By Fiona Chan

TOP local companies with the potential to make it big globally may get some help in the upcoming Budget, tax firms said yesterday.

Ernst & Young tax partner Choo Eng Chuan said that while the Government has traditionally been very careful not to favour home-grown enterprises over foreign multinationals, it may be time to make the playing field less level.

'We would like the Budget to... identify local champions and have an overall strategy to help them bloom in the global economy, make them the mothership of our other, smaller local companies,' he said at a media briefing yesterday on what Ernst & Young would like to see in the Budget, due on Feb 22.

One way to do this would be for the Government to reserve its 'best incentives' for such 'champion' local companies, said Mr Choo.

There is also plenty of scope to help relieve the tax burden on companies in Budget 2010, tax experts said.

PricewaterhouseCoopers tax partner David Sandison said the Government should introduce more incentives to encourage the growth of small local firms. For example, investors could be allowed tax deductions for investments in local start-ups, he added.

To help firms tide over the recession last year, the Government exempted from tax the income that Singaporean companies earned overseas and remitted back to Singapore. This exemption could be extended or made permanent, said Mr Choo.

KPMG's head of tax services, Mr Owi Kek Hean, suggested that the Government provide more tax concessions for research and development activities in order to attract R&D centres to Singapore.

Tax incentives for 'green' companies could also encourage more sustainable growth, said Ernst & Young's head of tax, Mr Russell Aubrey.

While tax experts do not expect corporate tax rates to be reduced in next month's Budget, they believe the personal income tax rate could be lowered.

Singapore's top corporate tax rate has already been cut in previous Budgets to its current level of 17 per cent, just a touch higher than traditional rival Hong Kong's top rate of 16.5 per cent.

But the highest personal income tax rate here remains at 20 per cent.

Although this rate is 'competitive on a global basis', it is above Hong Kong's top rate of 16 per cent, said Mr Owi.

Individuals could also be given more tax breaks including another 20 per cent tax rebate for this year, said Mr Ajit Prabhu, partner and head of tax services at Deloitte Singapore and South-east Asia.

Middle-income taxpayers, in particular, would get some relief if the first $40,000 they earned was tax exempt, rather than the first $20,000 currently.

'This will help the mid-income individuals who are normally eligible for limited government assistance and who at the same time face an increase in the cost of living,' said Mr Prabhu.

He also suggested that the Government extend the goods and services tax offset package for another year.

This article was first published in The Straits Times.