By Rob Starr, Content Manager, Big4.com
Singapore, 10 January 2013 – The PwC wishlist for the 2013 Budget is focused on addressing the need for access to financing, increasing productivity and innovation and overseas expansion.
This scheme currently allows approved angel investors to claim tax deduction of 50% of qualifying investments (capped at $250,000 of investments per year of assessment) at the end of a two-year holding period. The investments must be made at the individual level according to PwC.
Remove or reduce withholding tax on interest payments
Removing the 15% withholding tax on interest payments to non-residents would reduce the cost of financing for Singapore companies, particularly through intercompany lending. In any event, PwC feels the final withholding tax rate 15% on interest should be reduced as it is no longer representative of the effective tax rates on net income of non-resident persons.
Productivity and Innovation
Understand measures available
Many measures such as the Productivity and Innovation Credit (PIC) have been introduced in recent years to help businesses improve their productivity. However, the feedback has been that these measures have benefited mainly multinationals and large corporations as SMEs, at whom the measures were mainly targeted, have found them to be too complex to understand and administer.
Singapore has incentives to support the acquisition and protection of intellectual property (IP), but not its exploitation according to PwC. Measures that could be introduced to encourage the exploitation of IP from Singapore are, for one, an IP box regime which allows taxpayers to claim a notional tax deduction against income and gains arising from the exploitation of qualifying IP (such as patents, trademarks, copyrights, designs etc). This is less likely to have CFC and other overseas tax implications as it is not a reduction in the tax rate.