Singapore Budget 2016: Giving the financial services sector a timely tax boost

THE ushering of the Year of the Monkey seems to have brought some calm to the financial markets which have otherwise had a turbulent start to 2016. Many stock markets were at their 52-week lows. Oil prices touched US$26 a barrel, which is the lowest point since 2003. Economic data coming out of many countries are not encouraging. There is a lot of uncertainty around the emerging markets and in particular China.

Singapore is one of the leading financial centres in the world. This coveted status has been achieved as a result of decades of planning by the government and the implementation of right policies. This is expected to continue. The ups and downs in the global economy pose challenges for Singapore but at the same time show Singapore's strength to the world. The strength is Singapore's ability to maintain its pro-business policies, strong tax and regulatory framework, even through hard times. But can more be done to ensure that Singapore remains resilient in these uncertain times while being ready to tap rising trends once the uncertainties show signs of being overcome?

Singapore's corporate tax rate currently stands at 17 per cent. To spur growth in certain industries and to ensure that our tax regime is sufficiently competitive to attract businesses, various tax incentives were introduced to reduce rates to 12 per cent, 10 per cent and sometimes lower. Many of the tax incentive rates have been maintained at this level for decades, from the time the corporate tax rate was well over 25 per cent about 15 years ago.