PwC calls for personal income tax tweaks in Budget 2018

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Professional services company PwC wants the income threshold for personal income tax to be raised from $20,000 to $40,000 in next year's Budget.

Taxable income beyond the first $20,000 is now taxed at graduated rates ranging from 2 per cent to 22 per cent.

PwC would like to see the lowest two bands removed, with personal tax to start applying only to the first $40,000 of taxable income as a way of helping the country's middle class.

It also proposed other reliefs. These include medical insurance to encourage taxpayers to take up policies to supplement their MediShield coverage and help for taxpayers employing foreign maids to help care for their elderly parents or in-laws.

These were among the suggestions PwC submitted to the Ministry of Finance and the Monetary Authority of Singapore for consideration.

Most of its proposals concern helping businesses embrace digital disruption and encouraging innovation and enterprise.

Key among them was a call to enhance the writing-down allowance for acquisition of intellectual property (IP), and enhancements around research and development (R&D).

There were also proposals to encourage local businesses to expand their footprint locally and overseas, including enhancing the double deduction for internationalisation and tax concessions for training and to help companies "go digital".

PwC said multinational companies may not be able to transfer full ownership of their IP to Singapore in the light of legal or commercial constraints.

Still, they should be encouraged to locate activities relating to IP in Singapore and exploit it from here, as this will create economic spin-off for the economy.

It suggests the writing-down of allowances for IP be extended to its "economic owner" here, without the need for prior approval from the Economic Development Board.

This would bring Singapore in line with countries such as Australia and Britain, where no distinction is made between the economic and legal owner of IP.

PwC also proposed that premiums for insuring against bond defaults be added to the list of prescribed deductible borrowing costs. This will help investors and companies in vulnerable sectors, given several high-profile cases of default.

It will encourage issuers of debt to insure against default, which will protect investors.

It also proposed tweaking the rules for goods and services tax registration, simplifying tax invoices and extending GST concession to non-share trades on overseas exchanges.