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The Straits Times (Singapore)
Auditors unveil Budget wishlists
Among firms' proposals: reduce business costs and extend tax rebates
TWO of the big four accounting firms have unveiled their wishlists for the next month's Budget with calls for more business-friendly policies dominating.
PricewaterhouseCoopers (PwC) laid out several broad aims last week, including reducing business costs, making Singapore a more attractive place to start a company, providing for citizens' medical and retirement needs, encouraging procreation and protecting the environment.
The Ernst & Young (E&Y) list out yesterday proposes measures ranging from lowering business borrowing costs to extending tax rebates to companies and individuals, and improving productivity.
PwC suggested cutting the headline corporate tax rate from 17 per cent to 15 per cent.
'Of course, tax rate reductions also make newsworthy international headlines - a good way to attract the attention of potential foreign investors at a time when businesses are looking to invest in the Asia Pacific region,' it said.
E&Y's head of tax, Mr Adrian Ball, said while he did not expect the corporate tax rate to be 'cut further at this point in time... we hope the Government will extend for another year the corporate income tax rebate and SME (small and medium-sized enterprise) cash grant that was conferred for the 2011 tax year'.
'To further benefit SMEs, a 25 per cent corporate income tax rebate, capped at $10,000, will be more helpful. For companies which pay little or no tax because of low or no profits, it may be more meaningful to increase the cash grant to 10 per cent of the company's revenue, capped at $10,000.'
PwC said Singapore could be a more attractive location for holding companies if the Government amended the legislation to treat a company incorporated here as a tax resident to minimise uncertainty.
E&Y tax partner Poh Bee Tin added that a permanent tax exemption for foreign income would help companies improve cash flow.
'In the long run, it will further buttress Singapore's position as a holding company location and put it on a par with Malaysia and Hong Kong, both of which already grant full tax exemption on foreign-sourced income.
'If a permanent tax exemption is not possible, then a temporary tax amnesty would at least help companies ride over the rough economic period.'
PwC and E&Y recommended liberalising the rules for the Productivity and Innovation Credit (PIC) Scheme, which offers tax deductions for companies that invest in improving output and driving innovation.
PwC also suggested that the Government could continue increasing the mandatory employers' CPF contribution until the 20 per cent rate is reinstated while also allowing higher voluntary CPF contributions for older workers.
It added that individuals should not be allowed to use CPF savings to finance property, investments and children's education.
'CPF is intended to provide for retirement needs. Allowing CPF to be used for these investments results in an asset- rich, cash-poor retirement and contributes to an artificially inflated market for HDB property.'
PwC said Singapore should impose environmentally related penalties on companies, such as a carbon tax, to encourage sustainable business practices.
The Budget is due next month but the date has not been announced.
Yasmine Yahya & Melissa Tan