New Budget 2020 tax schemes to boost business sector: PwC

One of its proposals includes a tax relief for micropreneurs’ R&D under IMDA.

Professional services firm PwC has launched its list of proposals for Singapore’s Budget 2020, where it targeted tax schemes within business activities that are seen to hinder further enterprise growth and innovation.

PwC proposes that a tax relief be implemented in research and development (R&D) and innovation activities undertaken by micropreneurs part of the Open innovation platform of Infocommunications Media Development Authority (IMDA) of Singapore.

PwC sees that a possible double deduction on incurred expenses will further support the rich collaboration that already exists between innovators and enablers via the initiative.

Due to inadequate sample size and a different geographical environment, not all aspects of R&D activities are feasible in Singapore, noted PwC. In this light, PwC suggests that overseas R&D efforts be made to qualify for the 100% tax deduction enforced under the section 14D of country’s Income Tax Act (ITA). As long as R&D activities have a nexus to Singapore business, an extended slash on taxes with cross-border R&D will ease costs in companies’ innovation programmes, said PwC.

Schemes within mergers and acquisitions (M&A) as well as individual investors in the country were also ran through by the firm’s proposal. PwC recommends that the scope of the M&A scheme be expanded to include instruments such as preference shares, and bonds that are convertible into ordinary shares to give investors greater flexibility. The firm further states that the M&A allowance should be allowed to be claimed on a group basis rather than solely by the acquiring company. This will give groups more flexibility in the present structuring and restructuring of their acquisitions in the future, the firm noted.

On angel investors on the other hand, the liberalisation of the Angel Investors Tax Deduction (AITD) is a solution sighted by PwC to make it easier for individual investors to qualify.

PwC suggests to waive the eligibility conditions and approval requirements for an angel investor under the AITD scheme for certain classes of wealthy individuals, such as those accredited Investors defined in the Securities and Futures Act.