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Prior to the unveiling of Budget 2024, the professional services firm advocates for strategic measures to keep Singapore competitive amidst a world with global minimum corporate tax, bolster businesses’ environmental, social, and governance efforts, and streamline the city-state’s tax regime.
Singapore, 15 February 2024 – With the Singapore Budget 2024 due to be announced by Minister for Finance Lawrence Wong on 16 February 2024, Grant Thornton sets out some thoughts aimed at fortifying Singapore's economic resilience and fostering sustainable growth.
David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton, says "This Budget must navigate through a complex backdrop of a largely unwanted global minimum corporate tax regime rising inflation and extreme geopolitical uncertainty. It must ensure stability for now, while also fostering long-term growth in Singapore's economy and ensuring the wellbeing and security of its population."
Grant Thornton's proposals for Singapore Budget 2024 revolve around three themes, staying competitive despite a global minimum corporate tax, bolstering support in Environmental, Social, and Governance (ESG), and simplifying the Tax Regime.
We highlight some key areas from Grant Thornton’s recommendations below.
Based on the statistics released by the National Population Health Survey in October 2023 of about 17,000 adults, the prevalence of poor mental health in Singapore has risen from 13.4% (2020) to 17% (2022). DPM Lawrence Wong has also recently announced in Parliament that Government is making plans to make mental health and well-being a key national priority.
To encourage employers to better provide for their employees’ mental wellbeing, a further deduction on mental (and physical health) expenses incurred for welfare of staff should be considered.
David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton, says "There are many areas that play a part in helping to encourage mental wellbeing. By helping employers address mental wellness needs, we not only enhance employee productivity but also contribute to a more resilient and thriving workforce.”
To help Singapore maintain its competitiveness globally, the government should focus on attracting decision-makers to Singapore, rather than necessarily the businesses themselves. Human nature being what it is, making Singapore an attractive place for decision makers personally, will encourage them to "reverse engineer" a case for the business being brought into and maintained in Singapore.
Such measures could include the exemption of, or reduction of tax on, certain benefits-in-kind, enhancing employee share schemes, and introducing schemes to bring regional roles to Singapore. While these measures will benefit these decision-makers, they must also be implemented with proper evaluation of the benefits that Singaporeans will obtain in return.
The professional services firm also recommends that Singapore consider non-tax incentive tools for multinational enterprises to encourage them to set up operations in Singapore. These tools may include enhanced cash grants to defray operating expenses such as staff and establishment costs.
Cash grants are typically recognised as income and thus will be included as part of the income in determining the effective tax rate using the Global Anti-Base Erosion model. Compared to other tax incentive schemes such as tax holidays or concessionary tax rates, grants should be more attractive to MNEs if not only for their immediate impact.
The existential threat to Singapore’s future is its demographic profile. A rapidly aging population at one end of the scale and a dearth of babies at the other, will squeeze the life out of the working population. Some attention is being paid to the birth deficiencies. But it takes 20 years to produce an economically viable human being.
Meanwhile, longevity improvements whip on at an alarming rate. Attention needs to be paid now to the self-sufficiency (not state or taxpayer sufficiency) of this older population before it is too late. A broader range of personal and tax efficient pension plans need to be brought into existence to supplement the CPF which, frankly, does not cut it on its own. We have too many ideas around this to fit into this note.
Grant Thornton's proposals reflect a commitment to collaborating with policymakers to shape policies that promote economic vitality, foster innovation, and enhance Singapore's position as a global business hub.
ENDS
A more comprehensive version of Grant Thornton’s Budget recommendations and other updates on Grant Thornton updates for Budget 2024 can be found at www.grantthornton.sg/budget-2024
Press Release
Singapore Budget 2024: Grant Thornton recommends measures to strengthen support for mental wellness, ensure Singapore remains competitive globally
15 Feb 2024
Prior to the unveiling of Budget 2024, the professional services firm advocates for strategic measures to keep Singapore competitive amidst a world with global minimum corporate tax, bolster businesses’ environmental, social, and governance efforts, and streamline the city-state’s tax regime.
Singapore, 15 February 2024 – With the Singapore Budget 2024 due to be announced by Minister for Finance Lawrence Wong on 16 February 2024, Grant Thornton sets out some thoughts aimed at fortifying Singapore's economic resilience and fostering sustainable growth.
David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton, says "This Budget must navigate through a complex backdrop of a largely unwanted global minimum corporate tax regime rising inflation and extreme geopolitical uncertainty. It must ensure stability for now, while also fostering long-term growth in Singapore's economy and ensuring the wellbeing and security of its population."
Grant Thornton's proposals for Singapore Budget 2024 revolve around three themes, staying competitive despite a global minimum corporate tax, bolstering support in Environmental, Social, and Governance (ESG), and simplifying the Tax Regime.
We highlight some key areas from Grant Thornton’s recommendations below.
Supporting mental health
Based on the statistics released by the National Population Health Survey in October 2023 of about 17,000 adults, the prevalence of poor mental health in Singapore has risen from 13.4% (2020) to 17% (2022). DPM Lawrence Wong has also recently announced in Parliament that Government is making plans to make mental health and well-being a key national priority.
To encourage employers to better provide for their employees’ mental wellbeing, a further deduction on mental (and physical health) expenses incurred for welfare of staff should be considered.
David Sandison, Singapore Practice Leader & Head of Tax at Grant Thornton, says "There are many areas that play a part in helping to encourage mental wellbeing. By helping employers address mental wellness needs, we not only enhance employee productivity but also contribute to a more resilient and thriving workforce.”
Staying competitive despite a global minimum corporate tax
To help Singapore maintain its competitiveness globally, the government should focus on attracting decision-makers to Singapore, rather than necessarily the businesses themselves. Human nature being what it is, making Singapore an attractive place for decision makers personally, will encourage them to "reverse engineer" a case for the business being brought into and maintained in Singapore.
Such measures could include the exemption of, or reduction of tax on, certain benefits-in-kind, enhancing employee share schemes, and introducing schemes to bring regional roles to Singapore. While these measures will benefit these decision-makers, they must also be implemented with proper evaluation of the benefits that Singaporeans will obtain in return.
The professional services firm also recommends that Singapore consider non-tax incentive tools for multinational enterprises to encourage them to set up operations in Singapore. These tools may include enhanced cash grants to defray operating expenses such as staff and establishment costs.
Cash grants are typically recognised as income and thus will be included as part of the income in determining the effective tax rate using the Global Anti-Base Erosion model. Compared to other tax incentive schemes such as tax holidays or concessionary tax rates, grants should be more attractive to MNEs if not only for their immediate impact.
The elephant in the room
The existential threat to Singapore’s future is its demographic profile. A rapidly aging population at one end of the scale and a dearth of babies at the other, will squeeze the life out of the working population. Some attention is being paid to the birth deficiencies. But it takes 20 years to produce an economically viable human being.
Meanwhile, longevity improvements whip on at an alarming rate. Attention needs to be paid now to the self-sufficiency (not state or taxpayer sufficiency) of this older population before it is too late. A broader range of personal and tax efficient pension plans need to be brought into existence to supplement the CPF which, frankly, does not cut it on its own. We have too many ideas around this to fit into this note.
Grant Thornton's proposals reflect a commitment to collaborating with policymakers to shape policies that promote economic vitality, foster innovation, and enhance Singapore's position as a global business hub.
ENDS
Notes
A more comprehensive version of Grant Thornton’s Budget recommendations and other updates on Grant Thornton updates for Budget 2024 can be found at www.grantthornton.sg/budget-2024