SINGAPORE: Singapore will adjust its corporate tax rate and related tax incentives schemes, in due time - but it will do so, in consultation with the industry, while protecting its sovereign rights on taxes and keeping the compliance burden on businesses down, said Minister for Finance Lawrence Wong.
The minister was replying to questions posed in Parliament on Monday, on Singapore’s response to the Group of Seven’s recent agreement on a global minimum tax rate and how that would affect the nation’s competitiveness, report agencies.“Singapore has been actively involved in these international discussions as part of the Inclusive Framework or the IF,” he said.
The OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) comprises over 130 jurisdictions, collaborating on the implementation of measures to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment.
Mr Wong said the measures being considered by the IF - which fall under two pillars: Pillar One and Pillar Two - would eventually affect Singapore’s corporate income tax revenues, and limit the effectiveness of its tax incentives, respectively.
“However, at this stage, it is still too early to work out the exact impact of these tax proposals. The final number of affected MNEs (multinational enterprises) as well as the extent of the impact depends on the design of the specific rules, which are still being actively discussed at the IF.
“As some of these tax changes can only be effected through a multilateral instrument, there will be a need for an international consensus to be reached before the changes can be implemented.”
He said, therefore, that Singapore will only be able to determine the impact of such measures when the IF has worked through and agreed on the detailed design elements of both pillars and when it can observe how companies and other governments respond to these international developments.“What we can say for certain is that, when a consensus is fully reached, Singapore will adjust our corporate tax system as needed in consultation with the industry.
“Any adjustments to our tax system will be guided by three key principles: First, we will abide by internationally agreed standards; second, we will safeguard our taxing rights; and third, we will seek to minimise the compliance burden for businesses.