The truth about corporate taxes in Singapore
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Singapore depends very heavily on Foreign Direct Investment (FDI). Low corporate taxes have been a feature since Singapore started its pursuit of FDI in the 1960s.
Mat Toro argued in the GST thread that low corporate taxes boost entrepreneurship. So how many world class brands have we seen from Singapore over the years as compared to Taiwan?
Taiwan has a 'messy' parliament - but has many world class brands.
Singapore has a 'stable' parliament - but has only a 2 or 3 to boast of. -
Reuters
January 22, 2007
SINGAPORE
By Mia Shanley
SINGAPORE'S plan to trim its 20 percent corporate tax rate by at least one percentage point this year reflects a need to retain its competitive edge against rivals such as Hong Kong, analysts said on Monday, Jan 22.
And it could also be an attempt to soften the blow that companies would feel from any increase in employers' social security contributions, something mooted by the government as it tries to head off grumbles about a growing income gap, they said.
Lee Kuan Yew, the country's founding prime minister, told reporters over the weekend that Singapore planned to trim its corporate tax rate to stay competitive, a move that would cost the state up to S$500 million (US$325 million) in revenue.
The island-state lured an impressive $31.9 billion in foreign direct investment in 2006, nearly half the $70 billion that China attracted, a United Nations survey showed this month.
But it fell short of the $41.4 billion that long-time financial and manufacturing rival Hong Kong won last year with its 17.5 percent corporate tax rate.
"Hong Kong is benefiting from the China listings and it has a huge hinterland that Singapore doesn't have," said Chua Hak Bin, an economist at Citigroup, referring to the sometimes huge stock market share sales by mainland firms in the Hong Kong market.
A recent survey that ranked the world's freest economies put Singapore just behind Hong Kong, which topped the list due to its low taxes and flexible labour market.
Singapore-listed companies surged on news of the planned tax cut, with the benchmark Straits Times Index posting its biggest rise in about seven months on Monday.
The government will provide full details in its budget announcement on Feb. 15.
Owi Kek Hean, head of tax services at accountancy firm KPMG, said the government had to ensure the climate was favourable to businesses and investors.
But Singapore ranks 18th globally in terms of having the lowest corporate taxes and was already well placed vis-a-vis Hong Kong.
"Singapore has an edge," Owi said. "It has the infrastructure, the social environment and the quality of life. Tax is just one of the many factors that investors look at."
SWEETENER
Lower corporate taxes in Singapore may take some of the heat off Singapore-based companies should they be required to contribute more to their employees' pension schemes, known as the Central Provident Fund (CPF), as suggested by Prime Minister Lee Hsien Loong in a New Year's Eve message.
"It looks like they are going to raise the CPF contribution and they felt obliged to sweeten the pie a bit for the companies," said David Cohen, an economist at Action Economics.
Singapore -- the wealthiest nation in Asia ex-Japan in per capita terms -- has come under pressure for a widening in the income gap and has promised measures to help the nation's poor by building a stronger safety net.
The proposed increase in pension contributions would help cushion the blow that low- and middle-income earners especially may feel from a planned increase in the goods and services tax (GST) to 7 percent from 5 percent.
The government can afford to take some of the pain itself.
On balance, Deutsche Bank said in a research note, the changes would be "net positive" for government revenues.
Every percentage point increase in GST would raise revenue by around S$750 million while every percentage point cut in corporate taxes would reduce revenue by about S$370 million, based on fiscal 2005/06 data, the report said. -
Reduce corporate taxes by 2% and increase GST by 2%.Originally posted by Rock^Star:Every percentage point increase in GST would raise revenue by around S$750 million while every percentage point cut in corporate taxes would reduce revenue by about S$370 million, based on fiscal 2005/06 data, the report said.
Lower corporate revenue of S$740 million but raise GST revenue by $1.5 billion ($1500 million). And we still have not seen any concrete plans for Workfare from the govt. -
Corporate Taxes
In order to help all companies and keep Singapore attractive as a business location, corporate tax rate will be reduced by two percentage points to 18%, with effect from YA2008.
http://www.iesingapore.com/wps/portal/HubInSingapore/BusinessCentre/TaxEnvironment
The truth is, the corporate tax was lowered to keep Singapore attractive to foreign investors since Singapore depends heavily on FDI. Not to encourage entrepreneurship. -
The very attraction of FDI only serves to make Singapore a hunting ground for 'cheap' labour. Therefore, the widening rich-middle class-poor divide.
It stifles entreprenuership because it encourages many Singaporeans to be "employees" rather than be "employers". -
reduce corp tax also help those local elites pay less and make more.
