An international body has said that Singapore's tax incentives meet the international standards on countering corporate tax avoidance, reports The Straits Times.
The Forum on Harmful Tax Practices (FHTP) said in a report on Monday (Oct 16) that it had reviewed 164 countries in total, finding that governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of international efforts to improve the international tax framework.
The reviews, which took place over the past two years, were aimed at studying the progress tha these countries have made in updating and implementing tax policies that ensure companies do not exploit tax incentives for the sake of avoiding paying their fair share of taxes.
In particular, the reviews were focused on a practice called "base erosion and profit shifting" (BEPS).
This is a practice where multinational firms avoid taxes by engineering lower profits in countries where taxes are high and correspondingly reporting higher profits in low-tax jurisdictions.
In recent years, the Organisation for Economic Co-operation and Development (OECD) has set out international standards to dismantle unfair tax regimes which enable such practices.
"Harmful tax practices are a particularly aggressive way through which jurisdictions can encourage the erosion of other jurisdictions' tax bases," said Mr Martin Kreienbaum, the chair of the Inclusive Framework on BEPS, in the report.
"It is critical that they be addressed, to protect the level playing field and prevent a race to the bottom. The Inclusive Framework's peer reviews are resulting in real changes to these tax incentives, making it harder for multinationals to artificially shift their profits around the world for a tax advantage."
Singapore's Finance Ministry said in a statement that as a member of the Inclusive Framework on BEPS, Singapore is committed to implementing internationally-agreed standards to counter BEPS.
Singapore has implemented all of the four internationally agreed standards under the OECD's BEPS project, including participating in the review and volunteering to be among the first few jurisdictions in Asia to undergo peer review on its implementation of the Mutual Agreement Procedure (MAP), the MOF noted.
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.
"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."