Government urged to adopt tax incentives for 5G adoption: KPMG

This includes tax credits of up to 42.5% for the development of use cases for 5G.

The government is being encouraged to implement a digital transformation package consisting of broad-based tax incentives to hasten the adoption of 5G in Singapore, according to a budget proposal by KPMG.

In particular, it proposed a research and development (R&D) tax incentive scheme that would allow refundable tax credits of up to 42.5% of qualifying R&D and innovation costs, to spur the development of new use cases for 5G networks.

For these, it also suggested to revise the definition of R&D to include wider innovation activities such as the development of data analytics models.

To lighten the burden of costs to consumers in the form of products and services, tax depreciation or writing down allowances for spectrum rights payments to offset costs to telcos were also proposed.

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The progressive roll-out of 5G network by Singapore telcos is expected to fuel greater demand for data centres, KPMG said.

The package would also include enhancing the capital allowance for investments in assets like software, as well as providing deduction of at least 250% for digital skills training. This aims to encourage the onshoring of business processes.

“Singapore loses tax revenue when enterprises offshore their operating activities, as their profits are reduced due to outsourcing costs. However, when these activities are resumed in Singapore with technology-backed solutions, it will help to preserve revenue since the costs of undertaking these onshore activities will be made cheaper with technology or digital labour,” KPMG said.