Budget debate: Govt to consider publishing estimates on impact of corporate tax changes on S'pore: Lawrence Wong

Rules under the Base Erosion and Profit Shifting initiative are still being fine-tuned and discussed globally. ST PHOTO: KUA CHEE SIONG

SINGAPORE - The Government will consider putting out more information and estimates on the impact of changes to international taxation rules on Singapore to provide for more informed debate, said Finance Minister Lawrence Wong.

He stressed that rules under the Base Erosion and Profit Shifting initiative or BEPS 2.0 are still being fine-tuned and discussed globally, pointing out that while the initiative is scheduled to come into effect by 2023, it is not set in stone "because many details are still being worked out".

The fact that matters are still being discussed is one of the reasons why he is hesitant to put out any figures at this stage, Mr Wong said in Parliament on Wednesday (March 2).

He was responding to Leader of the Opposition Pritam Singh's request for the projections that the Government is working with vis-a-vis the impact of BEPS 2.0, an agreement by 137 jurisdictions to reform international corporate tax rules.

There are two pillars under BEPS 2.0 - the first seeks to reallocate profit of the most profitable multinational enterprises (MNEs) from where activities are conducted to where consumers are located, while the second introduces a global minimum effective tax rate of 15 per cent for MNE groups with annual global revenues of at least €750 million (S$1.1 billion).

In reply, the minister acknowledged an earlier point made by Mr Singh about putting out more information for a more informed debate, and said: "We will go back and think about whether we might provide a range of estimates about what the impact of BEPS 2.0 might be for both Pillar One and Pillar Two."

Mr Wong suggested that the initiative would likely result in a neutral to "some increase" in tax revenue, and that the authorities will "provide some figures hopefully to help everyone get a better sense of what it might be".

However, any added revenue will very likely have to be reinvested back into ensuring Singapore continues to attract its fair share of investments, and is unlikely to go towards the Republic's social spending needs, he stressed.

The reality is that competition for investments is not going to go away just because of BEPS 2.0, and will in fact intensify in other non-tax areas, which Singapore will therefore have to fund and have resources ready for, Mr Wong said.

"So even if there is a plus from BEPS 2.0, I am in fact not confident that additional revenue will help us with our social spending needs, and especially not for our healthcare spending needs, which will continue to rise very sharply."

Watch Finance Minister Lawrence Wong's full speech in Parliament:

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