Crackdown on corporate tax evasion 'unlikely to affect S'pore'

A GLOBAL crackdown on firms "shifting profits" abroad to evade tax is likely to have little impact here, given Singapore's compliance with international practices, say PwC executives.

They note that, while Singapore's corporate tax rate of 17 per cent is among the lowest in the world, its legal framework will deter multinationals from moving profits here to avoid levies in another jurisdiction.

Australia is among the latest to join the crackdown. Last month, it proposed a new law to tighten loopholes while targeting the activities of about 30 multinationals. Similar efforts have taken place in Europe and India.

PwC Singapore tax leader Chris Woo told The Straits Times in a recent interview that it would be very hard for profit-shifting to happen in Singapore, given its compliance with international tax standards and strong tax treaty network.

"It is, in a way, still business as usual," he said, noting Singapore is always conscious of the need to meet global standards.

He said: "There might be refining of tax regulations to increase clarity, transparency, or increased reporting, which would help businesses based here better demonstrate their substance."

On the sidelines of PwC's global tax symposium, which ended on May 28, he said Singapore had always been rigorous about attracting businesses with substantive business operations.

"To businesses, we have a strong rule of law - it's a safe country with robust infrastructure. As a financial centre, it adds to the global value chain.

"These commercial factors far outweigh the tax factor, which is just icing on the cake."

He said the bigger challenge is dealing with firms that are taxed two or even three times.

"It's the same dollar earned, but a company can be taxed twice, in two countries."

PwC global tax leader Rick Stamm said: "A good system taxes profits only once, somewhere in the world. It should also support global trade - be transparent and clear."

A project pushed by the Organisation for Economic Cooperation and Development (OECD) that aims to standardise tax rules worldwide - and includes eliminating double taxation - could be the "best chance to get positive near-term change", he said.

A version of this article appeared in the print edition of The Straits Times on June 19, 2015, with the headline 'Crackdown on corporate tax evasion 'unlikely to affect S'pore''. Print Edition | Subscribe