Singapore must adjust to G7 tax plans, says finance minister

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Singapore, will need to adjust with nations if a proposed regime for taxing multinational enterprises is implemented, Finance Minister, Lawrence Wong, said on Tuesday.

The plans, announced by the Group of 7 (G7) nations last weekend, would a minimum corporation tax of 15 per cent and force multinationals to pay tax where their sales are made.

“What we know for sure is that the international rules for corporate taxation will change, and all jurisdictions will need to adjust their tax systems and rules,” Wong said.

The South-East Asian city-state has one of the world’ highest living standards, based in part on attracting foreign businesses and on its own corporations investing in neighbouring countries.

Many multinationals have made Singapore their regional headquarters, drawn in part by relatively low 17 per cent corporate tax.

In spite of its small size, Singapore regularly features among the world’ ten biggest foreign direct investment (FDI) destinations, according to data collated by the United Nations Conference on Trade and Development (UNCTAD).

However, global FDI fell by around 40 per cent in 2020; UNCTAD said in January, due to the pandemic and related restrictions on businesses.

Wong warned on Monday that the proposed new rules should inadvertently weaken the incentives for businesses to invest and innovate as otherwise; countries will all be worse off, fighting over share of a shrinking revenue pie.

Singapore will attend the next meeting of the Group of 20 (G20) in July, where the tax proposals will be discussed, Wong said.