SINGAPORE - Budget 2018 should give companies more support to go digital, said KPMG.

This could mean more flexible manpower policies, as well as enhancing tax deductions for digital skills training.

KPMG's suggestions come amid growing concerns about a shortage of tech talent here. Small and medium-sized enterprises (SMEs) have also expressed worries about the impact on their businesses of potential tax hikes in Budget 2018.

These hikes - combined with the expiry of popular schemes such as the Productivity and Innovation Credit (PIC) this year - could push up costs for SMEs and weigh on sentiment, said KPMG head of tax Chiu Wu Hong.

To encourage firms to push on with digital transformation, the professional services firm said that tax incentive schemes should be enhanced and extended to help businesses digitise.

KPMG also called for a more flexible manpower framework which would allow companies to hire more foreigners with skills that are lacking here - especially in tech-related segments such as cybersecurity.

At the same time, companies should get tax deductions for training local employees in these skills.

There were also suggestions for tweaks to Singapore's tax system to boost competitiveness and innovation efforts here.

For example, an innovation tax credit could be introduced to support firms engaged in research and development, KPMG said. This could be set at 50 per cent of eligible expenditure.

Asian multinationals also could be given more incentives to set up their headquarters in Singapore.