PROFESSIONAL services firm PwC is calling for a refundable tax credit framework, a participation exemption for gains on the disposal of foreign assets, as well as sustainability and workforce related measures in its Budget 2024 wish list released on Tuesday (Dec 19).

Uplifting businesses

With the upcoming implementation of the Global Anti-Base Erosion Model Rules, the government can consider a framework for granting refundable credits for multinational enterprises (MNEs) with Singapore operations, it said. Such a framework should be designed to minimise the impact of any top-up to meet the global minimum tax while still encouraging businesses to align investments with overall economic policy.

This “not only fortifies Singapore’s appeal as the preferred foreign direct investment location but also addresses business concerns of high operating costs”, said Ching Ne Tan, corporate tax leader, PwC Singapore.

As manufacturing is expected to remain weak for the rest of the year, PwC also proposed granting manufacturers a credit as a payment against tax, which would encourage key industry players to set up facilities in Singapore.

Such a credit would be calculated using a percentage of qualified investment cost or pegged against some measurable target such as environmental, social and governance or productivity criteria.

PwC also wants to introduce a participation exemption scheme for certain share disposal gains from tax, to maintain Singapore’s attractiveness as a platform jurisdiction for MNEs to invest overseas.

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It also suggested changes and expansions to goods and services tax regulations.

Operationalising sustainability

PwC proposed the introduction of a comprehensive Sustainability Support Scheme, a one-stop platform which would comprise grants and tax incentives in the form of super deductions, refundable tax credits, investment allowances, concessionary tax rates and withholding tax exemptions.

This customisable scheme will provide the appropriate level of support for different needs across the ecosystem of companies of different shapes and sizes, said Irene Tai, energy, utilities and resources tax leader.

In light of the European Union’s (EU) carbon management adjustment mechanism (CBAM), which places a compliance burden on exporters to the EU to provide data on greenhouse gas emissions, PwC also urged the government to implement guidance to Singapore’s exporters on how to manage and fulfil CBAM requirements.

It also called for the government to increase transparency in identifying CBAM-affected goods, to defray additional costs and resources required by local exporters.

The government can also introduce its own version of CBAM, to promote greater sustainability efforts and proactively deal with related challenges, said Frank Debets, managing partner, customs and international trade at PwC Worldtrade Management Service.

Meanwhile, in the maritime sector, Singapore-based companies will be buying and selling emission allowances for voyages in and through EU and European Economic Area.

PwC said it would be helpful for the Maritime and Port Authority of Singapore to provide guidance on how the gains or losses arising from such trading that are ancillary to shipping activities should be treated for Maritime Sector Incentive purposes. The government may consider granting tax exemption on such trading activities, it added.

Noting Singapore’s goal to produce 30 per cent of its nutritional needs locally by 2030, PwC also suggested tax deductions for the costs of approved buildings used exclusively or almost exclusively for food farming as well as deductions for upfront land premiums for such buildings on land approved for farming. It also proposed the extension of the Land Intensification Allowance to related sectors.

Supporting workforce

PwC Singapore workforce rewards leader Noel Goh called for a deeper systemic rethink of the care and support ecosystem. Its South-east Asia consulting workforce transformation leader Martijn Schouten added that employers must “critically look at the ‘whole person’ and not just the ‘person on the job’”.

To care for Singapore’s workers, PwC made several suggestions.

These measures include increasing the maximum amount of earned income relief and a one-off tax rebate for taxpayers under 55; making the fixed dollar amount for the Working Mother’s Child Relief available as the minimum relief to those eligible; making family or parent care leave mandatory; and introducing a flexi-work post maternity leave policy.

PwC also advocated for government subsidies for mental health support; chronic illness leave; wage support for caregivers re-entering the workforce; the extension of senior employment credit; and more SkillsFuture credits for workers aged 65 and over.

“Budget 2024 presents an avenue to enhance the harmony between seizing opportunities in the marketplace, and for the people and advancing social values,” said Marcus Lam, executive chairman. “In a world that is prone to polarisation, we believe Singapore’s competitiveness can leverage its strengths and cultivate a self-resilient as well as values-driven economy.”