Jamus Lim on Income Tax (Amendment) Bill and Multinational Enterprise (Minimum Tax) Bill
The Multinational Enterprise (Minimum Tax) Bill will align Singapore’s tax regime with international tax developments arising from the BEPS 2.0 initiative. On concerns that subscribing to a corporate minimum tax will erode a cornerstone of Singapore’s global competitiveness - its attractiveness to foreign capital - MP Jamus Lim said such fears are “probably misplaced”. He said the reality is that Singapore’s competitiveness is not anchored in low taxes but on many other “best in class” factors. Another reason for the “relatively muted” effect of tax policy on foreign direct investment (FDI) is that sufficiently large multinational corporations - precisely the ones targeted by the BEPS 2.0 regime - will ultimately confront foreign taxes on their earnings when their profits are repatriated to their home countries anyway. This could even lead paradoxically to a situation where raising taxes stimulates more investment, said Assoc Prof Lim. He added that given Singapore’s status as a high-income country and capital-rich economy, it should be pursuing FDI more for its secondary benefits than for the financing itself. He called for Singapore to focus on evaluating the efficiency of capital deployment and upgrading its technological capabilities to raise levels of productivity and innovation. He spoke in Parliament on Monday (Oct 14).
The Multinational Enterprise (Minimum Tax) Bill will align Singapore’s tax regime with international tax developments arising from the BEPS 2.0 initiative. On concerns that subscribing to a corporate minimum tax will erode a cornerstone of Singapore’s global competitiveness - its attractiveness to foreign capital - MP Jamus Lim said such fears are “probably misplaced”. He said the reality is that Singapore’s competitiveness is not anchored in low taxes but on many other “best in class” factors. Another reason for the “relatively muted” effect of tax policy on foreign direct investment (FDI) is that sufficiently large multinational corporations - precisely the ones targeted by the BEPS 2.0 regime - will ultimately confront foreign taxes on their earnings when their profits are repatriated to their home countries anyway. This could even lead paradoxically to a situation where raising taxes stimulates more investment, said Assoc Prof Lim. He added that given Singapore’s status as a high-income country and capital-rich economy, it should be pursuing FDI more for its secondary benefits than for the financing itself. He called for Singapore to focus on evaluating the efficiency of capital deployment and upgrading its technological capabilities to raise levels of productivity and innovation. He spoke in Parliament on Monday (Oct 14).
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