Singapore, 24 January 2022 – With the Singapore Budget due to be announced by Finance Minister Lawrence Wong on 18 February 2022, Grant Thornton has published their suggestions to the Ministry of Finance for consideration in the upcoming Budget and beyond.
The recommendations fall into four broad themes:
In the suggestions, Grant Thornton covers issues that have been in the spotlight over the past year – such as wealth taxes and the global minimum corporate tax.
“It goes without saying that Covid-19, and the reaction to it, has had (and will continue to have) a devastating impact across the globe,” says David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton. “However, in many respects, it has done no more than highlight, exacerbate and accelerate several issues that have been “out there” for some time. As a result, Singapore is facing a perfect storm of challenges which have made the need for firm and decisive action even more immediate.
“Attracting and retaining foreign investment and talent is the only way to provide the wherewithal to fund the attack on its other major challenges: the ageing population, the wealth gap and the cost and quality of living. But the world will not sit idly round while Singapore sorts its travel and immigration restrictions out. It needs to move, and move fast, to regain and retain its competitive edge.”
In light of the global minimum corporate tax to come in 2023, Singapore must find ways to remain an attractive hub for multi-national enterprises. Grant Thornton has proposed that Singapore should focus on developing the financial services sector and revamp incentives to help offset the cost of doing business in Singapore.
“Although the rules are expected to impact only a limited number of companies in the short term, some of these companies have a significant presence in Singapore and make a large contribution to the economy and employment,” says David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton Singapore. “Typically, they also foster a local SME ecosystem that feeds off their presence. It is critical that the government’s response to the initiative does not disturb the current harmony, despite the ransom being demanded by the OECD (and others) which conspires to upset it.”
Following a speech by Minister Heng Swee Keat last year, there have been several discussions over the past year looking at practical ways of taxing wealth.
Grant Thornton recognises that wealth taxes will primarily benefit the city-state in two ways:
Grant Thornton suggests that wealth taxes should be directed at investment properties as it is easy to collect and can be used as a mechanism to stabilise property prices for Singaporeans.
The firm also warns against introducing a pure wealth tax based on an individual’s net assets citing that pure wealth taxes in other countries have been a driver for ultra-high net worth individuals (UHNWIs) to leave the country.
“Singapore real estate provides a safe-haven parking lot for foreign wealth as properties can be perpetually left empty,” says Adrian Sham, Private Clients and Employer Solutions Partner at Grant Thornton Singapore. “Real estate does not contribute to the economy per se, unless it is being used productively for industry.
“While Singapore does have some taxes on transactions in property, they are mainly property cooling measures. To tax wealth using property, the government could consider a combination of a real property gains tax for residential property and a deemed rental income tax for vacant residential property.”
ENDS
The full PDF of Grant Thornton’s Budget recommendations can be downloaded at www.grantthornton.sg/budget-2022
Natalie Choo
Manager – Marketing and Communications
M +65 9672 4683
Grant Thornton is a different kind of network ready to meet the very different demands of today’s business. The network comprises 62,000 passionate people in member firms in 130 countries, with one common goal — to help organisations realise their ambitions in any environment.
Press Release
Grant Thornton provides suggestions for government to consider for Singapore Budget 2022 and beyond
24 Jan 2022
Among the suggestions include ways to tax wealth through property and responding to the global minimum corporate tax.
Singapore, 24 January 2022 – With the Singapore Budget due to be announced by Finance Minister Lawrence Wong on 18 February 2022, Grant Thornton has published their suggestions to the Ministry of Finance for consideration in the upcoming Budget and beyond.
The recommendations fall into four broad themes:
In the suggestions, Grant Thornton covers issues that have been in the spotlight over the past year – such as wealth taxes and the global minimum corporate tax.
“It goes without saying that Covid-19, and the reaction to it, has had (and will continue to have) a devastating impact across the globe,” says David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton. “However, in many respects, it has done no more than highlight, exacerbate and accelerate several issues that have been “out there” for some time. As a result, Singapore is facing a perfect storm of challenges which have made the need for firm and decisive action even more immediate.
“Attracting and retaining foreign investment and talent is the only way to provide the wherewithal to fund the attack on its other major challenges: the ageing population, the wealth gap and the cost and quality of living. But the world will not sit idly round while Singapore sorts its travel and immigration restrictions out. It needs to move, and move fast, to regain and retain its competitive edge.”
Strengthening Singapore’s position as a competitive business hub
In light of the global minimum corporate tax to come in 2023, Singapore must find ways to remain an attractive hub for multi-national enterprises. Grant Thornton has proposed that Singapore should focus on developing the financial services sector and revamp incentives to help offset the cost of doing business in Singapore.
“Although the rules are expected to impact only a limited number of companies in the short term, some of these companies have a significant presence in Singapore and make a large contribution to the economy and employment,” says David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton Singapore. “Typically, they also foster a local SME ecosystem that feeds off their presence. It is critical that the government’s response to the initiative does not disturb the current harmony, despite the ransom being demanded by the OECD (and others) which conspires to upset it.”
Building an inclusive and sustainable Singapore
Following a speech by Minister Heng Swee Keat last year, there have been several discussions over the past year looking at practical ways of taxing wealth.
Grant Thornton recognises that wealth taxes will primarily benefit the city-state in two ways:
Grant Thornton suggests that wealth taxes should be directed at investment properties as it is easy to collect and can be used as a mechanism to stabilise property prices for Singaporeans.
The firm also warns against introducing a pure wealth tax based on an individual’s net assets citing that pure wealth taxes in other countries have been a driver for ultra-high net worth individuals (UHNWIs) to leave the country.
“Singapore real estate provides a safe-haven parking lot for foreign wealth as properties can be perpetually left empty,” says Adrian Sham, Private Clients and Employer Solutions Partner at Grant Thornton Singapore. “Real estate does not contribute to the economy per se, unless it is being used productively for industry.
“While Singapore does have some taxes on transactions in property, they are mainly property cooling measures. To tax wealth using property, the government could consider a combination of a real property gains tax for residential property and a deemed rental income tax for vacant residential property.”
ENDS
Notes
The full PDF of Grant Thornton’s Budget recommendations can be downloaded at www.grantthornton.sg/budget-2022
For questions on the release or analysis on Budget 2022
Natalie Choo
Manager – Marketing and Communications
M +65 9672 4683
About Grant Thornton
Grant Thornton is a different kind of network ready to meet the very different demands of today’s business. The network comprises 62,000 passionate people in member firms in 130 countries, with one common goal — to help organisations realise their ambitions in any environment.