PwC calls for tax incentives in Budget 2019 to encourage firms to go digital and Singaporeans to stay healthy

 As a form of check and balance, PWC Singapore said the current tax incentive should be confined to venture capital funds which are managed by fund managers that are approved by the Monetary Authority of Singapore.
As a form of check and balance, PWC Singapore said the current tax incentive should be confined to venture capital funds which are managed by fund managers that are approved by the Monetary Authority of Singapore.PHOTO: BERITA HARIAN

SINGAPORE - Should the healthy lifestyles of Singaporeans be rewarded via a national tax credit programme, with smart devices used to track their level of activity?

And should local start-ups that invest in costly digital transformation be taxed less in order to encourage them to go digital?

These are some proposals from accounting firm PricewaterhouseCoopers Singapore (PwC) for next year's Budget, released on Tuesday (Dec 18). Its 15-page report, titled "Proposals to enhance Singapore's economy", was submitted to the Ministry of Finance.

In it are 19 recommendations, including tax deduction schemes, to incentivise businesses and the general population to adopt national business and healthcare initiatives, as well as to attract investors and talents from overseas.

The proposals do not include any measures to raise taxes.

PwC tax leader Chris Woo said the changes will help Singapore have a fiscally sustainable and secure future in a time when increasing uncertainty, changing trade winds and the ageing demographic create both challenges and opportunities for the country.

"It is imperative that this Budget prepares for a more uncertain future by recognising the need to balance revenue collection pressure vis-à-vis targeted use of tax measures," said Mr Woo.

Several of the proposals are geared towards encouraging firms to hop on Singapore's Smart Nation initiative, the national effort to drive technological adoption here.

Besides a tax relief for smaller enterprises that invest in technology and cyber security, PwC also called for the Government to encourage bigger players to embark on proof-of-concept trials with small local technology start-ups.

To attract wealthy investors to Singapore, it also urged the Government to waive eligibility conditions and approval requirements of certain classes of investors under the Angel Investors Tax Deduction Scheme, extending the scheme to more firms and venture capitalists that finance businesses here.

Measures to liberalise tax deduction rules for new ventures can help Singaporean firms that want to internationalise their businesses, PwC said.

"Policymakers should look into enhancing existing initiatives to grow stronger local enterprises and strengthen Singapore's position as a start-up hub," said Mr Woo.

PwC also called for Singapore to be turned into a free trade zone, allowing unfettered import, storage and processing for re-export as a hub for goods moving in and out of Asean.

The firm also proposed that healthcare initiatives be incentivised, including through a Fitness Tax Credit regime to reward Singaporeans who participate in community wellness programmes and routine exercise. This can be implemented with the aid of smart devices and healthcare technology, such as smart watches, said the firm.

In addition, it called for a tax relief for Singaporeans who buy health insurance and more support for new mothers to continue working through tax incentives, as well as added childcare leave for working parents with more than two children.