Singapore needs to go beyond tax perks and develop new trump cards, says Heng

Singapore

SINGAPORE needs to develop its competitive advantages beyond tax incentives, given the trend of lower tax rates around the world, said Minister for Finance Heng Swee Keat in Parliament on Monday.

The tax cuts the US is offering companies may enhance its tax competitiveness vis-à-vis other countries, and companies with US linkages are likely to be analysing the details of the US tax reform package and reviewing their options, he said.

However, companies also take into account non-tax considerations in their investment decisions.

"Considerations would include a location's business environment, its proximity to markets, availability of skilled manpower and corporate capabilities."

He added that Singapore must continue to develop and strengthen its other competitive advantages by maintaining its pro-business environment and building on its connectivity to global markets and strong links to the Asean and Asian economies, which are expected to continue to grow strongly.

"We must also continue to deepen the capability of our industries and our people, so that we can continue to stay relevant and attractive to all investors."

Mr Heng was responding to questions on the impact of the impending US tax cuts on Singapore's economy

The current US tax reform includes a cut to the headline federal corporate tax rate from 35 per cent to 21 per cent, which is in sync with the current global downward trend in corporate tax rates.

The top US marginal personal income tax rate is also being reduced from 39.6 per cent to 37 per cent.

Singapore's corporate tax rate is currently at 17 per cent; the top marginal personal income tax rate stands at 22 per cent.

Both are competitive internationally, said the minister.