STUDY MISSIONS TO COUNTRIES WITH HIGH TECHNOLOGY WORK (Double deduction against tax for expenses)

Mr Eugene Yap Giau Cheng asked the Minister for Trade and Industry whether his Ministry will consider the grant of a double deduction against tax for expenses incurred by companies that participate in study missions organised by government agencies to countries with industries engaged in high technology work.

Mr Goh Chok Tong: Mr Speaker, Sir, the device of granting of double tax deductions to companies should not be indiscriminately used as it could be abused, besides causing revenue loss. If it is in the interest of a company to participate in a study mission, it should do so, and it can deduct all legitimate expenses. Double tax deductions should not be a critical factor in determining participation in study missions.

Moreover, confining the incentive to study missions organised by government agencies will discriminate against those organised by the private sector either as a group or individually.

Also, sufficient effective incentives already exist for manufacturers to upgrade their technology and I do not see the need for an additional incentive. Their best incentives are the benefits which a technological upgrading will bring for their enterprise.

Mr Eugene Yap Giau Cheng: Mr Speaker, Sir, what about the smaller private companies who want to see the machines for themselves before purchasing them, as they have limited capital?

Mr Goh Chok Tong: Sir, the expenses connected with their studies abroad are deductible. The companies should have at least the resources to go abroad before they can claim any tax deduction. That part of the expenses which they will incur on study missions abroad are legitimate expenses and are deductible for tax purposes.

Mr Eugene Yap Giau Cheng: Sir, trade missions are granted double tax deductions. I am sure the Minister would like to encourage the smaller companies to go overseas to see these machines for themselves.

Mr Goh Chok Tong: Sir, unlike trade missions, in the case of missions abroad to study technological developments, there are other incentives available for the latter group, such as the accelerated depreciation allowance for investments, investment allowance scheme, capital assistance scheme for the upgrading of industries, and small industries finance scheme for purchases of capital equipment for them to upgrade their operations. There are, therefore, sufficient incentives available for even the small companies to participate in missions abroad so as to absorb new technology which they can then introduce when they come back.