Reframing taxes for resilience and competitiveness

SINGAPORE’S tax system has long underpinned its status as a global business hub. But that foundation is facing unprecedented pressures amid significant global tax reforms, digital disruption and heightened geopolitical uncertainty

The government is responding to the changed environment through the Singapore Economic Resilience Taskforce, chaired by Deputy Prime Minister Gan Kim Yong, which is charting strategies to shore up the nation’s economic future. 

In this context, tax policy has moved beyond a mere revenue tool to a strategic lever for reinforcing competitiveness, boosting innovation and securing sustainable growth. The urgent task for policymakers is to balance revenue needs with fairness and strategic appeal, to keep Singapore an attractive destination for global capital.

Tay Hong Beng, chairman of Singapore Chartered Tax Professionals (SCTP), said Singapore has attracted foreign investments “not solely through its tax system, but through a robust business ecosystem built on business-friendly regulations, a strong talent pool, and regional infrastructure and connectivity”.

The challenge lies in evolving the Republic’s ecosystem amid a major international tax overhaul. 

The Organisation for Economic Co-operation and Development’s two-pillar solution sets a global minimum effective tax rate of 15 per cent for large multinationals, directly challenging Singapore’s traditional competitive corporate tax regime.

In response, Singapore introduced a Domestic Top-up Tax. This ensures that if a multinational’s effective tax rate on local profits falls below 15 per cent, Singapore collects the difference itself, rather than letting another country do so.

The global shift

The playbook for competitiveness must now go beyond tax rates.

Allen Tan, chair of the Asia-Pacific tax practice at law firm Baker McKenzie, suggested that a strategic pivot is needed.

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“While ensuring alignment with global taxation standards is important, it is also crucial that Singapore continues to anchor and attract strategic investments, especially from multinational enterprises which have contributed to Singapore’s economic growth,” he said.

“Singapore should continue to differentiate itself through continuously refreshing and calibrating its policy on targeted or sector-specific initiatives with a special focus on high-value-creation activities, advanced manufacturing, IP development and R&D, sustainability-linked investments, as well as businesses that are aligned with the country’s future growth priorities,” added Tan, who is also SCTP’s deputy chair.

Agreeing, Tay said Singapore can also present a compelling proposition for investors by “(strengthening) its ecosystem of business professionals to help investors navigate business and tax rules responsibly across the region”.

For Eu Chin Sien, executive director and head of goods and services tax (GST) at BDO, the Republic’s goal should be “to foster a comprehensive business ecosystem that provides certainty and confidence for companies to invest, expand and innovate locally”.

“By integrating sustainability, forward-looking policies and flexible incentives, Singapore can encourage long-term growth and resilience, ensuring it stays attractive to global investors while adapting to evolving international tax trends and economic challenges.”

Building business resilience

In a world of volatility, resilience is the new competitive advantage; tax policy must be a stabilising force and a catalyst for adaptation. For businesses facing uncertain demand and technological disruption, the cost of transformation is a key hurdle.

Said Tay: “Developing an agile operating model, incorporating process redesign and automation to adapt to changing business demands will be key, followed by investments in IT upgrades and building AI capabilities. These transformation costs will be substantial.”

He suggested that the government could support this through relevant grants and tax incentives to accelerate the necessary digital transformation for local enterprises.

Beyond specific incentives, the overarching qualities of the tax system itself become critical resilience levers. Tan noted that, amid global uncertainty and trade volatility, there is a need to “ensure that stability, fairness, clear predictability and flexibility remain as key elements of our tax system”.

“Our policies should continue to be flexible enough to accommodate and help the vulnerable in our society, as well as businesses undergoing hardship in challenging times, something Singapore demonstrated effectively during the pandemic.”

Eu observed a technological dimension to this resilience that could benefit smaller companies, such as “a modern, real-time tax administration – leveraging e-invoicing, data analytics and faster processing”. This enhances efficiency and responsiveness for both authorities and businesses.

The profession’s pivotal role

As the bridge between policy and practice, trained tax professionals are evolving beyond compliance functions into strategic partners.

“They are recognised,” Tay said, “as professionals who are not only proficient in local tax compliance but also in international taxation, often providing valuable business insights in sectors they specialise in.”

Tan said that for multinationals, tax experts “can connect the dots more effectively and help these global businesses make decisions that are both compliant and commercially sensible”.

“The role goes beyond tax and accounting,” he added. “It is about connecting and integrating tax with legal to stay aligned with evolving laws, with finance and operations to ensure business practices and structures are operationally sound, and with IT on data governance and security, working hand in hand to future-proof the business.”

Eu framed this as transforming the compliance function into an opportunity, where professionals act as “both technical interpreter and strategic partner” to help organisations anticipate changes, manage risks and capitalise on opportunities.

Singapore’s approach has always been to innovate from global best practices to meet local needs; there are good lessons for the country in the current global tax transition.

Tay advised a discerning approach: “Singapore can learn not only from best practices overseas, but also avoid those that may create potential challenges for tax administration.” He stressed the need for boldness and administrative clarity, supported by “a highly reliable and ethical group of tax professionals”.

Tan sees value in the strategy to engage with global partners. “Singapore’s proactive participation in intergovernmental collaborations on international tax law reforms is highly commendable,” he said. “This approach ensures that Singapore’s views are heard and better promotes a level playing field.”

Eu pointed to practical administrative innovations abroad, such as Europe’s real-time value-added tax systems, which illustrate how technology can improve oversight while reducing business burdens. 

She noted that Singapore’s own GST InvoiceNow initiative, a national electronic invoicing system that standardises and digitises business-to-business invoice submission, “represents a significant step toward modernising GST compliance and aligning with international best practices”.

Shaping future policy

As global rules reshape tax competition, industry players say professional bodies like SCTP provide a crucial bridge between practitioners and policymakers, ensuring that policy remains practical and responsive.

Tan said SCTP can help shape a “stable, fair and more predictable tax system” through informed input on tax law and policy reforms. 

Eu sees value in a structured process, where “consultations, technical committees, and thought-leadership initiatives” provide authorities with essential, ground-level insights.

For Tay, maintaining trust and agility is fundamental in a complex landscape. “SCTP’s core purpose is to uphold the highest standards of tax professionalism and ethics while ensuring our members remain future-ready,” he said.

Ultimately, Singapore’s adaptation in the global tax landscape hinges on a close partnership between policymakers and practitioners. “By fostering collaboration and transparency, SCTP helps create a tax ecosystem that is fair, resilient and aligned with Singapore’s long-term economic objectives, giving assurance to taxpayers in engaging accredited tax professionals,” said Tay.

The writer is CEO of Singapore Chartered Tax Professionals, the national institute that benchmarks tax expertise through accreditation and drives excellence in professional standards and technical competency. This series shares insights on the tax issues shaping business today.