Singapore’s fiscal policy is in need to evolve to support businesses in an increasingly complex global economy, according to Deloitte Singapore, highlighting how policies that provide clarity and flexibility could help companies stay resilient and responsive to change.
In its key recommendations for Budget 2025, which zeroes in on enhancing business resilience, adapting to global tax reforms, advancing research and development (R&D), and promoting sustainability, Deloitte says easing restrictions on the disposal of shares in property-holding companies could provide businesses with greater flexibility to restructure their assets.
The current rules, including those requiring proof of no property development for an extended period, could slow down strategic decisions and limit the ability of businesses to pivot quickly in response to market conditions.
Deloitte says simplifying these requirements can enable companies to streamline operations, redeploy capital more efficiently, and manage resources effectively during periods of economic uncertainty.
"Singapore should continue to fine-tune its tax policies to bolster resilience amid economic uncertainties. Key recommendations include clarifying and amending tax rules, such as the deductibility of costs for carbon offsets and conditions for tax allowances for mergers and acquisitions (M&A), which have been viewed as limiting for businesses," says Rohan Solapurkar, business tax leader at Deloitte Singapore.
"A review of the exemption conditions under Section 13W of the Singapore Income Tax Act 1947 (ITA) is also proposed. The current requirement that investee companies must refrain from property development for 60 months before the disposal of shares can be overly restrictive, particularly when the immovable property serves as an operational asset rather than one that is being held for trading or resale. Updating these conditions would be helpful in providing tax certainty to businesses while ensuring compliance with global standards."
Solapurkar says other recommendations include increasing the cap on medical expense deductions and addressing challenges in foreign tax credit rules for mark-to-market taxation, which would offer businesses much-needed clarity and flexibility.
