Singapore to lift business and social environment amid tax changes: Lawrence Wong

WHILE the global movement towards a minimum corporate tax rate of 15 per cent will have an impact on Singapore's competitiveness, the city state has never relied only on taxes to compete for investments, said Finance Minister Lawrence Wong.

This, however, means that Singapore will have to double down on efforts to strengthen non-tax competitive factors, including infrastructure and capabilities of its workforce in order to ensure that the overall business environment is attractive and conducive, said Wong.

"We are determined to make sure that Singapore remains one of the best places in the world for business," Wong said in an interview with CNBC on Monday (Feb 21).

On wealth taxes, the finance minister said that it is indeed challenging given that that wealth and financial flows are highly mobile.

"If we were to move, but other jurisdictions do not have similar taxes, it is very easy for wealth to move away from Singapore to another location," he said.

In addition, putting in place these sorts of wealth taxes, particularly a net wealth tax, can be a very complex exercise to estimate the wealth of the individual, said Wong.

While the government continues to study these options, it will also have to be practical, said Wong.

As such, the government had in this year's Budget decided to impose wealth taxes principally through existing means including property tax, stamp duties and the additional registration fee for motor vehicles.

Commenting on the tax changes announced in Budget 2022, Wong said that it is not sustainable for Singapore to compete on cost alone given that wages have to go up as society and economy progress.

As wages rise, Singapore will have to compete on the basis of of capabilities, productivity and innovation. Much of the measures announced in the Budget had therefore been directed towards investing in the capabilities of businesses and workers here, Wong noted.

The tax changes and increased social spending also come as Singapore looks to become a more equitable society.

"We are not against people doing better, earning more and accumulating wealth," said Wong.

"But as part of our renewed and strengthened social compact, we do want everyone to contribute their share of taxes - and those who have greater means should contribute a larger share," he added.