Singapore to break free from reliance on foreign workers:KPMG

The proposed increase in foreign worker levies shows how the government wants to do away with the reliance on foreign workers and push productivity growth.

According to Tay Hong Beng, Head of Tax, KPMG in Singapore, this year’s Budget has gone a step further in addressing the social questions around ensuring no one is left behind in Singapore’s march towards globalisation. While it is not possible to completely address the issue of a widening income gap, the new measures nevertheless represent a step forward.

A burgeoning middle class is the mark of any maturing economy. With the new measures, the sandwiched class are trading butter within their slices of bread for a tastier filling. I applaud the efforts the Government has taken to address the needs of Singaporeans.

The competition for foreign investments in the region is intensifying with lower corporate tax rates and aggressive tax incentives. What we have for this year’s budget is very much focused on priming the growth for local enterprises and promoting productivity. We were hoping that more could be introduced to compete for these investments, by refining our tax exemption rule for foreign income and creating more certainty on tax treatment on disposal of long term investments.

Having a 400% tax deduction under the PIC scheme is an aggressive move to encourage innovation. Coupled with the proposed increase in foreign worker levies, it is not difficult to understand what the motivation is behind these bold moves – to do away with the reliance on foreign workers and push productivity growth.