Mr Speaker Sir,
This Bill seeks to give effect to Pillar Two of the OECD/G20 Base Erosion and Profit Shifting Project, or BEPS 2.0. One of the key provisions of the Bill is the introduction of a minimum effective tax rate of 15% for large multinational enterprises (MNEs) that have a consolidated group revenue of at least 750 million euros annually in at least 2 of the 4 preceding financial years.
This will mark a major shift in Singapore’s taxation policy, which PSP supports. PSP believes that more profitable companies should pay more taxes. I first articulated this policy position during my Budget speech in 2023. During that speech, I also spoke about the highly inequitable nature of our corporate tax system, where companies with the highest profits pay the lowest percentage of their profits as tax. For example, I pointed out that companies earning profits before tax of between $200k to $10m paid on average 8% to 9% of their profits as taxes, whereas companies with profits beyond $1bn pay less than 1% of their profits as taxes.
We hope that the introduction of a minimum effective tax rate for MNEs under this Bill will make for a more equitable corporate taxation system where large MNEs pay their fair share of taxes relative to their profits.
We have debated the impact of this Bill on tax revenue before in this House and it is likely to be substantial, especially considering recent data showing strong corporate earnings following the post-Covid economic recovery. IRAS announced last month that corporate tax revenues increased by $5.9 billion in FY 2023, reaching $29 billion or 36% of total tax revenues. The OECD’s 2024 Corporate Tax Statistics report showed that large MNEs accounted for 73% of total corporate income tax revenue in 2021. The percentage is likely similar today. If investments and business activities in Singapore remain the same, then we are likely to soon see a very substantial increase in corporate tax revenues.
During the Budget debate in 2022, the Finance Minister cautioned that “BEPS 2.0 represents a fundamental change in the competitive environment for Singapore”, and we would likely “need to find other ways to stay competitive, from investing even more in our workers to building new infrastructure and incentivising R&D”, and any additional tax revenue from Pillars 1 and 2 would need to be reinvested to ensure Singapore remains competitive. In 2023, he again said that “we cannot afford to price ourselves out of the competition, or else Singapore and Singaporeans will end up the biggest loser”.
Singapore does have inherent disadvantages, such as limited land, a small population, and a high-cost structure. But we also have strong advantages compared to other countries in the region, such as a highly educated workforce, a well-developed and globally-connected financial system, excellent international connectivity for the movement of people and cargo, respect for rule of law, and strong property rights. These advantages will not go away, even after the provisions of this Bill come into effect. It is highly unlikely that all the MNEs in Singapore will pack up and leave overnight just because there will be a minimum effective tax rate after this Bill is passed.
What this Bill does represent is a once-in-a-generation opportunity to reshape our tax and incentive structure for companies and our policy towards attracting foreign investments.
For many decades, we have used various tax incentives and schemes to lower effective corporate tax rates and attract foreign investments, especially from multinational enterprises.
But such a strategy could never have lasted forever. Other countries could and did replicate Singapore’s tax incentives, in whole or in part, creating a destructive race to the bottom where governments across the world slashed corporate tax rates to attract businesses. This trend has only stabilised in recent years with BEPS 2.0.
This imposition of a global minimum corporate tax regime is a step in the right direction that has hastened the inevitable for our nation, which is, the need to make ourselves competitive and attractive to foreign investments in ways other than providing them with economic incentives and low taxes.
As I mentioned earlier, we still have very strong advantages as a nation. But the additional economic resources that this Bill provides will allow us to do more.
With the additional tax revenue from this Bill, we can help to create a more level playing field between domestic companies and MNEs. The OECD’s Corporate Tax Statistics report found that we are the fourth-most dependent economy on large MNEs for corporate tax revenue. Many of the MNEs in Singapore are foreign-owned, and this dependency has increased in recent years.
Instead of pouring all the additional tax revenue back into more economic support for MNEs, we can invest part of the additional revenue in our SMEs, which employed 71% of our workforce as of 2022, and help them leverage on AI and other new technologies, so that they can become more productive and internationally competitive, and hopefully grow into local MNEs of our own. And finally, we can take steps to address our high cost structure. In particular, PSP feels that the rising rent and cost of property is an area that requires urgent attention.
Mr Speaker, Mandarin please.
议长先生，
我们今天所辩论的跨国企业（最低税）法案将标志着新加坡税收政策的重大改变。新加坡前进党支持这项法案。我们认为，高盈利的公司应该缴纳更多税。我在2023年财政预算案辩论中指出，我国目前的企业税制极不公平，利润最高的公司缴纳的所得税占利润的百分比最低。税前利润在 20 万至 1000 万元之间的公司平均要缴纳 8% 至 9% 的利润作为税款，而利润超过 10 亿元的公司则缴纳不到 1%。
本法案所推出的最低有效税率，将高利润的跨国企业在新加坡的有效税率补足至15％。长期以来，我国一直依靠低税率和税收减免以吸引外资到我国投资。这项法案通过之后，我国将无法继续依赖这些措施来吸引外资。
这项法案给予我国一个千载难逢的机会，来改造对公司的税收和激励结构，以及吸引外资的政策。我国的企业税收目前高度依赖外资跨国企业。前进党认为，我们应该将这项法案所带来的额外税收，投入到我们的中小型企业，帮助他们利用人工智能和其他新技术，从而提高生产力和国际竞争力，帮助他们有望成为跨国公司。我们也必须为本地公司和跨国公司之间，打造一个更公平的竞争环境。额外的税收，也可以为政府提供资源，来采取措施，帮助企业降低经营成本，也帮助国人降低生活成本，并以较低的成本，继续吸引外资。其中，产业价格和租金的上涨，尤其需要急切的关注。
前进党殷切希望第四代领导团队会利用这个机会，重塑我国的经济结构，更新我国的社会契约，为国人打造更良好的生活环境。
Sir, the additional tax revenues from this Bill present us with an opportunity to reshape our economic structure and refresh our social compact, instead of using it towards the same economic playbook that has been used for decades. PSP hopes that the 4G leadership will make full use of this opportunity.
PSP supports the Bill.