More support for innovation, please

Besides encouraging people to take responsibility for their healthcare needs, the Government should consider granting personal relief for premiums paid for medical insurance, says a tax partner at Deloitte Singapore and South-east Asia.
Besides encouraging people to take responsibility for their healthcare needs, the Government should consider granting personal relief for premiums paid for medical insurance, says a tax partner at Deloitte Singapore and South-east Asia.ST FILE PHOTO

Also on Deloitte S'pore's Budget wish list: corporate tax review, incentives to hire older workers

Accounting firm Deloitte Singapore is calling for more support for innovation and internationalisation in next month's Budget.

In its report submitted to the Ministry of Finance and released yesterday, Deloitte Singapore outlined proposals ranging from reviewing corporate tax rates in view of international tax developments to clarifying Goods and Services Tax policy for the digital economy.

Its recommendations urge more support for innovation to complement existing research and development (R&D) incentives.

This is key, especially as the popular Productivity and Innovation Credit (PIC) scheme is set to expire at the end of the year, the report notes. The PIC scheme encourages small and medium-sized enterprises to spur investment in productivity by offering them cash and tax deductions for costs like worker training, automation and research.

Additional support could come in the form of enhanced tax deductions for spending on "innovative activities" that lead to the creation of new products or services, the report says.

A BOOST FOR INNOVATION

Innovation does not necessarily involve the creation of something new from scratch. Taxpayers who undertake innovative activities - which in certain instances may just be a whisker away from being regarded as R&D as per the definition under the Singapore Income Tax Act - may be frustrated by the lack of broad-based support.

'' MR LOW HWEE CHUA, regional managing partner for tax at Deloitte Singapore and South-east Asia.

"Innovation does not necessarily involve the creation of something new from scratch," said Mr Low Hwee Chua, the regional managing partner for tax at Deloitte Singapore and South-east Asia.

"Taxpayers who undertake innovative activities - which in certain instances may just be a whisker away from being regarded as R&D as per the definition under the Singapore Income Tax Act - may be frustrated by the lack of broad- based support," he added.

The Government could also consider introducing enhanced tax deductions to encourage digitisation - for instance, designing and implementing e-billing systems - to subsidise part of companies' upfront costs, the report suggests.

It also recommends increasing the cap on tax deductions for medical expenses to encourage employers to provide more healthcare benefits for employees.

Ms Jill Lim, tax partner and leader of Global Employer Services at Deloitte Singapore and South-east Asia, said: "Incentives should be provided to employers that hire older Singaporeans in their workplace; this may include allowing a double deduction on Medisave contribution to CPF for older workers.

"In addition, to encourage individuals to take responsibility for healthcare needs, the Government should consider granting personal relief for premiums paid for medical insurance."

A version of this article appeared in the print edition of The Straits Times on January 07, 2017, with the headline 'More support for innovation, please'. Print Edition | Subscribe