Deloitte’s recommendation on SG Budget 2024: Reshape SG’s tax incentives and grants regime

SINGAPORE: Deloitte’s recommendation on the Singapore Budget 2024 involves the “consideration to reshape Singapore’s tax incentives and grants regime,” as reported by The Edge Singapore. This is in anticipation of a transformative year for international tax reform on tax avoidance initiatives by the Organisation for Economic Co-operation and Development (OECD).

As the Global Anti-Base Erosion Rules (GloBE) rules, imposing a 15% tax on large multinational enterprises wherever they operate, are set to take effect, Deloitte suggests reshaping Singapore’s tax incentives and grants regime. “The introduction of new fiscal subsidies, such as refundable tax credits, should be considered to enable Singapore’s tax incentives to continue to foster an environment conducive to investment,” as noted in their Dec 26 release.

The spotlight is on Section 10L of the Income Tax Act 1947, a forthcoming law effective from 2024 aligning Singapore’s rules with international standards for taxing gains from the sale of foreign assets, especially the guidelines from Conduct Group’s EU code.

Loh Eng Kiat, tax partner of Deloitte Singapore, said, “Our recommendation ​​ aims to not only smoothen the teething issues expected with the start of a new law but also to sharpen the tool of using economic substance requirements as a key lever to ensure tax-favourable outcomes.”

In line with this, Deloitte suggests deferring income tax collection while transferring foreign assets between related Singapore entities in internal group restructuring situations, offering a strategy to minimise fiscal strain.

Additionally, the anticipation of new incentive tools, such as Qualified Refundable Tax Credits (QRTCs), is raised.

Yvaine Gan, global investment and innovation incentives leader of Deloitte Singapore, emphasises that well-designed and implemented QRTCs could significantly support businesses while adhering to fair minimum tax rate commitments.

Ms Gan said, “These proactive measures highlight our dedication to a balanced and resilient economic framework, allowing Singapore to confidently navigate the complexities of the global economic landscape while fostering sustainable development and inclusivity.”

Deloitte extends its recommendations to green financing within the budget, aligning with sustainability and climate change concerns—the firm advocates for strategies that encourage environmentally friendly business practices and hasten investments in renewable energy.

Furthermore, Deloitte’s recommendations emphasise the importance of advancing Singapore’s aspiration to become a leading financial services hub in Asia, a sought-after destination for global talent, and for the government to focus on society’s needs. /TISG