EY’s reactions to Singapore Budget 2016

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SINGAPORE, 24 March 2016 EY today released its reactions to the Singapore Budget 2016 announcement.

Overall views

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“A comprehensive and all-encompassing Budget with transformation of enterprises and industries through innovation taking centre stage.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“A forward-looking Budget for Singapore to set the stage as Singapore begins its journey to SG100 – transform our economy and strengthen society.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The three key words in Budget 2016 are Resilience, Transformation and Innovation.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“A Budget that touches the lives of all Singaporeans and workers as well as provides life lines to Singaporean businesses, not forgetting those in the heartlands.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“The call for businesses to internationalise and to innovate is heard loud and clear. Transformation of enterprises and industries through innovation is key to success. Growth through merger and acquisition is also encouraged. The people front is not neglected. Investing in people as businesses transform is integral to greater success.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“The Budget measures send a very strong message that the Government is here to help.”

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“Not only does the Budget provides near term measures to tide over the current economic slowdown, it also introduces measures for the next stage of development, like the New Industry Transformation Programme.”

Mr. Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The 2016 Budget is Singapore's own version of TPP – Tripartite Partnership amongst the businesses, people and government to work together to transform our economy and build a resilient and caring society.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The unprecedented expenditure on investment in infrastructure and security as well as an ageing population means that it is imperative to raise productivity and achieve economic growth to fund these investments.”

Mr. Grahame Wright, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“Budget 2016 sets the direction towards SG100 by enabling transformation on how we live, work and play through a focus on learning, building and creating. The Budget focuses on how we can take pole position when broader global recovery happens.”

Ms. Lim Gek Khim, Partner and Asean Tax Quality Leader, Tax Services, Ernst & Young Solutions LLP says:
“Government's decision to keep property-related measures is expected.”

Business Grants Portal and National Trade Platform

Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says:
“The Business Grants Portal for grant application and the National Trade Platform point towards the government efforts to ease the cost of doing businesses.”

Mr. Yeo Kai Eng, Partner, GST Services and Asean Indirect Tax Leader, Ernst & Young Solutions LLP says:
“Long overdue, a Business Grant Portal to make it easier for companies to access the right grant.”

Mr. Shubhendu Misra, Partner, Indirect Tax – Global Trade, Ernst & Young Solutions LLP says:
“The National Trade Platform is a good step to enhance and integrate the various trade facilitation measures provided by the government and should make it easier for the industry to tap on them. These are incremental steps that should go a long way in helping the industry transform.”

Mr. Russell Aubrey, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The new Business Grants Portal should provide a one-stop-shop, thus simplifying applications by businesses for suitable grants and incentives.”

Productivity and innovation

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The growing recognition that driving productivity growth would require more targeted and sector-specific measures is a move in the right direction. The move to develop initiatives that are at an industry level will catalyse the industry transformation at a much faster pace.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The expiry of the Productivity and Innovation Credit (PIC) is not unexpected. With concerns over abuse and the lacklustre results on productivity growth, it is no surprise that the PIC would be allowed to lapse and the budget reallocated to more targeted and sector specific initiatives.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“It is heartening to note that the journey towards innovation and R&D will continue to be important. It is disappointing that the R&D enhanced tax deductions were not further liberalised, especially with the lapse in the PIC, to give this initiative another push forward.”

Mr. Desmond Teo, Partner, Financial Services Tax, Ernst & Young Solutions LLP says:
“In supporting specific financial service industry sectors such as FinTech, Singapore has chosen to take a targeted approach in funding some of these financial institution projects in addition to broad-based initiatives such as enhanced deduction for qualifying R&D.”

Shifting from broad-based to targeted support

A) For SMEs

Mr. Chai Wai Fook, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The extension of the double tax deduction scheme for internationalisation by another four years will allow more SMEs expanding overseas to benefit from the scheme and gain a foothold on the global stage.”

B) For intellectual property

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The liberalisations to allow for flexibility on the writing-down period for intellectual property acquisition costs to 10 years and 15 years, would enhance Singapore’s attractiveness as a location for acquiring and developing intellectual property, particularly given that many companies with significant operations in Singapore may be benefitting from other tax incentives.”

C) Other areas

Mr. Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP says:
“The proposed increase in M&A allowances cap coupled with the extension of the certainty of non-taxation of gains on disposal of shares, will further encourage Singapore enterprises to consider acquisitions and consolidations as a means to meet challenges and be ready to seize opportunities as they come.”

