Generally analysts predict Budget 2016 to be more neutral as compared to last year’s Jubilee budget, however remaining accommodative in order to help ease the strain of the economic slowdown. Some business federations and organizations such as the Singapore International Chambers of Commerce (SICC) and the Singapore Chinese Chambers of Commerce and Industry (SCCCI) have made their recommendations.
Do not fret if you have not managed to view or read some of the recommendations, as we will give you a sneak into Budget 2016 based on recommendations we’ve seen.
Many tax experts have proposed a tweak to the GST threshold to help offset the projected increase in social spending. Currently, only companies with an annual turnover of $1million and above are required to register for GST. By making more companies pay the GST, it’ll be able to boost revenue collection, thus providing an additional source of income for the government. This can be done if the government considers lowering the GST threshold per annum.
Ernst & Young (EY) in its recommendations published on the Singapore Business Review, have also urged the government to consider imposing the GST rules to overseas service provider, particularly for those who do their businesses through digital means citing that such transactions create a GST leakage and also a price disadvantage to domestic suppliers, as a result creating an uneven playing field.
Broaden Avenues to Assist Firms Restructure
The key challenge almost all business owners face; seems to be the inevitable restructuring of their companies because of rising competition and technological advances. Although the government continues to encourage them to find global growth opportunities, its current incentives could be broaden and focused on rewarding growth.
As many SMEs have just embarked on their productivity journey, enhancements to the Productivity and Innovation Credit (PIC) scheme such that it is granted based on productivity gains will encourage even more SMEs to strive greater productivity. SMEs will immensely benefit if the government is able to enhance such schemes, especially so to help these firms through the headwinds.
Enhance Access to Foreign Capital and Finance
The safe harbour rule exempts gains’ made from disposal of investments in equities from tax, and this exemption is due to expire in 2017. Making the safe harbour rule permanent will benefit SMEs who seek the support of foreign equity while at the same time provide investors with certainty that the capital gains will not be taxed, ultimately helping these firms plan for the long-term.
Other recommendations look into tweaking tax rates, extension of the foreign worker levy and a review of the Entrepass Scheme.
As this is the first year for the new term of government since last September’s General Elections, the government is likely to be ‘particularly prudent’ with the Budget. But we are optimistic that the Budget 2016 will have the quintessential key drivers to transform Singapore’s value added economy to a value creating economy, and eventually bolster this island nation’s position as the undisputed business hub in the region.