Potential Impact of Base Erosion and Profit Shifting project on Outlook of Singapore's Technology Sector and Preserving Singapore as a Favoured Hub for Technology Multinational Companies

Mr Seah Kian Peng asked the Minister for Trade and Industry (a) what is the Ministry's assessment of the potential impact of the Base Erosion and Profit Shifting project (BEPS 2.0) on the outlook of Singapore's technology sector; and (b) what are the steps that the Government will be taking to preserve Singapore's competitiveness as a favoured hub for technology multinational companies.

Last week, 130 countries and jurisdictions, including Singapore, agreed to reform international taxation rules under the Base Erosion and Profit Shifting (BEPS) 2.0 Project. Details on the final parameters, design and implementation will need to be discussed at the OECD in the coming months. Therefore, there remains significant uncertainty in terms of the possible impact on the technology sector and on Singapore.

When the details have been finalised, all jurisdictions will need to adjust their tax regimes to be compliant with the new rules, or cede tax revenue to other jurisdictions. Any adjustments to Singapore’s tax system will aim to minimise the compliance burden for businesses and ensure that Singapore continues to be an attractive place for these global technology companies to do business. We are closely monitoring these international developments and engaging industry stakeholders to better scope our response.

Singapore’s competitiveness goes beyond our taxation rates. Our key fundamentals remain strong. We have built a vibrant technology hub with deep capabilities, secure infrastructure, strong intellectual property protection regime and dense ecosystem of local and global enterprises. We will push on with our efforts to enhance the technology ecosystem, through initiatives such as reskilling and upskilling the local workforce in emerging tech skills, welcoming experienced global tech talent and investing in research and development to strengthen the innovation capabilities of our enterprises. We are therefore confident that even as the window for tax competition narrows, global technology companies will continue to find Singapore a compelling place to do business.