inventory, see their skills development and career pathways, and identify suitable training opportunities that match their desired areas of upskilling. This will also allow better planning within the national skills ecosystem i.e., government, employers, trade unions and training providers, to support the upskilling efforts of all citizens.”

Building a sustainable Singapore

Sustainability has gained greater prominence amid international pressure on governments and businesses to demonstrate action for climate change. 

Supporting the journey towards an Extended Producer Responsibility (EPR) framework for packaging waste management by 2025

Singapore announced that an EPR framework for packaging waste management is to be implemetend no later than 2025. However, with the pandemic, more Singaporeans opted for food delivery and online grocery shopping while F&B outlets are also using more disposable utensils for hygiene reasons. This resulted in a significant increase in packaging waste.

Mr. Simon Yeo, EY Asean Climate Change and Sustainability Services Leader says:

“The government can consider setting aside an amount over the next three years to co-fund pilot programmes around packaging waste reduction, targeting the F&B and ecommerce sectors. The focus areas can be to incentivise first-movers to reduce packaging; collect packaging for reuse or recycling; conduct consumer or industry outreach on packaging 3Rs; encourage use of recycled content in packaging material; and improve recyclability of packaging.” 

Setting the pathway for a carbon ecosystem that aligns with national net-zero goals

There are plans for Singapore to become a global carbon services and trading hub and the Climate Impact X, a global marketplace and exchange for high-quality carbon credits was set up in 2021. However, presently, voluntary carbon credits cannot be used to offset obligations under Singapore’s current carbon tax system. 

Mr. Simon Yeo, EY Asean Climate Change and Sustainability Services Leader says:

“Creative and effective use of compliance and voluntary carbon schemes will be instrumental in achieving Singapore’s net zero ambitions. The government may consider allocating S$10m to S$20m over the next three years for co-funding research, setting standards and establishing a complementary set of policy and market-based instruments to support this net-zero timeline. The research should focus on searching for an incremental pathway to stricter environmental regulations aimed at deterring intensive carbon producing behaviours, while encouraging new norms.”

Encouraging early adoption of EVs

The recent Budgets have introduced various incentives to encourage the early adoption of electric vehicles (EVs).

Ms. Toh Shu Hui, Partner, Tax Services, Ernst & Young Solutions LLP says:  
“We recommend that expenses incurred on EVs by businesses should be fully tax deductible and capital allowances claimable on the purchase of EVs. Likewise, for GST, we suggest that input tax be claimable on the GST incurred for expenses incurred in relation to EVs.”


Notes to Editors

About EY

EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets.

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via EY member firms do not practice law where prohibited by local laws. For more information about our organisation, please visit

This news release has been issued by Ernst & Young Solutions LLP, a member of the global EY organisation.