Singapore Budget 2022 proposals

Singapore’s FY2022 Budget Statement will be announced by the Minister for Finance, Mr Lawrence Wong on Friday, 18 February 2022 in the Parliament.

The Organisation for Economic Co-operation and Development (OECD) proposal for a global minimum tax is expected to reduce the effectiveness of tax incentives as a tool to encourage larger multinational enterprises (MNEs) to invest in Singapore. Therefore, it is crucial for Singapore to strengthen its competitiveness on the non-tax front to remain attractive to foreign direct investors. In addition, Singapore needs to promote a conducive environment for local enterprises to expand and internationalise, while addressing the socio-economic considerations amid a maturing demographics profile and the ongoing economic transformation.

In the long term, the expected increase in government spending should be funded by economic growth. Meanwhile, there has been much debate about whether a wealth tax can help address fiscal needs and income/ wealth redistribution. Being a leading asset and wealth management centre, Singapore would need to consider any such measure carefully to avoid capital flight.

Key proposals

PwC’s Singapore Budget 2022 proposals are pivoted on three key themes around creating an active economy, a beautiful society and a clean environment, with business competitiveness, social resilience and environment, social, and governance (ESG) identified as the main areas of focus.

Active economy via business competitiveness

As Singapore continues to compete for foreign direct investments, it also needs to promote a conducive environment for local enterprises to expand and internationalise. Hence, promoting digitalisation and extending SME Grants will help to encourage and drive business and workforce transformation. At the same time, Singapore should consider measures to promote greater vibrancy in capital markets as funding is essential, particularly for start-ups and the overall economic growth.

Beautiful society through social resilience

Amid the current COVID-19 pandemic coupled with soaring healthcare costs, ensuring affordable, accessible and quality care must remain a priority. With Southeast Asia emerging as a hotbed for HealthTech investors, Singapore is well positioned to lead the advancements in HealthTech not just regionally but globally. Thus, investment in HealthTech will not only improve clinical outcomes but also provide economic value.

In addition to the Research, Innovation and Enterprise Plan (RIE2025) launched to strengthen the medical devices industry in Singapore, the formation of an independent entity with experience around the entire life cycle, from conceptualisation to commercialisation and supporting decisions on the distribution of funds, can help encourage the development of a more robust ecosystem.

Clean environment via embracing ESG

The time is now for companies to translate their Net Zero pledges into action to decarbonise. Addressing these challenges to spur real change would require innovation and support from the Government to develop new solutions and capabilities.

In this regard, many companies, especially SMEs, may be keen to start on a Net Zero programme but may not know how to start the process. Grants or double tax deductions may be given to these companies to encourage them to engage qualified consultants in carbon services. This will help them to better understand their current carbon emissions, and take steps to reduce it. Some examples of such services include carbon accounting, sustainability advisory and assurance, and greenhouse gas verification.

The confluence of a global pandemic, wealth inequality and trade tensions have posed immense challenges to businesses as they grapple with enhanced expectations of operating in a socially responsible manner. We have therefore proposed various measures to sharpen Singapore’s competitiveness, to turn these risks into opportunities.