Singapore tax incentives meet global standards

The Forum on Harmful Tax Practices (FHTP) said in a report that it had reviewed 164 tax regimes, finding that governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes.
The Forum on Harmful Tax Practices (FHTP) said in a report that it had reviewed 164 tax regimes, finding that governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes.PHOTO: REUTERS

Republic has implemented all four agreed standards under OECD's tax/profit project

An international body overseeing global tax practices has said that Singapore's tax incentives meet the international standards on countering corporate tax avoidance.

The Forum on Harmful Tax Practices (FHTP) said in a report yesterday that it had reviewed 164 tax regimes, finding that governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of efforts to improve the international tax framework.

The reviews, which took place over the past two years, were aimed at studying the progress that these countries have made in updating and implementing tax policies so as to ensure companies do not exploit tax incentives for the sake of avoiding paying their fair share.

In particular, the reviews were focused on a practice called "base erosion and profit shifting" (BEPS).

This involves multinationals avoiding taxes by engineering lower profits in countries where taxes are high and correspondingly reporting higher profits in low-tax jurisdictions.

In recent years, the Organisation for Economic Cooperation and Development (OECD) has set out international standards to dismantle unfair tax regimes which enable such practices.

The Finance Ministry said in a statement that as a member of the Inclusive Framework on BEPS, Singapore is committed to implementing internationally-agreed standards to counter BEPS.

Singapore has implemented all of the four internationally-agreed standards under the OECD's BEPS project, including participating in the review, the ministry noted.

"Our tax incentives meet international tax standards and anchor substantive economic activities in Singapore," said Finance Minister Heng Swee Keat.

"I am glad that this is recognised by the FHTP. We will continue to create a conducive environment where businesses at various stages of growth can use Singapore as a base to build deep capabilities, grow and internationalise. In the process, we can create a range of good jobs and expand opportunities for our people."

Mrs Chung-Sim Siew Moon, the Singapore head of tax at Ernst & Young Solutions, said the review shows that foreign investors can rest assured that tax incentives will continue to stay in Singapore.

"There is also certainty that Singapore's tax incentives are not harmful by international standards, and hence will face less challenges from overseas tax authorities," she noted.

"Investors can expect more rigorous evaluation on new incentive applications and ongoing monitoring that incentive conditions are met."

A version of this article appeared in the print edition of The Straits Times on October 17, 2017, with the headline 'S'pore tax incentives meet global standards'. Print Edition | Subscribe