Budget 2015 “one of the most comprehensive” ever seen, says EY

Residents and SMEs are the clear winners.

The broad-based Jubilee Budget was one of the most comprehensive Budgets ever seen, EY analysts said.

Chung-Sim Siew Moon, Partner and Head of Tax at Ernst & Young Solutions LLP, said that the budget is clearly directed at residents and SMEs and provides an ‘ang pow’ for every individual and business.

““The 2015 budget touches every aspect of life, from support for lifelong learning to affordable education to sharper initiatives to help companies to continue to raise productivity, innovation and internationalize. Ultimately, it aims to create a sustainable infrastructure that is needed to maintain a vibrant, future-ready economy,” added Mildred Tan, Managing Director, Ernst & Young Advisory.

Adrian Ball, Managing Partner, Tax – Asean, Ernst & Young Solutions LLP, also noted "With funding for continued skills development and further support for innovation, this budget is a statement of faith in Singapore’s SMEs and Singaporeans."

Here are more reactions from Ernst & Young analysts regarding Budget 2015:

Increase in top marginal personal tax rate from 20% to 22%

“The increase in top marginal personal tax rate is a calculated risk for Singapore, as its competitive position is weakened for a group of highly mobile senior executives.”
Grahame Wright, Partner, Human Capital, Ernst & Young Solutions LLP

 “The increase in the top marginal personal tax rate from 20% to 22% has come as a surprise. Nonetheless, the increase only affects a small population of taxpayers and is unlikely to significantly impact the competitiveness of Singapore.”
Kerrie Chang, Partner, Human Capital, Ernst & Young Solutions LLP

“The proposed raise in the top personal income tax rate may become an unintended red herring in attracting fund managers to manage funds out of Singapore. Whilst there are many favourable factors contributing to Singapore’s attractiveness, personal income tax has a direct impact on the pockets of fund managers.”
Amy Ang, Partner, Financial Services Tax, Ernst & Young Solutions LLP

CPF changes
“CPF enhancements continue to refocus CPF on retirement savings rather than home ownership as Singapore looks towards an ageing population and shifting societal norms.”
Grahame Wright, Partner, Human Capital, Ernst & Young Solutions LLP 

“The increase in the CPF salary ceiling helps middle-income earners accumulate more in their CPF accounts. Together with the higher interest rates accorded, this is a good step towards the aim of achieving retirement adequacy. With a higher CPF salary ceiling, an increase in the maximum allowable contributions to the Supplementary Retirement Scheme will allow taxpayers to claim a higher tax relief. This may further encourage them to voluntarily put aside more for their retirement needs.”
Kerrie Chang, Partner, Human Capital, Ernst & Young Solutions LLP

Investing in skills and SkillsFuture Credit

“The scope of the SkillsFuture Credit is stunning and will boost the training and education sector. The SkillsFuture framework supports every Singaporean to face future challenges but also reinforces the responsibility of every Singaporean for his or her own future. SkillsFuture will provide both opportunities and major challenges to training and development providers to help create Singapore’s future. To compete effectively, Singapore needs to deepen its skills and capabilities. It is about achieving mastery, having passion and creating value.”
Grahame Wright, Partner, Human Capital, Ernst & Young Solutions LLP

Transition Support Package

“The extension of the corporate tax rebate by another two years, albeit with a reduced cap of S$20,000 is welcomed for all companies, especially for cash-strapped SMEs which can reinvest the tax savings to upgrade their capabilities and drive innovation.”

Chai Wai Fook, Partner, Tax Services, Ernst & Young Solutions LLP

“The extension of the Wage Credit Scheme to 2017 will help SMEs to attract and retain their workforce - a key factor to grow and compete overseas.”
Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP

“With planned increase in the foreign worker levy deferred, companies struggling in the tightened labour market will welcome the slight but temporary reprieve from rising foreign labour costs.”
Grahame Wright, Partner, Human Capital, Ernst & Young Solutions LLP

Internationalisation and innovation for SMEs

“SMEs will be encouraged by the government’s slew of new and enhanced grants and incentive schemes to aid in their innovation and internationalisation efforts.”
Chia Seng Chye, Partner, Tax Services, Ernst & Young Solutions LLP 

“The introduction of the new tax incentive scheme for companies targeted at internationalisation efforts will be greatly welcomed by many SME, which have been challenged to meet the requirements of current tax incentives that apply more generally to large companies.”

Tan Bin Eng, Partner, Business Incentives Advisory, Ernst & Young Solutions LLP

REITs

“For REITs investing in overseas properties, the extension of the income tax and GST concessions for another five years would facilitate more overseas acquisitions and encourage the listing of cross-border REITs on the Singapore Exchange. However, the withdrawal of the stamp duty remission, which will expire on 31 March 2015, will make it more challenging for Singapore-focused REITs to grow their portfolios.”
Lim Gek Khim, Partner, Tax Services, Ernst & Young Solutions LLP

Financial services

“Favourable tax schemes have been instrumental in propelling the growth of Singapore as a wealth management premier centre. The enhancement of the tax incentive scheme to extend tax exemption to investment vehicles set up by qualifying funds managed out of Singapore will ease the administration and provide certainty on the tax treatment to the entire fund structure.”

Amy Ang, Partner, Financial Services Tax, Ernst & Young Solutions LLP

M&A Allowance Scheme

“The enhancement of the M&A Allowance scheme is a targeted support to encourage SMEs to expand through acquisitions. The reduction of the qualifying shareholding threshold will encourage cash-constrained SMEs to make strategic investments. In addition, the extension of the scheme for another five years will provide SMEs with a longer runway to pursue acquisition opportunities.”
Chai Wai Fook, Partner, Tax Services, Ernst & Young Solutions LLP 

Supporting society

“Income supplement and strengthening of savings and income in retirement through the Silver Support, SEC and TEC schemes are welcomed support for the aging and low-income population. However, for elderly who are not physically well and active, more emotional and social support can be provided through inclusive activities spearheaded by family social services to ensure that they remain engaged and connected.”
Mildred Tan, Managing Director, Ernst & Young Advisory Pte Ltd.