Taxing times: Singapore urged to simplify tax rules amidst rising labour costs

Budget 2014 must focus on tax refinement, says analysts.

Ernst & Young recently revealed its wishlist for Singapore Budget 2014. Mrs. Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions LLP says: “Singapore needs to continually refine its tax policies to enhance its competitiveness and anchor Singapore as a business hub.

Amid rising costs, a tight labour market and challenging economic conditions, businesses need to be more nimble, flexible and innovative. The answer to this lies in increased productivity.”

Adds Siew Moon: “From a longer-term perspective, bold and decisive changes to reduce the complexity of Singapore’s tax framework will enhance the ease of doing business in Singapore. Tax liabilities should be clear and certain and the tax incentives regime simplified. This will reduce the compliance burden and enable businesses to plan their investment strategies for the long term.”

Ms. Chong Lee Siang, Partner, Financial Services Tax, Ernst & Young Solutions LLP says: “We hope that the government can remove the need to identify the sources of funds to fund the qualifying activities, or if necessary, put in place simpler rules.

This will help to alleviate a significant administrative burden for companies and enhance Singapore’s reputation as a pro-business and investor-friendly destination, and a global financial center.”

Extend Singapore’s lead as an asset management hub

The current package of tax exemption and tax concessions that is instrumental to the growth of the asset management industry in Singapore will expire on 31 March 2014.

Mr. Desmond Teo, Partner, Financial Services Tax, Ernst & Young Solutions LLP says: “We hope the government will extend and enhance this package of tax incentives for another five years so that Singapore can continue to retain a competitive edge in view of increasing competition and the shifting regulatory landscape and market conditions.”

Adds Desmond: “We hope the government can refine the existing tax exemption schemes for funds managed by Singapore-based fund managers. Specifically, an umbrella tax exemption can be introduced such that the tax exemption accorded for Singapore-domiciled funds can be automatically applied to the investing or trading vehicles wholly owned by such funds or have the conditions applied on a group basis.

Also, similar to the Enhanced-Tier Fund Scheme, the conditions for the qualifying offshore fund scheme can be applied for offshore funds that are in the form of limited partnership, at the partnership level.

Lastly, on a non-tax front, as the race heats up within the region for the introduction of new fund vehicles such as open-ended investment vehicles, we would like to see Singapore remain ahead of the competition.”