SINGAPORE - Public accountancy firm Deloitte Singapore has proposed inclusion of certain fiscal initiatives in Singapore's 2016 budget with an aim to enourage local businesses innovate and expand overseas.
In its pre-budget feedback document released on Monday, Deloitte said value-creation is more crucial for Singapore as a slower pace of growth is expected in 2016. "Middle and back office jobs in the country are under threat from lower cost locations," the document observed.
The firm proposed that fiscal policy should promote innovation, which, in turn, will deliver new growth avenues and high wage jobs.
"The Government should incentivise investment in startups, to make it easier for these innovative enterprises to expand. Tax incentives could also support businesses in digitisation and automation," Deloitte Singapore said in the document.
Deloitte also said that tax policies intended to attract overseas talent could be tweaked or expanded to create a level playing field for both local and foreign talent.
For instance, companies could be granted further tax deductions for "costs of recruiting Singaporeans who take up key management roles", it said.
The Government should also encourage firms to internationalise, Deloitte said. For instance, with the formal establishment of the Asean Economic Community at the end of last year, it could grant full tax exemption for income derived from foreign markets within the Asean Economic Community.
Although Singapore is a "choice location" for multinationals to set up their treasury centres in Asia at, Malaysia and Thailand have introduced tax incentives for treasury centres and headquarter activities. In time, they may emerge as alternatives to Singapore.
Deloitte said its industry-specific tax incentives also need to "evolve in tandem with business developments" for Singapore to maintain its edge as a financial hub.
The Government should also encourage research and development into technologies that are transformative for the financial services sector, Deloitte said.
The Government is scheduled to present this year's budget on March 24.