Mr S Iswaran at the Seminar on the Attribution of Business Profits and the Taxation of Permanent Establishments

SPEECH BY MR S ISWARAN, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE SEMINAR ON THE ATTRIBUTION OF BUSINESS PROFITS AND THE TAXATION OF PERMANENT ESTABLISHMENTS ON FRIDAY, 20 JUL 2007, 9.00AM AT SHERATON TOWERS, BALLROOM 1 & 2

Distinguished Guests

Ladies and gentlemen,

I am pleased to join you this morning at this seminar on the Attribution of Profits and Taxation of Permanent Establishments. Let me first extend a warm welcome to all the delegates, especially our guests from overseas. I understand some of you have already spent a week in Singapore, and I hope you had the time to take in the sights and culinary delights of Singapore.

Aligning our Income Tax Regime to Business Needs

The Singapore Income Tax regime is comparatively young and has its origin in the period after the Second World War.At that time, the cross border movement of people, goods, capital and services was relatively small.But with globalisation, the world has become interconnected and more interdependent and the volume of trade and investment has increased exponentially.Businesses seek higher returns by locating different parts of their value chain in diverse geographies to enjoy competitive advantages pertaining to labour, land and taxes.Consequentially, businesses face more complicated tax issues

Today, a business is concerned not only with how its foreign income will be taxed in its home country, it will also have to contend with how the host country in which it operates would want a share of the tax due.Clearly, if both countries taxed the same income, this undue tax burden will have an adverse impact on cross border trade and investments.

To mitigate the effect of international double taxation, countries usually enter into bilateral treaties for the avoidance of double taxation.Apart from setting out the rights to tax, a Double Taxation Agreement (DTA) may also provide an avenue for the resolution of tax issues. To this end, Singapore has been taking proactive steps to encourage and support its businesses venturing abroad.

Presently, Singapore has 54 comprehensive treaties in force.Another nine treaties are pending ratification and we are in the process of negotiating with more tax jurisdictions.We also have limited agreements for the mutual exemption of air transport and/or shipping profits with seven other tax jurisdictions.Our companies can therefore take advantage of the wide network of DTAs with our major and emerging trading partners to enjoy tax certainty, reduce tax burden and resolve issues with foreign tax jurisdictions.

Our treaty policy has evolved to keep pace with economic developments. From receiving credits for tax forgone for investments into Singapore, we are now prepared to offer credit for underlying tax.

Raising Knowledge in our Tax Community

While these laws help our businesses venture overseas, it is also important to have a sound understanding of the different taxation systems in countries where our businesses invest. This is where seminars such as this are particularly relevant.After all our tax law is only as good as the tax professionals who administer and interpret them.

Today, you will have the opportunity to discuss the complex area of taxation with 250 other tax professionals. The various panel discussions will offer businesses an understanding and appreciation of their tax exposures when they venture overseas in their search to maximise returns. I am hopeful that the open and comprehensive sharing and exchange of learning between the regulators and practitioners will benefit both parties.

Launch of the Advanced Tax Programme and Masters in Taxation Programme

It is therefore timely that the TaxAcademy has chosen this platform to launch the Advanced Tax Programme. This is an advanced and intensive tax course for tax professionals. To cater to working adult-learners, classes will be held in the evenings and on weekends, beginning September 2007.This advanced tax course will cover a wide spectrum of topics on income tax, Goods and Service Tax, regional tax, and stamp and estate duties. The Advanced Tax Programme will equip graduates with a more comprehensive and thorough understanding of the complexities of tax issues.It will be led by professionals who have extensive experience in taxation.

I am also heartened to see that the TaxAcademy has linked up with SIMUniversity to launch a Masters in Taxation course with the Advanced Tax Programme as the foundation for admission.Graduates of the Advanced Tax Programme will be eligible for exemptions from four of the ten courses required for the Masters in Taxation.This qualification will be an important milestone in any tax professionals’ quest for excellence.It will also be yet another significant step for the Tax Academy of Singapore in its efforts to be the regional tax knowledge hub.

Conclusion

On this note, I would like to offer my congratulations to the Tax Academy on your achievements and it is with great pleasure that I now declare the seminar on the “Attribution of Business Profits and the Taxation of Permanent Establishments” open.I wish all tax regulators, professionals and practitioners here fruitful discussions, warm company and an enjoyable stay in Singapore.

Thank you.