SINGAPORE - Ernst & Young (EY) has called on the Government to enhance Singapore's tax treaties with other nations and explore new tax revenue options to support government spending, among other things, in its Budget wish list released on Wednesday (Feb 10).
Said Mrs Chung-Sim Siew Moon, the head of tax services at Ernst & Young Solutions: "We propose that Singapore's income tax system be simplified and made more competitive to promote Singapore as Asia's business and financial hub, while tweaking certain policies to ease business costs and promote business growth.
As an open economy, Singapore also has to continue to improve the international competitiveness of its tax treaties, she added.
This could mean refreshing them, providing for tax arbitration clauses and greater clarity on the interpretation of tax treaties or adding new treaties.
To support government spending, EY suggested ways to capture new streams of tax revenue through lowering the GST registration threshold and imposing GST on the digital economy.
Currently the GST registration threshold in Singapore is S$1 million per annum - significantly higher than most other countries, EY noted.
Mr Kor Bing Keong, a GST Services partner at Ernst & Young Solutions, said: "The government could consider lowering the GST registration threshold to S$500,000 per annum. A high GST registration threshold was important at the start of GST implementation as it relieves small businesses from GST registration and compliance.
"GST has now become an integral part of businesses and GST-compliant accounting and point-of-sale software is readily available. 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."
Other recommendations that EY made in its wish list included providing incentives for Singapore-based family offices, maintaining the corporate tax rate and increasing the cap for tax deduction for 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, EY said.