Singapore Budget 2019 Feedback
Deloitte Singapore proposals for Budget 2019
We expect Budget 2019 to be a case of ‘steady as she goes’. Despite global uncertainty, Singapore’s economy is holding a steady course, growing steadily at 3.3 percent in 2018. As the country continues to implement the bold strategies set in 2017 by the Committee for the Future Economy, no major mid-course corrections are anticipated.
On the homefront, Singapore’s domestic concerns continue to be headlined by ageing demographics and healthcare issues. The fiscal impact caused by an ageing population will be keenly felt in the areas of income tax collections and rising spending on healthcare and welfare. Recent measures introduced to address these issues include the raising of the Goods and Services Tax rate some time between 2021 and 2025, as well as implementing more measures to tax wealth in view that an ageing population would arguably have accumulated significant capital over the years. Our budget proposals in this area, such as calling for an imposition of a tax on sweetened beverages are primarily pre-emptive in nature on the premise that an ounce of prevention is worth a pound of cure.
Climate change remains a key concern for Singapore. There is, at a global level, an urgent requirement to mitigate the emission of greenhouse gases which is a major contributor to climate change and rising sea levels. On its part, Singapore will be implementing a carbon tax regime in 2019. Our budget proposals includes tax measures aimed at incentivising the private sector eco-friendly ecosystem in Singapore, such as introducing enhanced capital allowances on purchases of clean energy equipment or electric vehicles.
In terms of international tax developments, an observe, connect and influence approach to shape global tax policy remains the optimum approach for a small country like Singapore. The dust from tax reforms brought about by the OECD’s BEPS project has yet to settle and already various countries are scrambling for a slice of the digital economy tax pie. Amongst others, we call for Singapore to closely monitor the impact that interim unilateral measures taken by other countries in relation to the taxation of the digital economy could have on our country.
Other than the above, we have also included suggestions for specific sectors such as the financial services and the shipping and maritime sector, certain broad-based business tax recommendations, as well as personal tax and GST suggestions. For more detailed recommendations, please download the report.