Overview

Tham Sai Choy, Chairman of KPMG’s Asia Pacific Region and Managing Partner, KPMG in Singapore

• The continued emphasis on innovation in this year’s Budget helps to prepare Singapore for the future. As other countries also move up the value chain, having an efficient and educated workforce, with their capabilities harnessed through enterprises with strong market positions, will enable Singapore’s economy to stay competitive and relevant in a globalised world.
• A finely-balanced Budget that recognises both social and business needs, it builds on our past successes in Singapore to create a brighter future. The various initiatives attend to the needs of our people, while supporting the growth ambitions of our local businesses.
  

Satya Ramamurthy, Partner and Head of Government & Infrastructure at KPMG in Singapore

• The Fresh Start Housing Scheme further extends the social safety net and will level the playing field for the less privileged in the future.

Ajay Sanganeria, Tax Partner at KPMG in Singapore

• Platforms like 'SG Innovates' and 'National Trade Platform' together with fiscal support is a great combination that allows companies to tap into support areas in a simplified manner.

Tan Chee Wei, Tax Partner at KPMG in Singapore

• The strengthening of tax incentives reinforces Singapore's practice of promoting tax incentives with commercial substance, even as the tax landscape evolves due to the OECD’s BEPS action plans.
• The extension of safe-harbour rules on gain from disposal of equity investments will provide certainty for companies looking to undergo restructuring in the next 5 years.
  

 

PIC Scheme 

Tay Hong Beng, Head of Tax at KPMG in Singapore

• Transforming enterprises is a key focus in this year’s Budget. There is definitely a shift in the approach to achieve this through more financial rather than tax incentives. This is most apparent from the announcement that the PIC scheme will be allowed to lapse after the Year of Assessment 2018.
• Although the PIC scheme will not be extended after it expires in 2018, it would have been good to modify the scheme to effect a more balanced shift from productivity to value creation for the remaining 2 years.
  

Harvey Koenig, Tax Partner at KPMG in Singapore

• The decision to discontinue broad-based schemes like PIC in favour of targeted schemes may leave some businesses without support in their productivity and innovation efforts. The downside of targeted schemes is that they involve an application process which many smaller companies may not have the resources to undertake.

Tan Chee Wei, Tax Partner at KPMG in Singapore

• Lower cash pay-out and expiry of PIC scheme in YA2018 signals an intention to focus on the broader Industry Transformation Programme.

 

Help for SMEs 

Chiu Wu Hong, Head of Enterprise at KPMG in Singapore

• This year’s Budget focuses on 2 broad groups - the small-medium enterprises (SMEs) and the people. It highlights the importance of a concerted partnership between enterprises, trade associations and chambers (TACs), government agencies, and unions. This provides continuous support for our people to manage a weaker and challenging economy.
• This is a Budget for the small-medium enterprises (SMEs). It addresses their short term measures and helps them to continue structuring and growing domestically and also compete internationally. SMEs need to transform themselves in the way they operate, automate and collaborate with an industry centric approach.
  
• It is heartening to see that the Budget adopts a more sector focused approach with calibrated measures to help the different needs and challenges faced by small-medium enterprises (SMEs).
  

Harvey Koenig, Tax Partner at KPMG in Singapore

• This Budget is friendly to small-medium enterprises (SMEs), providing access to funding and support for automation and internationalisation, and improving access to government grants. However, there could have been more support for innovation and value creation; hopefully this will be addressed in the recommendations by the Committee on the Future Economy.
• The enhancement of the M&A incentive, extension of double tax deduction incentives and exemption of capital gains for share disposals are welcome measures and will provide strong support for Singapore businesses looking to internationalise. This timely enhancement will help SMEs take advantage of the ASEAN Economic Community.
  

Toh Boon Ngee, Tax Partner at KPMG in Singapore

• The automatic exemption of gains from disposal of shares under Section 13Z can now continue to apply till at least 31st May 2022. The importance of this new change goes beyond providing tax certainty. This change, coupled with the enhancement of M&A allowances, helps facilitate SMEs’ growth via mergers and acquisitions.

