Techblog
Singapore Budget 2015: Reactions from the Big 4 audit firms
Post-Budget 2015, the myBusiness team brings you the reactions from the Big 4 audit firms in Singapore, and highlights the responses from key executives.
Before the highly anticipated delivery of the Budget statement on February 23, the Big 4 audit houses - namely KPMG, PwC, Ernst & Young and Deloitte - released their wishlists and thoughts on what would be highly beneficial for the country's new financial year.
Amidst the introduction of new key initiatives and measures to help SMEs during the statement delivery, we look at what taxation experts and other analysts from audit firms think about the various new schemes and adjustments announced during Budget 2015.
General Opinion about Budget 2015
Head of tax services at Deloitte, Low Hwee Low, called the budget a birthday budget, considering this year marks Singapore's 50th birthday.
Ernst & Young called Singapore's Budget 2015 one of the most comprehensive ones with 'ang pows' for everyone. "The winners are clearly the people and the SMEs," said Chung-Sim Siew Moon, Partner and Head of Tax.
Over at PwC, Tax Leader Chris Woo described Budget 2015 as the"Darwinian Hong Bao Budget", where "Incentives and grants enhance the skills of the workforce," he said.
Tham Sai Choy, Chairman of KPMG Asia Pacific and Managing Partner at KPMG in Singapore referred to the budget as being "strong and forward-looking.
Improved measures for business innovation
The government's efforts in focusing on innovation was lauded by all four audit houses.
"We are especially heartened that innovation will be more widely recognised and made more accessible to SMEs," said Tham Sai Choy, Chairman of KPMG Asia Pacific and Managing Partner at KPMG in Singapore."This will position Singapore companies well for regional opportunities and competition with the advent of the ASEAN Economic Community later this year." he continued.
"SMEs often face challenges of assessing government assistance schemes," said Lennon Lee from PwC's Entrepreneurial & Private Clients Tax division." The Finance Minister has repeatedly mentioned the easier application process for Capability Development Grants (CDG) for innovative projects that are below $30K by SMEs. Look forward to more SMEs being able to enjoy CDG to enhance productivity."
Ernst & Young's Chia Seng Chye ,Partner, Tax Services, praised the government's determination in helping firms be more innovative as well as the fine tuning made to grants and the debut of new schemes to help SMEs expand outside of Singapore. "SMEs will be encouraged by the government's slew of new and enhanced grants and incentive schemes to aid in their innovation and internationalisation efforts," he said.
Transition Support Package (TSP): Wage Credit Scheme (WCS), Corporate Income Tax Rebate and PIC Schemes
Extending the corporate tax rebate for an additional two years was welcome by all four firms.
Tax partner at KPMG, Leonard Tan, said the extension will give a boost to SMEs during the current period of sluggish growth.
The strategic move by the government to lower the corporate tax rebate to $20,000, as well as the further support for SMEs' internationalisation and the extension of the wage credit scheme, were also applauded.
Mr. Chai Wai Fook, Partner of Tax Services said: "The extension of the corporate tax rebate by another two years, albeit with a reduced cap of S$20,000 is welcomed for all companies, especially for cash-strapped SMEs which can reinvest the tax savings to upgrade their capabilities and drive innovation."
"The extension of the Wage Credit Scheme to 2017 will help SMEs to attract and retain their workforce - a key factor to grow and compete overseas," he said.
Tay Hong Beng, Head of Tax at KPMG also noted that a high number of tax proposals for the year are skewed towards Singapore businesses, and enhanced incentives to promote innovation and internationalization are a step in the right direction for the country's growth in a maturing economy. However, a more tailored PIC scheme to target businesses at different stages of development would have been more relevant to drive business growth and increase job opportunities.
SkillsFuture
Largely praised at PwC is the newly introduced SkillsFuture initiative. According to Lennon Lee of the Entrepreneurial & Private Clients Tax department at PwC Singapore, SkillsFuture is a "well thought-out scheme benefitting all Singaporeans, especially school-going children and mid-career individuals."
Deloitte's Director of taxes, Daniel Ho, highlighted the creative SkillsFuture scheme as one that would "encourage continuous learning for workers, with a fund created for each individual that will be topped up regularly and can be used for upgrading and training purposes."
"To make it more effective, perhaps the government could have considered a further step of subsidizing employers who grant workers leave to attend such courses," added Ho.
Personal Income tax changes
The 2% marginal tax rate increase for top earners did come as a "surprise", but it is consistent with the government's continued focus on a more progressive tax system. However, the hike might be perceived to negatively impact Singapore's "competitiveness", says Girish Vikas Naik, Director of Global Mobility at PwC's International Assignment Services (Singapore).
With regards to the 50 per cent tax rebate, capped at S$1,000, Kerrie Chang, Partner, Human Capital says: "The tax rebate demonstrates the government's focus to ensure that the benefit is most felt by middle and upper-middle income earners."
Spurring Internationalisation
Adrian Ball, Managing Partner, Tax - ASEAN, at Ernst & Young said the funding for employees to further their skills coupled with the the keenness shown in wanting to help raise innovation showed that the government had faith in SMEs and Singaporeans.
"The government understands that SMEs need to venture overseas in order to grow and be increasingly competitive," said Ball."It is positive to see continued support in helping SMEs ‘punch above their weight' and develop a greater international footprint."
At KPMG, Tax Partner Mak Oi Leng welcomed the introduction of the new international growth but said "details on how to distinguish the foreign-sourced income vis-à-vis Singapore sourced income for the purpose of computing the incremental qualifying income should be clearer."
Encouraging Mergers & Acquisitions
Lee Tiong Heng, a tax partner at Deloitte said the firm was wishing for an extension of the M&A allowance scheme but what the Budget 2015 proposed was better.
"Besides extending the scheme, the minister has surprised us by increasing the M&A tax allowance to 25% from 5% and lowering the qualifying shareholding threshold to 20%," she said.
"This will be of significant help for SMEs and businesses which are seeking for inorganic growth and consolidation."
Tax Partner at KPMG, Chiu Wu Hong said he hoped the enhancements to scheme will encourage SMEs to consider M&A related growth plans.
For the full reaction reports please visit the links below:
KPMG: http://www.kpmg.com/sg/en/pressroom/pages/pr20150223.aspx
PWC: http://www.pwc.com/sg/en/pressroom/pressrelease20150223.jhtml
E&Y: http://www.ey.com/SG/en/Services/Tax/EY-singapore-budget-2015-EYs-reactions-to-singapore-budget-2015
Deloitte: http://www2.deloitte.com/sg/en/pages/tax/articles/deloitte-reactions-to-sg-budget-2015.html