Deloitte urges more tax exemptions for struggling SMEs

Improvements in the popular PIC scheme are needed.

Deloitte urged the government to offer more help to local businesses in its 2015 udget wishlist, stating that SMEs need help to counter the rising costs of doing business in Singapore.

One of its recommendations is to increase the partial tax exemption from the first S$300,000 of normal chargeable income to the first S$600,000 of normal chargeable income for SMEs.

Under this enhancement, the effective tax rate for SMEs with chargeable income of $600,000 would drop to 8.4%, from the current 12.7%.

“To align with the Government’s push to drive greater productivity and innovation for local businesses, Deloitte Singapore suggests improving the effectiveness of the popular PIC scheme. The recommendation is to combine the PIC cash payout across the relevant assessment years and increase the payout cap instead of limiting it to $100,000 per YA. Furthermore, a new scheme should be introduced to reward innovative activities that are not within the ambit of the current PIC scheme. To encourage SMEs to grow and build critical mass via acquisitions, the M&A tax allowance scheme should be extended, and perhaps enhanced to allow tax deduction for interest costs incurred in share acquisitions, and not just asset acquisitions,” the report stated.