Mr. Desmond Teo, Partner, Financial Services Tax, Ernst & Young Solutions LLP says:
“It is great that the extension of the certainty of non-taxation of gains on disposal of shares is announced a year ahead before it is scheduled to expire in May 2017. This allows companies to plan ahead and provides tax certainty for disposal of their investments. However, it remains narrow and continues not to fully meet the needs of companies that make equity investments beyond ordinary shares.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The liberalisation of the tax incentives for global trading and maritime sectors is certainly a welcome move given the adverse environment these industries are currently facing. Support for these sectors, which have been important pillars of Singapore's economy, will send a strong message on the continued importance of the role these sectors play.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The treasury centre tax incentive has been around for a long time and while it has been well received, with increased competition from the region to attract treasury centres, it is timely that the Finance and Treasury Centre (FTC) tax incentive regime gets a refresh.”

Ms. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says:
“The enhancements to the finance and treasury tax incentive from a concessionary tax rate of 10% to 8%, along with liberalisations on the scope of activities allowed to a FTC, would provide a significant boost to encourage companies to use Singapore as a preferred hub for such activities. The tax rate of 8% would make Singapore a globally competitive jurisdiction for multinationals interested in conducting such activities in Asia.”

Mr. Desmond Teo, Partner, Financial Services Tax, Ernst & Young Solutions LLP says:
“While Singapore’s financial services sector has performed well, Singapore is striving to push the more mature industry sectors such as insurance up the value chain through specialisation, technology and skills.”

Personal income tax relief cap

Ms. Kerrie Chang, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“Notably absent this year is the announcement of any one-off personal tax rebates to reduce the tax cost of all resident taxpayers. This must be disappointing for taxpayers especially in light of continuing challenges with high costs of living and amidst a slowing economy.”

Ms. Kerrie Chang, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“The cap on personal reliefs will impact high-wage working mothers with dependent children. This may disincentivise various voluntary contributions, e.g., CPF top-ups to set aside money for retirement needs either for themselves or for family members. For reliefs that can be shared by spouses, for e.g., Qualifying Child Relief, taxpayers will need to better plan so that they can maximise the tax savings.”

Ms. Kerrie Chang, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“Those who will be impacted by this change are high-wage working mothers with two or more dependent children. The Working Mother Child Relief (WMCR) that is currently enjoyed by working mothers ranges from 15% to 25% of the mother’s earned income (subject to a cap), depending on the number of children she has. The more children, the higher the quantum of WMCR. There are also other additional reliefs available to working mothers/married women, which can overall increase the total personal relief claims. This announcement seems to be inconsistent with the push to encourage working mothers to have more children.”

Social measures for family, seniors and individuals

Mr. Samir Bedi, Partner, People Advisory Services – Talent & Reward, Ernst & Young Solutions LLP says:
“With the proportion of seniors expected to double by 2030, Budget 2016 sets up the support through a series of measures designed to protect and enhance the seniors’ life.”

Mr. Samir Bedi, Partner, People Advisory Services – Talent & Reward, Ernst & Young Solutions LLP says:
“Expectant parents will rejoice with the $3,000 Kidstart contribution to the child development account but the question remains whether it will give impetus to our low birth rate.”

Mr. Yeo Kai Eng, Partner, GST Services and Asean Indirect Tax Leader, Ernst & Young Solutions LLP says:
“With many children today preoccupied with their mobile devices and computer games, as a parent, I am excited about the Outdoor Adventure Education Masterplan, including the new Outward Bound School.”

Ms. Kerrie Chang, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“I’m not surprised that there are not many ‘goodies’ at the individual tax front as there has already been tremendous focus in the past Budgets on individuals and households, with more attention on the lower income group and the pioneer generation. For this year, the announcements in this Budget have been holistic and inclusive, to encompass Singaporeans from all generations and all walks of life.”

Mr. Grahame Wright, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“As we continue to develop a caring and resilient society, Budget 2016 touches all aspects of the nation’s demographics from birth to youth to adults to seniors.”

Ms. Wu Soo Mee, Partner, People Advisory Services - Mobility, Ernst & Young Solutions LLP says:
“I like the various support introduced in this Budget for the different groups – the seniors, the low-wage workers, persons with disability and even for the children.” 

Building a caring society

Mr. Samir Bedi, Partner, People Advisory Services – Talent & Reward, Ernst & Young Solutions LLP says:
“The Business IPC Partnership scheme is a refreshing perspective to recognise the value of corporate social responsibility activities and encourage more businesses to contribute their employees’ skills to a greater cause. This also provides an avenue to the workforce to connect with IPCs in a more meaningful way.”

Mr. Yeo Kai Eng, Partner, GST Services and Asean Indirect Tax Leader, Ernst & Young Solutions LLP says:
“‘Our Singapore Fund’ should spur more Singaporeans to be more involved in community projects.”

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The views expressed by the makers of each statement are not necessarily those of Ernst & Young Solutions LLP. Ernst & Young Solutions LLP disclaims all liability and responsibility to you in respect of the content in this document.

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