SINGAPORE — The plans by countries around the world to set a global minimum corporate tax rate will make it harder for Singapore to attract investments, Finance Minister Lawrence Wong said in Parliament on Monday (5 July).
Wong’s comments come after 130 countries and jurisdictions including Singapore commit to a two-pillar plan to radically reshape the global tax system, according to a statement by the Organisation for Economic Co-operation and Development issued last week.
The global agreement follows a landmark deal by the G7 group of wealthy nations signed last month to force multinational companies to pay a fairer share of tax.
Singapore has to be “realistic about what the impact will be,” Wong said.
“It will make it harder for us to attract investments and we have to work harder, particularly given our size, the fact that Singapore is such a small city-state compared to so many other locations around the world, which offer equally if not more attractive and compelling attributes,” he added.
He was responding to a question by Member of Parliament for East Coast Jessica Tan about the impact of the tax deal on Singapore’s tech hub status.
Wong said Singapore has to work “much harder” in upgrading its workforce, infrastructure, connectivity, and overall business environment to stay competitive and attract investments.
Echoing the sentiment, Trade and Industry Minister Gan Kim Yong said Singapore's competitiveness goes beyond its taxation rate and that it must not be complacent.
“We are therefore redoubling our efforts to enhance our competitiveness and improve our business environment. For example, through upgrading our Industry Transformation Maps, we are confident that investors will continue to find Singapore a compelling place to do business and our economy can continue to thrive in the new environment,” Gan added.
In response to a question by Bishan-Toa Payoh MP Saktiandi Supaat about the risk of US firms moving out of Singapore because of the tax reform, Gan said the risks exist even now given that these firms do their financial calculations regularly to guide their investment decisions in Singapore.
The Ministry of Trade and Industry continues to look at ways to help companies operating here to continue doing so in cost-effective ways, Gan said. Apart from boosting its infrastructure, Singapore needs to expand its network of free trade agreements including their scope such as in the areas of renewable energy and the digital economy, he added.
Stay in the know on-the-go: Join Yahoo Singapore's Telegram channel at http://t.me/YahooSingapore
More Singapore stories: