SINGAPORE - Singapore welcomes the blueprint laid out by the Organisation for Economic Cooperation and Development (OECD) to crack down on international tax avoidance, said the Ministry of Finance (MOF) in a statement on Tuesday (Oct 6).
"We believe that sound implementation of the BEPS (base erosion and profit shifting) principles, with all tax jurisdictions being included in the process, will help foster free and fair economic competition," said MOF.
BEPS (base erosion and profit shifting), as the two-year review of the international tax system is called, seeks to curb tax haven use and other strategies by companies such as Google, Starbucks and Apple.
The OECD said that such tax avoidance strategies costs the world as much as US$240 billion (S$343.8 billion) a year in lost revenue.
Separately, a study by two left-leaning non-profit groups found that the 500 largest American companies hold more than US$2.1 trillion (S$2.99 trillion) in accumulated profits offshore to avoid US taxes and would collectively owe an estimated US$620 billion in US taxes if they repatriated the funds.
MOF said Singapore supports the view that "profits should be taxed where substantive economic activities generating the profits are performed and where value is created".
"We do not condone activities aimed at base erosion and profit shifting."
Singapore's tax policies support substantive economic activities, so as to create skilled jobs and business innovation, MOF added.
There are also provisions in Singapore's tax treaties with other countries that provide for exchange of information upon request in line with the internationally-agreed standard.
However, the ministry cautioned that the OECD recommendations should not "inadvertently end up stifling competition for substantive economic activities, raising taxes worldwide, and impeding global growth".
Finance Minister Heng Swee Keat said in the MOF statement that the recommendations should be "consistently applied" to ensure a level playing field.
"Singapore supports an inclusive monitoring mechanism that is conducted in a fair, open and objective manner with participation on an equal footing by all relevant tax jurisdictions," he said.
The OECD plan will be discussed at a meeting of G-20 finance ministers in Lima, Peru, on Thursday.