Too early to tell what G-7's historic tax deal would mean for Singapore: Lawrence Wong

IT is too early to say what the G-7's historic tax deal targeting tech giants would mean for Singapore, Finance Minister Lawrence Wong said on Tuesday, although he noted that all jurisdictions will need to adjust their tax systems and rules.

The G-7 on Saturday reached a landmark agreement to impose a minimum corporate tax rate of 15 per cent on multinational companies in a move that would reduce their incentive to shift to low-tax havens.

In a Facebook post, Mr Wong said: "The new rules should not inadvertently weaken the incentives for businesses to invest and innovate. Otherwise, countries will all be worse off, fighting over our share of a shrinking revenue pie."

Detailing three things that will not change in Singapore, he said the Republic will continue to support a multilateral consensus-based solution that is anchored on sound economic principles, promotes tax certainty and ensures a level playing field across all jurisdictions.

Secondly, the Ministry of Finance and Inland Revenue Authority of Singapore will make any necessary changes to the country's corporate tax system, in close consultation with businesses and tax professionals, as and when a global consensus is reached on the G-7's proposals.

The tax proposals will be further discussed at other international platforms, such as the Inclusive Framework on BEPS (base erosion and profit shifting), for which Singapore is a member, said Mr Wong. They will also be discussed at the G-20 Finance Ministers meeting in July, he added.

Although Singapore is not a G-20 member, it has been invited to attend, and Mr Wong said he looks forward to sharing his views then.

If a consensus is reached, detailed rules will need to be hammered out over several months, he added.

"We will continue to ensure that our tax system is compatible with international norms, while managing the administrative and compliance burden on businesses," said Mr Wong.

Third, noting that Singapore's overall competitiveness has never been based on taxation alone, Mr Wong said it is about ensuring a conducive environment for businesses and entrepreneurs to thrive.

"Trust, reliability and integrity are ultimately what makes Singapore an attractive place for substantial economic activities. We will continue to strengthen these attributes, to create good jobs and opportunities for all Singaporeans," he said.

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