Accelerating sustainable growth: What are some of the measures that we might expect in Budget 2022?
Mazars in Singapore calls for proactive measures in Budget 2022 that will inspire confidence in a post-pandemic world and chart a path to a stronger and greener economy.
Pillar Two Model detailed rules announced provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy under the OECD/G20 Inclusive Framework on BEPS.
These rules will introduce a global minimum corporate tax rate set at 15%. The minimum tax will apply to Multinational Enterprises (MNEs) with revenue above EUR 750 million.
We hope the IRAS and MOF would give better guidance and clarity on how these rules will be implemented in Singapore.
With the hardship that many Singapore residents and businesses are going through during this Covid period, we hope the Government would consider providing tax rebates to businesses and individuals and allow the carrying back of business tax losses beyond 1 or 3 years.
We also hope that the Government will consider removing the limit on maximum personal tax relief cap of S$80,000 to encourage Singapore residents to donate or save through the Supplementary Retirement Scheme or to have more children.
Personal reliefs for children should also be reviewed since the cost of maintaining and educating children has gone up significantly over the years. This will encourage Singaporeans to have bigger families in the light of decreasing birth rates.
Gene Kwee, Partner and Head of Tax APAC said: “We hope the new tax package soon to be announced in Budget 2022 will provide greater clarity on the various tax issues concerning businesses and tax residents today. We look forward to the introduction of tax measures that will further stimulate business investment and economic recovery.”
- Central bank digital currency
As fintech funding surged to $3 billion in 2021, we hope the government will continue to bolster our fintech capabilities to strengthen our position as a global fintech hub.
Singapore has been spearheading Central Bank Digital Currency (CBDC) research for many years. In Budget 2022, we would like to see MAS continue expanding its CBDC initiatives to provide faster cross-border payment solutions, and further enhancing the Singapore government’s digitization efforts.
- Infrastructure investments
Building resilience is crucial in a post-pandemic reality. We hope Singapore will continue issuing new bonds to finance large-scale sustainable infrastructure. This measure will also help to preserve Singapore's structurally strong fiscal position.
Mark Chew, Partner, Financial Services said: “As we move beyond the recovery phase, we must continue to deliver high-quality digital and physical infrastructure that we need to propel our economy forward. Our financial services ecosystem is integral to Singapore’s global competitiveness.”
Privately-owned businesses and SMEs
- Stimulus and financing access
Many industries have been adversely affected by the pandemic. We hope that Budget 2022 will include measures to revive the affected sectors and the government can look into further improving access to financing for SMEs to aid them in business recovery. Further extension of wage subsidies and financial aid will likely continue beyond the “stabilization” phase.
It would be great to see more investments in skills in SMEs and the private sector. Expanding the funds available to support training in digital skills will help to build a continuous digitally enabled talent pipeline in Singapore. The Innovation Advisors Programme needs to be expanded to more sectors beyond manufacturing, MedTech, aerospace, ICT and logistics.
We hope that the Market Readiness Assistance grant will be extended beyond March 2022. The Enterprise Development Grant which helps Singapore companies grow and transform also needs to be expanded. It would be great to see more homegrown companies go international and benefit from Singapore’s extensive free trade agreements.
Wee Han Tah, Head of Management Consulting said: “Many businesses are still recovering from the setbacks brought by the pandemic. In Budget 2022, we hope the government will continue to support businesses in driving strong and inclusive growth to build a more resilient economy.”
Technology and digitalisation
- 5G technology and Smart Nation
We look forward to the government announcing more initiatives to support 5G adoption in Singapore and making the spectrum available in a timely manner in line with our Smart Nation goal.
We will also need to complement the benefits of 5G with emerging technologies such as Internet of Things devices, robotics, edge computing and artificial intelligence. New initiatives to boost the adoption of the digital technologies among industry players will be helpful. Reskilling the workforce is also crucial to prepare for the digital future.
Chester Liew, Head of Risk Consulting and Technology and Digital Consulting said: “One way to accelerate our economic growth is by digitalising businesses and industries. More government support would be welcomed to drive innovation across all business sectors, ahead of our target of island wide 5G coverage by 2025.”
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