Singapore’s Tax Incentives Meet International Standards on Countering Base Erosion and Profit Shifting (BEPS) Activities

1. The Forum on Harmful Tax Practices (FHTP) has on 16 October 2017 released a progress report on preferential regimes that were reviewed in 2016 and 2017. Specifically, FHTP has assessed that Singapore’s tax incentives satisfy the international standards on countering harmful tax practices under the OECD/G20 Base Erosion and Profit Shifting (BEPS) project.

1. As a member of the international body Inclusive Framework^[1] on BEPS, Singapore is committed to implementing internationally-agreed standards to counter base erosion and profit shifting. To date, Singapore has implemented all of the four internationally-agreed standards under the BEPS project:

1. We participated in the FHTP’s peer review of tax incentives;

1. We signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting;

1. We implemented Country-by-Country Reporting for financial years starting on or after 1 January 2017, and signed the Multilateral Competent Authority Agreement for automatic exchange of Country-by-Country Reports; and

1. We volunteered to be among the first few jurisdictions in Asia to undergo peer review on our implementation of the Mutual Agreement Procedure (MAP). MAP is provided in tax treaties for resolving tax disputes. Effective dispute resolution can help bring certainty and facilitate cross-border investment and trade flows.

1. “Our tax incentives meet international tax standards and anchor substantive economic activities in Singapore”, said Minister for Finance Mr Heng Swee Keat. “I am glad that this is recognised by the FHTP. We will continue to create a conducive environment where businesses at various stages of growth can use Singapore as a base to build deep capabilities, grow and internationalise. In the process, we can create a range of good jobs and expand opportunities for our people.”

About the Forum on Harmful Tax Practices

1. The BEPS Inclusive Framework has 102 members as at 6 July 2017, including Singapore. Under the BEPS Inclusive Framework, the FHTP is tasked with reviewing jurisdictions’ compliance with the BEPS Action 5 minimum standard on “Countering harmful tax practices more effectively, taking into account transparency and substance”.

1. The FHTP reviews preferential regimes that apply to income from geographically mobile activities, such as financial and other service activities. Preferential regimes designed to attract investment in plant, building and equipment are outside the scope of FHTP review. In its review, the FHTP considers whether a preferential regime is harmful^[2]. To maintain a level playing field, the FHTP also reviews preferential regimes of all relevant jurisdictions, regardless of whether they are members of the Inclusive Framework.

1. The list of Singapore’s tax incentives reviewed by the FHTP in 2017 is at Annex A.

Issued by:

Ministry of Finance

Singapore

16 October 2017

^[1] In June 2016, Singapore joined the Inclusive Framework for the global implementation of the BEPS project. With this joining, Singapore committed to implementing the four internationally-agreed standards under the BEPS project, namely the standards on countering harmful tax practices, preventing treaty abuse, country-by-country reporting and enhancing dispute resolution. 

^[2] Criteria used to assess if a tax incentive is harmful includes consideration whether the regime is ring-fenced from the domestic economy, lacks transparency, lacks effective exchange of information, or lacks economic substance.

Annex A:

Singapore’s key tax incentives that have been reviewed by the Forum on Harmful Tax Practices

• Development and Expansion Incentive - Services

• Pioneer Service Company

• Aircraft Leasing Scheme

• Finance and Treasury Centre

• Insurance Business Development

• Financial Sector Incentive

• Global Trader Programme

• Maritime Sector Incentive

Notes:

For more information on the Base Erosion and Profit Shifting (BEPS) project and the BEPS Inclusive Framework, please see:

• Singapore Joins Inclusive Framework For Implementing Measures Against Base Erosion and Profit Shifting (BEPS)

• Singapore to Sign the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting

• Singapore Signs Multilateral Competent Authority Agreements to Enhance Tax Co-operation on Exchange of Information

For more information on the Forum on Harmful Tax Practices, please see:

• OECD Action 5 2015 Final Report – Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance

• Harmful Tax Practices – 2017 Progress Report on Preferential Regimes