Ahead of the Singapore budget in March, Ernst & Young Solutions have offered proposals for this year’s Budget under four broad themes. The key themes could influence the wealth management industry.

Among the ideas the global consulting group EY recommends are to sharpen the focus of fiscal policies for improved effectiveness, enhance tax treaties for international competitiveness, explore new tax revenue options to support government spending and build a more inclusive Singapore society

«We propose that Singapore’s income tax system be simplified and made more competitive to promote Singapore as Asia's business and financial hub, while tweaking certain policies to ease business costs and promote business growth,» said Chung-Sim Siew Moon, Head of Tax Services, Ernst & Young Solutions.

Remaining Vulnerable

Preliminary estimates indicate that Singapore’s economy grew by 2.1 percent last year – the weakest since 2009. Against an uncertain global economic outlook and China’s slowing economy, Singapore, by virtue of its open economy, remains vulnerable.

EY believes to be future-ready, Singapore must enhance its core competitive capabilities and build new ones, leveraging the strengths of a resourceful and innovative population and an agile and pro-business stance that is oriented towards global markets, so as to transform into a value creation economy with inclusive opportunities for all.

Providing Incentives for Family Offices

Singapore-based families that seek to set up their own Singapore-based family offices to professionally manage their investments may be exposed to Singapore tax due to our territorial basis of taxation.

«We propose tax incentives to provide tax certainty for income arising from family investments of Singapore-based families that are professionally managed, either through in-house family offices or through third party fund managers. This will help to maintain Singapore’s competitiveness as a wealth management centre,» Said Goh Siow Hui, Partner, Private Client Services, Ernst & Young Solutions.

Enhancing the S-REIT Regime

The foreign-sourced income tax exemption and GST concessions granted to S-REITs will expire on 31 March 2020. The sunset clause in the case of the foreign-sourced income tax exemption is applied by reference to the date of acquisition of foreign properties. This could result in uncertainty, especially for cross-border S-REITs planning to list in Singapore around the expiry date.

«Foreign properties are likely to play a key role in the growth of the S-REIT market in the coming years. Given that tax exemption is critical for S-REITs with foreign properties and to level the playing field for pure play cross-border S-REITs, the sunset clause should be removed,» Lim Gek Khim, Partner, Tax Services, Ernst & Young Solutions said