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Monetary & Fiscal Policy in General

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  Fiscal andmonetary policies Chapter 6 !   Chapter 6 !# Summary There is a worldwide trend towards lower direct taxes. We must therefore keepthe burden of taxes on the economy as low as possible, especially the burdenof direct taxes on companies and individuals, to remain competitive, attractforeign investment and talent, and encourage Singaporeans to create wealth.To balance the budget, we must make up by raising GST. Key Recommendations Fiscal and Monetary Policies  ãContinue to pursue rational, prudent macroeconomic policies. Maintainfiscal discipline and a stable Singapore dollar. Reducing Direct Taxes  ãCut direct tax rates (corporate income and personal income tax rates) to 20per cent over the next two years to signal Singapore’s intent to compete forinvestment and talent across all sectors. Towards lower direct taxes and anattractive tax regime  Chapter 6 !$ Raising GST  ã Raise the GST from 3 per cent to 5 per cent as soon as possible. Retain across-the-board coverage of GST, with as few exemptions as possible. ã Provide an offset package to help Singaporeans adjust to the GST increaseand ensure that most households, and all lower-income households, are noworse off during the transition. Corporate Tax Reforms  ã Introduce group relief to allow local corporate groups to offset unutilised losses and excess capital allowances of one company against taxable profitsof another company within the same group. ã Shift from a full-imputation system to a one-tier corporate tax system tosimplify tax administration and compliance. ã Exempt business-related foreign source income for companies from tax. ã Allow more generous tax treatment of intellectual property. ã Review and rationalise withholding tax provisions to ensure that our withholding tax regime does not discourage cross-border transactions and disincentivise people and companies from locating their activities in Singapore. ã Consider giving tax deductions for mergers and acquisitions, to encourage consolidation in heavily fragmented industries. ã Consider giving tax deductions for selected expenses incurred prior to thestartup of new businesses and in the listing of companies, to help promoteenterprise development.  Personal Tax Reforms  ã Exempt individuals ’  interest income earned from onshore bank deposits fromtax. ã Consider tax exemption for individuals ’  foreign source income remitted backto Singapore. ã Enhance tax treatment of stock options to encourage employers to use stockoptions as a performance-linked compensation tool. ã Exempt employment income attributable to time spent outside Singapore for ‘ temporary tax residents ’  who have not been living in Singapore for along period before their current jobs. ã Exempt tax on employers ’  contributions on behalf of expatriates to overseasprivate pension funds. Enhancing the Tax Incentive Regime  ã Enhance the tax incentive regime so as to attract new activities and promotegrowth in new areas. ã Streamline and rationalise current incentives for easier administration andcompliance. !% Chapter 6

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Jul 23, 2017

Jomari Labilles

Jul 23, 2017
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