SINGAPORE – With the introduction of a global minimum tax, Singapore as a small economy must work harder than ever to attract and hold investment.
In addition to adjusting the corporate tax system, both multinational and local companies will continue to work together here to expand their business and create new connections to access global markets, said Second Minister of Finance and National Development Indranee Rajah on Friday (September 3rd ).
Speaking at the Virtual Tax Academy’s signature conference on “Taxes and Investing in the Post-Pandemic World”, Ms. Indranee said that the international consensus on the discussion of revising international tax rules and increasing taxes by multinational corporations, Also known as Base, Erosion and Profit Shifting or BEPS 2.0 solidifies quickly.
She added that the momentum to reach global consensus by the end of the year is strong.
The Group of 20 (G-20) recently approved a statement on a two-pillar solution to address the tax challenges arising from the digitization of the economy.
The proposed solution includes the introduction of a global effective minimum corporate tax rate of at least 15 percent.
Ms. Indranee, who is also a minister in the prime minister’s office, said Singapore has fully engaged in the BEPS discussions and has also quickly and proactively adapted its corporate tax system to international tax developments.
“When full consensus is reached, Singapore will adjust our corporate tax system as needed in consultation with the industry.”
All adjustments to Singapore’s tax system, she added, will be guided by three principles: Singapore will adhere to internationally agreed standards, it will safeguard its taxation rights and try to minimize compliance costs for companies.
As the scope for tax competition narrows, the environment after BEPS 2.0 would increasingly become a competition between overarching economic ecosystems, said Ms. Indranee. She added that ultimately the best answer would be to further strengthen the republic’s overall competitiveness.
Despite seeing a decline in FDI last year, Singapore managed to manage $ 17.2bn in investment backlog after Covid-19 is an example of how opportunities are being seized, she said.
“Singapore’s overall competitiveness is not and has never been due to fiscal factors alone.
“We have built and will continue to build strong non-tax advantages, including our strategic geographic location and connectivity, excellent physical and digital infrastructure, the rule of law, a robust intellectual property protection system, a skilled workforce and our open and friendly business environment. “
She added that as a small economy under BEPS 2.0, Singapore will have to work harder than ever to attract and hold investment.
“But hard work and overcoming challenges are no strangers to us,” noted Ms. Indranee.
This year’s budget announced a $ 24 billion package for the next three years to help businesses and workers adapt to a post-Covid-19 world.
All 23 Singapore’s Industry Transformation Maps (ITMs) are also being updated to drive restructuring and transformation and to develop new growth ideas.
The ITMs were launched in 2016 as roadmaps to drive transformation for 23 industries in manufacturing, built environment, commerce and connectivity, basic household services, modern services and lifestyle.
In addition to adjusting its corporate tax system, Singapore will continue to work with both multinational corporations and local businesses to transform and expand their businesses regionally and globally, as well as creating new connections to access global markets, Ms. Indranee said.
“I am confident that together Singapore – workers, industry, academia and government – will be able to strengthen existing benefits, build new ones and seek new opportunities to ensure Singapore’s continued economic success and a bright future for our people guarantee.”