Big Four release their wish-lists for Singapore Budget 2020: Deloitte

This year’s Singapore budget is just around the corner, and the Big Four have released their wish-lists in advance. Consultancy.asia highlights one areas of each firm’s input in a four-part series. Here, Deloitte calls for tax credits to encourage skills development

Amid growing signs of global economic gloom, there is a widespread sense that this year’s Singapore Budget – which is scheduled to be released on Tuesday – is an especially critical one. In its opening commentary, the Singapore member of global professional services firm Deloitte describes the current retreat from multilateralism being seen around the world as unprecedented. As such, the firm has called for a focus on further investment into local skills development.

“As the world economy becomes increasingly volatile, it is reassuring that the Singapore government is ready to help businesses and workers tide through potentially trying times,” states Deloitte Southeast Asia regional managing partner for Tax & Legal, Low Hwee Chua. “The challenge lies in how well businesses plan and prepare ahead. Developing and deepening workers’ capabilities remains one of the clear themes of Singapore’s transformation roadmap.”

In a bid to further transform Singapore into one of the world’s leading knowledge economies, the government two years ago released its professional services industry roadmap – with an expansion of the Professional Conversion Programmes (PCPs) a central feature. Deloitte followed up as the first company to establish an official PCP focused on consulting, for professionals, managers, executives and technicians wishing to train for a move into the evergreen sector. Here, the firm says that policy support in such areas should remain a priority.

“Human capital is an important driver of economic growth. With limited natural resources to depend on, the availability of quality human capital remains a key competitive edge for organisations to consider Singapore as regional or global headquarters for strategic and support activities,” states Liew Li Mei, International Tax Leader at Deloitte Singapore. “That being said, companies find that there are inherent risks in investing in human capital as employees may leave before the company has a chance to recoup or realise its investment.”

While Liew notes that employee movement doesn’t necessarily represent a risk to the wider economy – such as that skills learned will likely remain in the local market, albeit benefitting a different employer – the potential of departures still contributes to a reluctance to invest, and thus undermines a skilled market regardless. One of Deloitte’s recommendations then is for a study on the feasibility of an ‘unrealised investment in human capital’ tax credit or allowance.

Such tax concessions for ‘unrealised or unsuccessful’ investments would incentive private investment into human capital development and redistribute some of the risks from businesses to the broader economy; “in view that a skilled workforce is beneficial to Singapore as a whole.” Despite its own size – globally, the firm generates revenues in excess of $46 billion – Deloitte adds that this would be especially beneficial for small and medium-sized enterprises (SMEs).

Liew has also suggested aged-based top-ups to the SkillsFuture initiative, with citizens over 40 to receive higher credits. “Human capital can no longer be perceived as how much revenue a person could generate for the business, but how much value a person could bring to a business in his entire career,” the firm concludes. “Different value propositions could be brought in by an individual at different stages of his career; some values are tangible, while many are intangible”.

Next: KPMG shares a vision of Singapore as Asia’s Transformation Capital.