 

Non-taxation of Equity Divestments

Tay Hong Beng, Head of Tax at KPMG in Singapore

• The extension of the non-taxation of gain from equity investment is most welcome in this economic environment. Companies can explore new business models to restructure their operations and streamline their investments to unlock value and achieve a higher level of operational efficiency without having to worry about any incidental tax costs.

Alan Lau, Tax Partner at KPMG in Singapore

• The Government's intention to extend the non-taxation of equity divestments for another 5 years (till 2022) is a welcomed piece of news for taxpayers from many industries. The extension would continue to provide upfront tax certainty and is an expected boost for companies intending to pursue restructuring exercises or divestment strategies.

Larry Sim, Tax Partner at KPMG in Singapore

• The extension of the non-taxation rule on gains derived by a company from disposal of equity investments would provide certainty to companies intending to restructure for consolidation and growth. This would further enhance Singapore’s attractiveness as a business location and lower compliance costs for companies.

 

Corporate Tax 

Anna Low, Tax Partner at KPMG in Singapore

• The increase in the corporate tax rebate largely benefits small-medium enterprises (SMEs) who are paying tax. Start-ups who are making losses will not be able to enjoy the benefits. In fact, the reduction in PIC cash pay-out may be a let-down for start-ups who have invested in PIC initiatives and are cash-strapped.

 

Intellectual Property 

Tay Hong Beng, Head of Tax at KPMG in Singapore

• Flexibility in writing-down allowance claim of intellectual property (IP) will enable taxpayers to spread the tax benefits over a longer period of time to match the revenue inflow. It also allows preservation of the allowance which may be lost in the event of a substantial change in shareholdings of the company.

Ajay Sanganeria, Tax Partner at KPMG in Singapore

• The flexibility to claim writing-down allowances on the acquisition cost of Intellectual Property (IPs) over a longer period will help companies to take full advantage of foreign tax credits on foreign royalty income arising out of such IPs. Previously these were often lost due to higher amount of claims squeezed over a fixed period of five years. While we do not have a "Patent Box" regime yet, tweaks like this go a long way in encouraging companies to bring IPs to Singapore as these help to minimise the tax impact..

 

Real Estate

Leonard Ong, Tax Partner at KPMG in Singapore

• I’m sure the real estate community will be disappointed that the property cooling measures introduced previously to stabilise the property market were not removed or at least tweaked in view that the market has cooled considerably since 2011.

 

Innovation 

Lyon Poh, Head of Digital + Innovation at KPMG in Singapore

• Innovation is clearly a major theme of this year’s Budget. While we await more details, the announcements are clearly moves in the right direction. Going beyond supporting start-ups, helping them eventually accelerate business adoption and commercialisation will be just as important.
• I agree with the Minister’s comment that innovation goes beyond technology. It is not mere automation but changing the mind-set on how future business should be conducted in a digital world. You cannot expect to find new growth opportunities by combing the same street faster and fishing longer from the same pond.
  

 

GST 

Lam Kok Shang, Head of Indirect Tax at KPMG in Singapore

• I am glad that the Minister has not reduced the GST registration threshold. The current legislation is already flexible enough to allow businesses to voluntarily register for GST, if need be. Smaller businesses can be relieved from compliance costs arising from having to register for GST.

Gan Hwee Leng, Tax Partner at KPMG in Singapore

• In addition to the generous financial support for families, children and the elderly, it’s also a welcome relief that the GST rate remains at 7%.

 

Individual Tax

BJ Ooi, Head of Global Mobility Services at KPMG in Singapore

• The cap on total reliefs of $80,000 will take effect from YA2018 – High income female workers with children will feel the impact, and should take measures to prepare for this.
• The cap of $80,000 on total reliefs that can be disappointing for those who have been claiming the various reliefs, especially female high income earners with at least 2 children. Coupled with the higher top marginal rate of 22%, it appears that certain groups of individual taxpayers would be paying more taxes.