Speech by Mrs Josephine Teo, Senior Minister of State for Finance and Transport, at the Tax Academy & IFA Singapore Asia Pacific Regional Tax Conference

Mr Tan Tee How, Commissioner and Chief Executive Officer of the Inland Revenue Authority of Singapore

Mr Ong Yew Huat, Chairman of Tax Academy Board

Mr Porus Kaka, President of IFA Central

Mr Shanker Iyer, Chairman of IFA Singapore

Distinguished Guests

Ladies and Gentlemen

1. Thank you for inviting me to the Asia-Pacific Regional Tax Conference, jointly organised by the Tax Academy of Singapore & IFA Singapore. This conference is a useful platform to discuss key taxation issues, including treaty abuse, anti-avoidance, and transfer pricing developments within the Asia-Pacific region. I would like to extend a very warm welcome to all our delegates and speakers, especially those who have come from afar to join us today.

2. As many of you are aware, Singapore celebrates our 50th year of independence this year. Among the many domains which are organising celebratory events, it is somewhat difficult to imagine the tax community doing so. After all, very few people spend much time thinking about the role of a robust tax system in husbanding the nation's resources to support economic and social development.

3. It is easier to think of the efforts to build up physical infrastructure (e.g. roads, ports, power, housing) or some types of system (e.g. healthcare, education) But in fact, though less visible, a carefully built up tax system with a diversified tax base and efficient tax collection has enabled the Government to fund meaningful economic and social programmes to benefit our citizens. Coupled with thoughtfully-designed spending, we have been able to put in place a sustainable fiscal system.

4. By and large, we have kept tax rates in Singapore competitive. Even as we expect spending to increase, we will endeavour to keep the tax burden low, and we do so for a very simple reason – we want to continue to encourage enterprise, savings and investment, which in turn generate positive economic spinoffs.

Global Tax Developments

5. Besides attending to domestic priorities, Singapore continues to be an active participant in international tax-related fora. We recognise that the international tax landscape is evolving quickly. In particular, there have been many developments related to the Organisation for Economic Cooperation and Development’s (OECD) Action Plan to counter Base Erosion and Profit Shifting (BEPS).

6. BEPS was conceived after countries assessed that international taxation practices may not have kept pace with the fast-changing global business environment. Driven by concerns over fiscal deficits, tax authorities are increasingly taking more aggressive actions when scrutinising cross-border transactions and in dealing with transfer-pricing issues.

7. This is what we like to say. While the desire for quick action is understandable, we must acknowledge the risk of countries taking unilateral steps in an uncoordinated manner. Uncoordinated actions are very likely to create uncertainty and increase business risks. This could also discourage cross-border trade and investment which are vital to the economic success of many countries.

8. Singapore therefore supports the coordinated efforts of the global community to update international tax rules so that a common set of rules is applied equally across jurisdictions. I cannot emphasise enough, however, that it is critical for the reforms to the global tax system to be carried out in a way that continues to accommodate legitimate business models, promotes global economic growth and trade, and not be used as a disguise for protectionism. Put in another way, even as we tackle harmful tax practices, we must take care to preserve useful and beneficial ones.

Singapore participates actively to help shape international tax changes

9. Singapore therefore is participating and contributing to the discussions on international tax policies, including BEPS, at the multilateral OECD and G20 meetings. Through these international fora, we share our perspectives as a small, open economy in the heart of emerging Asia, and advocate tax policies aimed at promoting and sustaining global growth.

10. We also voice our support for a level-playing field across all tax jurisdictions to ensure that international tax changes remain inclusive and effective. On this front, IRAS works closely with other tax authorities to combat tax evasion, and cooperates in line with the International Standard for Transparency and Exchange of Information for Tax Purposes.

11. Government will also continue to regularly review Singapore’s tax policies to ensure that they meet our revenue needs, support our economic and social objectives, while remaining aligned with international standards. At the same time, we will ensure that tax compliance costs for businesses remain low.

Conclusion

12. Businesses engaging in cross-border transactions, tax practitioners and tax administrations would do well to pay close attention to changes on the international tax front, and to meet their tax obligations. Today’s conference provides an opportunity for all of us – tax policymakers, tax practitioners, academics, and tax administrators – to come together to discuss the various international tax developments and learn from one another’s experiences.

13. On this note, it is my pleasure to declare the second Asia-Pacific Regional Tax Conference open. I wish all of you a very fruitful discussion ahead.

Thank you.