The Business Times

PwC Singapore calls for tax breaks on Covid-19 business spend in Budget 2021

Annabeth Leow
Published Wed, Dec 16, 2020 · 08:25 AM

SINGAPORE'S tax rules could be tweaked in the next national Budget to cover pandemic-related spending and business needs, PwC Singapore has suggested.

Proposals include extending tax relief for employees who had to set up home offices for telecommuting, as well as letting businesses claim input tax in full for expenses such as office equipment that was given to workers, as well as phone and utilities fees.

"Covid-19 has pushed organisations to rethink the way they do business," PwC tax leader Chris Woo said in a statement on Wednesday. "The upcoming Budget 2021 should build upon earlier efforts with the aim to emerge stronger together."

The professional services firm also suggested in a report that the goods and services tax (GST) refund scheme for tourists temporarily cover hotel and dining expenses and domestic staycations, "to help boost the demand in the hospitality sector".

But even as suggested measures could cushion the blow from a pandemic-driven downturn, PwC also called for more support for emerging sectors - such as possible enhanced tax deductions or capital allowances for cybersecurity investments.

Otherwise, the government could spur agri-food investments with tax breaks for farming income and tax deductions for capital costs on farm buildings, the firm said.

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"The overall cost for this sector may be lowered further with subsidised land leases and GST suspension on the importation of specialised equipment and raw materials, for example, fertilisers," the report added.

Meanwhile, PwC urged tax incentives to continue in key segments such as manufacturing, "despite the increasing pressure on tax incentive schemes".

Final-stage food processing and advanced bioengineering were named as some potential priority industries, based on their lower labour and overhead demands.

Other tax-related recommendations include granting tax relief for business digitalisation expenditure in priority areas such as data analytics or staff training, letting virtual trade events qualify for the double tax deduction for internationalisation, and removing the cap on companies' tax deductions for employee medical benefits.

Said Mr Woo: "With the uncertainty surrounding the pandemic and the instability of the global geopolitical climate, this Budget will need balance providing support for transformation that is sustainable while increasing needed government tax revenue based on a broader purpose to grow Singapore's economy."

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