Saturday, 24 November 2012

Singapore scores in tax system for firms: Paying Taxes 2013 report

Rate lower than global average and less time spent on payments: Survey
By Jonathan Kwok, The Straits Times, 22 Nov 2012

SINGAPORE'S tax system has won another big tick in a report that found companies here fork out a lower tax rate and spend much less time on making payments than the global average.

A typical medium-sized company pays a total tax rate of 27.6 per cent of profits, compared with the global average of 44.7 per cent, a new study from the World Bank, the International Financial Corporation and PwC has found.

A Singapore firm needs to make five tax payments and spends an average of just 82 hours each year to comply with tax requirements.

The global average is for a company to make 27 or so payments and spend 267 hours on tax requirements, said the Paying Taxes 2013 report which covered tax regimes in 185 economies.

"One core tax per tax base, a low number of hours needed to comply and a highly competitive total tax rate continue to be the hallmark of Singapore's stable and simple tax system," said a statement by accounting giant PwC, which also has businesses in tax advisory and consulting.

The report noted that as the Singapore economy matures, policymakers have progressively moved away from broad-based initiatives to seek reform in targeted areas for maximum impact.

It said an array of tax incentives is in place for growth industries and "desirable" activities.

It also cited the Productivity and Innovation Credit scheme, which allows tax deductions for spending to raise productivity.

"Tax must and will continue to play a key role in Singapore's growth strategy. Reforms must and will continue," said PwC Singapore tax partner David Sandison in the firm's statement.

"At times, these reforms may come at the cost of increasing the compliance burden of businesses. Such choices, while at times inevitable, should be weighed carefully."

The report was launched yesterday at the Raffles Hotel.

Minister of State for Finance and Transport Josephine Teo noted at the event that Singapore sees it as a competitive advantage to keep its tax rates low - while keeping tax administration efficient and as easy as possible.

"As the tax commissioner at Iras (the Inland Revenue Authority of Singapore) might say: 'I can't make it tax-free or pain-free, but I can certainly make it fuss-free'," she said.

Mrs Teo also highlighted some steps recently taken to improve Singapore's tax administration.

"What we do hope is that with continued efforts to help keep tax compliance easy, we want to continue to improve the business environment for Singapore," she said.

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