Mr Seah Kian Peng: To ask the Minister for Trade and Industry (a) what is the Ministry’s assessment of the potential impact of the Base Erosion and Profit Shifting project (BEPS 2.0) on the outlook of Singapore’s technology sector; and (b) what are the steps that the Government will be taking to preserve Singapore’s competitiveness as a favoured hub for technology multinational companies.
Written Answer by Minister for Trade and Industry Mr Gan Kim Yong
1. Although momentum towards an international consensus has accelerated in recent months, negotiations on the final design and rules of the Base Erosion and Profit Shifting (or BEPS) 2.0 Project are still ongoing. There is therefore still a wide cone of uncertainty in terms of the possible impact on the technology sector and on Singapore. For example, there is still no international consensus on the revenue threshold above which a Multi-National Company (MNC) will be affected by BEPS 2.0, as well as how the effective tax rate of a MNC will be determined.
2. Should a global consensus be reached, the international rules for corporate taxation will change and all jurisdictions will need to adjust their tax regimes to be compliant with the new rules. Any adjustments to Singapore’s tax system will aim to minimise the compliance burden for businesses and ensure that Singapore continues to be an attractive place for these global technology companies to do business. We are closely monitoring these international developments and engaging industry stakeholders to better scope our response.
3. Singapore’s competitiveness goes beyond taxation. Our key fundamentals remain strong. We have built a vibrant technology hub with deep capabilities, secure infrastructure, strong intellectual property protection regime and dense ecosystem of local and global enterprises. We will push on with our efforts to enhance the technology ecosystem, through initiatives such as reskilling and upskilling the local workforce in emerging tech skills, welcoming experienced global tech talent and investing in research and development to strengthen the innovation capabilities of our enterprises. We are therefore confident that even as the window for tax competition narrows, global technology companies will continue to find Singapore a compelling place to do business.