Ernst & Young (EY) has called on the Government to sharpen some of its policies to make them more effective and to explore new tax revenue options to support spending, among other things.
The recommendations were laid out in its Budget wish list yesterday.
One suggestion is to have a specialised team review company applications for tax incentives related to research and development (R&D).
With the Productivity & Innovation Credit (PIC) scheme, Singapore has one of the more attractive R&D tax incentives globally, EY said.
However, it added, taxpayers have encountered significant administrative hurdles in their R&D claims, including multiple rounds of queries and protracted discussions with the Inland Revenue Authority of Singapore (Iras) on the technical eligibility of their projects.
"We propose that an Iras technical evaluation team with broad technical or industry expertise review the technical eligibility of the projects from the start," said Ernst & Young Solutions' business incentives advisory partner, Ms Tan Bin Eng.
"Such an arrangement will alleviate issues of confidentiality and ensure that the taxpayer is engaging with officers who have the general technical background to appreciate and understand the technical discussions on the R&D project, and ensure that R&D tax deduction claims are dealt with efficiently and expediently."
Among suggestions to promote Singapore's status as a financial and business hub, EY recommends providing tax incentives for Singapore-based family offices, which professionally manage the wealth and investments of wealthy families.
Meanwhile, Singapore's corporate tax rate should be unchanged to maintain global competitiveness, EY said.
However, the Government could consider raising the cap for tax deduction of medical expenses.
Currently, companies can claim a tax deduction for their employees' medical expenses of up to 1 per cent of the employees' total remuneration for the year.
"Increasing the cap will help companies to defray part of the business cost of providing this important benefit to their employees," noted Mrs Chung-Sim Siew Moon, head of tax services at Ernst & Young Solutions.
To stay relevant as a business hub, Singapore also needs to refresh many of its tax treaties that were signed during its developing years and secure new tax treaties with the United States and emerging countries in Latin America and Africa, EY added.
New tax revenue options should be explored to support government spending.
For example, the Government could consider lowering the goods and services tax (GST) registration threshold to $500,000 a year.
"With the expected increase in social spending by the Government, a decrease in GST registration threshold could bring more businesses into the GST net and increase revenue collection," said Ernst & Young Solutions' GST Services partner, Mr Kor Bing Keong.
And to make Singapore a more inclusive society, EY said that the Government could consider enhancing tax deductions or providing tax incentives for work-life programmes, and providing tax deductions for medical-related insurance policies.
There is no tax relief available to individuals for premiums paid on medical-related or health insurance policies.