Changes to Singapore’s FDI tax strategy may come only after Budget 2023 

GLOBAL tax changes could prompt Singapore to find new ways to attract foreign direct investment (FDI), such as tax credit schemes, grants, or industry-specific measures – but this may only happen after Budget 2023, said industry watchers.

The catalyst is the proposed Global Anti-Base Erosion rules in Pillar Two of the Base Erosion and Profit Shifting (BEPS 2.0) initiative, led by the Organisation for Economic Co-operation and Development.

The rules introduce a global minimum effective tax rate of 15 per cent for multinational enterprise groups with annual global revenues of at least 750 million euros. This may require countries such as Singapore to introduce top-up taxes, limiting the effectiveness of traditional tax incentives.