SINGAPORE said on Tuesday it welcomes the Organisation for Economic Co-operation and Development's (OECD) final recommendations to the G-20 for an international approach to combat tax avoidance.
These recommendations target activities aimed at base erosion and profit shifting, what OECD terms BEPS as an acronym.
In a statement, the Ministry of Finance (MOF) said Singapore supports the BEPS principle that profits should be taxed where substantive profit-generating economic activities are performed and where value is created. In this regard, Singapore is already in compliance.
"Our tax policies support substantive economic activities, so as to create skilled jobs and business innovation, and build new capabilities in Singapore," it said.
"Singapore also adopts the internationally-agreed arm's length principle for the determination of prices for transactions between related parties. Our tax treaties incorporate provisions that guard against treaty abuse, and provide for exchange of information upon request in line with the internationally-agreed standard."
Singapore has been actively taking part in BEPS discussions at various international forums and said it will continue to work with the global community to counter cross-border profit shifting.
MOF also said that tax policies are useful in generating economic activity when they are underpinned by prudent fiscal strategies. It added that the BEPS project should not end up in stifling competition, raising taxes worldwide and impeding global growth.
Singapore Minister for Finance Heng Swee Keat hopes that BEPS recommendations will be consistently applied across all state and non-state tax jurisdictions to ensure a level playing field. This will also maintain a pro-growth global environment for investment while minimising tax arbitrage.
"Singapore supports an inclusive monitoring mechanism that is conducted in a fair, open and objective manner with participation on an equal footing by all relevant tax jurisdictions," he said.