News release. Ernst & Young s reactions to Singapore Budget Overall:

Transcription

1 News release Ernst & Young s reactions to Singapore Budget 2013 Overall: Adrian Ball, Head of Tax Services, Ernst & Young Solutions LLP says: The Government is sending a clear message that it is focusing on those industries where Singapore is, and can be, competitive. It is not offering sweeteners to defray costs. Adrian Ball, Head of Tax Services, Ernst & Young Solutions LLP says: Survival of the fittest! This is a Darwinian budget for businesses in Singapore. Poh Bee Tin, Partner, Tax Services, Ernst & Young Solutions LLP says: A quick roll call of the winners: SMEs, and lower and middle income Singaporeans. Russell Aubrey, Partner, Transaction Tax, Ernst & Young Solutions LLP says: The Minister emphasised the importance of productivity growth, and made the link between this and social policy several times. In essence, higher productivity is the only sustainable way to create enduring growth and jobs, and increase the real wages of Singaporeans. Cheong Choy Wai, Partner, Tax Services, Ernst & Young Solutions LLP says: The Budget has shown to be responsive to feedback and really speaks to Singaporeans. Mildred Tan, Managing Director, Ernst & Young Advisory Pte Ltd says: Companies are now encouraged to redesign jobs and consider introducing flexi-work practices and smart work place initiatives. With the fibre optics network in place, Singapore is now better-placed to support a more mobile work force. Adrian Ball, Head of Tax Services, Ernst & Young Solutions LLP says: Budget 2013 is centered on transforming our SMEs to make a quantum leap. The fiscal schemes to boost SME s competiveness are there for the taking.

2 2 Cheong Choy Wai, Partner, Tax Services, Ernst & Young Solutions LLP says: Budget 2013 seeks to strike a fine balance between pursuing economic growth and social inclusiveness. Three-year transition plan Wage credit scheme Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says: The Wage Credit Scheme is a generous move by the government to help SMEs cope with wage increases during what is anticipated to be a painful transition period. PIC bonus Cheong Choy Wai, Partner, Tax Services, Ernst & Young Solutions LLP says: Introduction of the PIC bonus is encouraging. Hopefully this will be combined with a simplified process so that small businesses will benefit from it. Corporate income tax rebate Amy Ang, Partner, Tax Services Ernst & Young Solutions LLP says: The corporate tax rebate provides short term measure to ease the transition phase. But with more spending expected, coupled with grants and incentives, the benefit may only be felt if the rebate is extended beyond the three-year transition. Amy Ang, Partner, Tax Services Ernst & Young Solutions LLP says: For loss making companies, a cash grant in lieu of the corporate tax rebate will be the better pill. Tightening of foreign worker policies Grahame Wright, Partner, Human Capital, Ernst & Young Solutions LLP says: The further tightening of foreign labor policies, coupled with a more liberalised Productivity and Innovation Credit scheme, will push and pull companies to invest in driving higher productivity. Strengthening productivity incentives

3 3 Land Productivity Grant Mildred Tan, Managing Director, Ernst & Young Advisory Pte Ltd says: Due to the tight labour market and cost of doing of business in Singapore, the government is now providing support for companies to consolidate and reinvent themselves. This grant will be useful in helping companies who may need to relocate some operations abroad. Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP says: The land productivity grant has the potential to be a game-changer. It is a strong signal of the government's acknowledgment that SMEs will need to examine all options, including relocation of some activities offshore, to ensure survival in this highly competitive global environment. Strengthening the SME sector Poh Bee Tin, Partner, Tax Services, Ernst & Young Solutions LLP says: It would be ideal if the government could also consider helping SMEs that are already pro actively helping themselves by increasing the PIC cash payout limits beyond the existing S$60,000. Mildred Tan, Managing Director, Ernst & Young Advisory Pte Ltd says: Public and private sector teaming and collaboration, and linking SMEs to public research institutions and technology, will help companies to collaborate and co-innovate. By taking a sectoral approach, this will enable industrial transformation that will far outweigh the benefits of productivity gains of any one company. Promoting industry Amy Ang, Partner, Tax Services Ernst & Young Solutions LLP says: By embarking on an industryfocused partnership, the Government has taken a proactive move to further boost Singapore s long-term competitiveness through achieving targeted results rather than implementing a one-size fits all approach. Cheong Choy Wai, Partner, Tax Services, Ernst & Young Solutions LLP says: As Singapore attracts foreign investments and addresses investors' concerns with rising business costs, providing assistance to relocate offshore some of the activities is welcomed.

4 4 Building an inclusive society Education Amy Ang, Partner, Tax Services Ernst & Young Solutions LLP says: Providing equal access to quality education is key to enhancing social mobility and building an inclusive society. This is a defensive mechanism against a widening income gap. An educated and quality workforce will enhance Singapore s competitiveness in the long run. Personal income tax rebate Wu Soo Mee, Partner, Human Capital, Ernst & Young Solutions LLP says: The granting of 30% and 50% tax rebate is a pleasant surprise as there was no such rebate granted last year when the new reduced tax structure was first implemented. GST voucher Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: GST voucher, introduced last year, is a simple, effective and permanent way to provide direct GST relief to help lower income families without the need to overhaul the our existing GST system. The relief can be further enhanced, as and when required, as seen in the one-off doubling of the usual amount for this year. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: The permanent GST voucher, introduced last year, allows the government to provide direct GST relief to lower income families without modifying the existing GST system. It is also flexible as seen in the one-off doubling of the usual amount for this year. Yeo Kai Eng, Partner, GST Services, Ernst & Young Solutions LLP says: The beauty of the permanent GST voucher - the government can increase the GST relief for lower income families as and when required, as seen in the one-off doubling of the usual amount as announced in this Budget. Personal tax

5 5 Wu Soo Mee, Partner, Human Capital, Ernst & Young Solutions LLP says: The removal of the concessionary tax treatment for housing and hotel accommodation will remove opportunities to reduce tax liability by receiving housing benefit in kind. Wu Soo Mee, Partner, Human Capital, Ernst & Young Solutions LLP says: The removal of tax concessionary treatment for housing benefits will mean that high-earning expatriate employees will no longer be able to enjoy substantial tax savings through planning their remuneration package. Hong Kong still has tax concession for housing benefits granted to employees. What this means is that a Singapore employee may have a lower take-home pay compared to a Hong Kong employee enjoying the housing benefit. Wu Soo Mee, Partner, Human Capital, Ernst & Young Solutions LLP says: It is quite common for a foreign employee to be provided with temporary housing in a hotel. The taxable value is a prefixed monthly value of $250 per adult plus 2% on base salary paid during the hotel accommodation period. This amount will work out to be substantially lower than the actual hotel costs for the period. Again this will increase the tax costs thus reducing the take home pay. -Ends- About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit This news release has been issued by Ernst & Young Solutions LLP, a member of the global Ernst & Young organization that also does not provide any services to clients.