SINGAPORE: Singapore Institute of Accredited Tax Professionals (SIATP) has called for the upcoming 2018 Budget to introduce targeted tax incentives to boost the nation’s productivity and help businesses take advantage of emerging technologies. In a statement on Thursday, the professional body proposed a raft of measures: enhance the existing research and development (R&D) scheme introduce a double deduction scheme for training expenses; encourage R&D activities in startups and small and medium enterprises (SMEs) and introduce a fintech tax incentive. With the expiry of the Productivity and Innovation Credit (PIC) scheme in year of assessment 2018 (YA 2018), SIATP proposed that either the Economic Development Board or Spring Singapore could oversee a scheme where qualifying expenditure on approved R&D projects could see an additional 100 per cent to 200 per cent deduction, subject to a suggested annual cap of S$500,000. This would incentivise SMEs to innovate and attract startups to establish a presence in Singapore. Under the PIC scheme, companies can claim 400 per cent tax deductions up to S$400,000 or 60 per cent cash pay out up to S$100,000, for making investments in innovation and productivity improvements. The recommendation comes amid Thailand granting up to 300 per cent tax deductions for eligible expenditures incurred on R&D activities carried out in-country, and Hong Kong’s implementation of a 300 per cent tax deduction on the first HK$2 million (S$338,000) of qualifying R&D expenditure, with a 200 per cent deduction on expenditure after. The expiry of the PIC scheme would also mean there will not be any specific tax schemes for businesses to offset training costs, to which SIATP suggested the introduction of a double deduction for training expenditures, with a suggested annual spending cap of S$500,000. To further develop the fintech ecosystem in Singapore, SIATP also suggested a concessionary tax rate of 10 per cent or lower targeted at the fintech sector to help businesses innovate in the areas of mobile or cashless payment systems, blockchain technology, cryptocurrency and initial coin offerings. This would be on top of current initiatives like the Financial Sector Technology and Innovation Scheme overseen by the Monetary Authority of Singapore. On Wednesday, the Singapore Business Federation (SBF) – in a recommendation to the Budget – had floated the idea of developing and attracting “unicorns” to Singapore (startups valued at over US$1 billion) as part of a proposed growth strategy by positioning the Republic as a hub for high-potential startups and investors.
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