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Our govt forces our wages to be artificially low by their idea of "Low Pay, High bonuses"
Now... Low Pay, we all know, High bonuses? Highly dubious given that there are many de-motivating factors to companies in paying out more bonuses
This is my view:
We are targeting to be the cheapest Developed country in the world, so that we pull in investments for high-value sectors, because comparatively speaking, its cheaper to be in Singapore than in other Developed countries
Now this is all good (FDI keeps coming in, the country becomes rich), if not for:
1) Rising property costs that kill the average Singaporean
2) Rising costs of living that makes ends hard to meet for the average Singaporean
3) Worsened further by the very LEADERS whom selected this strategy, and then paying themselves astronomical pay.
4) The FDI coming in does not benefit and increase the standard of living for the average Singaporean
Yet, are we really successful? Hong Kong is still bringing in more investments than us, this despite the fact that in general, from the HK friends I know, most of them earn at least 2x more than us.
For info, a general doctor here would get... 3K? 4K? in a public hospital
A general doctor in HK would get about HK$50,000 monthly in a public hospital, do the conversion urself.
Singapore... slave driving economy in disguise? -
I worked in a CPA firm servicing SME n noticed majority of them suffering from continuous losses.Originally posted by soul_rage:Our govt forces our wages to be artificially low by their idea of "Low Pay, High bonuses"
Now... Low Pay, we all know, High bonuses? Highly dubious given that there are many de-motivating factors to companies in paying out more bonuses
This is my view:
We are targeting to be the cheapest Developed country in the world, so that we pull in investments for high-value sectors, because comparatively speaking, its cheaper to be in Singapore than in other Developed countries
Now this is all good (FDI keeps coming in, the country becomes rich), if not for:
1) Rising property costs that kill the average Singaporean
2) Rising costs of living that makes ends hard to meet for the average Singaporean
3) Worsened further by the very LEADERS whom selected this strategy, and then paying themselves astronomical pay.
4) The FDI coming in does not benefit and increase the standard of living for the average Singaporean
Yet, are we really successful? Hong Kong is still bringing in more investments than us, this despite the fact that in general, from the HK friends I know, most of them earn at least 2x more than us.
For info, a general doctor here would get... 3K? 4K? in a public hospital
A general doctor in HK would get about HK$50,000 monthly in a public hospital, do the conversion urself.
Singapore... slave driving economy in disguise? -
are the sme run by elites?Originally posted by will4:I worked in a CPA firm servicing SME n noticed majority of them suffering from continuous losses. -
No ordinary people running the show.Originally posted by mistyblue:are the sme run by elites? -
The truth of the matter is that the quality of investment in Singapore does not match the quality of investment India or China gets.
Whereas US companies go to India and China to find software engineers to assist developing their big projects, they never come here.
Whereas the big R&D projects that would prove most valuable to our population dominated by engineers, Intel and AMD instead invest in India or China. Intel has a huge op in Israel right now designing their next generation chips.
Even Biotech companies retain most of their research in the US. Here? We get the small tidbits.
Let's not bring up Taiwan or S.Korea, which remain electronics powerhouses.
Someone should remind Singaporeans that they have an overly inflated sense of importance. -
It seemed some of the local those pro ruling party cannot accept the fact Spore cannot be compared with Taiwan or HK.Originally posted by Fingolfin_Noldor:The truth of the matter is that the quality of investment in Singapore does not match the quality of investment India or China gets.
Whereas US companies go to India and China to find software engineers to assist developing their big projects, they never come here.
Whereas the big R&D projects that would prove most valuable to our population dominated by engineers, Intel and AMD instead invest in India or China. Intel has a huge op in Israel right now designing their next generation chips.
Even Biotech companies retain most of their research in the US. Here? We get the small tidbits.
Let's not bring up Taiwan or S.Korea, which remain electronics powerhouses.
Someone should remind Singaporeans that they have an overly inflated sense of importance. -
I am hazarding a guess on why we are picking up breadcrumbsOriginally posted by Fingolfin_Noldor:The truth of the matter is that the quality of investment in Singapore does not match the quality of investment India or China gets.
Whereas US companies go to India and China to find software engineers to assist developing their big projects, they never come here.
Whereas the big R&D projects that would prove most valuable to our population dominated by engineers, Intel and AMD instead invest in India or China. Intel has a huge op in Israel right now designing their next generation chips.
Even Biotech companies retain most of their research in the US. Here? We get the small tidbits.
Let's not bring up Taiwan, which remains a electronics powerhouse.
Someone should remind Singaporeans that they have an overly inflated sense of importance.
Becoz we are a CONFUSED HUB?
We aspire to be:
- Medical Hub
- IT Hub
- BioTech Hub
- Gaming Hub
- Financial Hub
- etc...
so much so that corporations are just not convinced we are serious about the industries they are in, and thus only provide us breadcrumbs? -
what i learn in poly as my dip is a general dip (computer engineering), you need to specialise in 1 or 2 areas in order to excel....being generalise doesn't get you anywhere unless during "rainy periods"Originally posted by soul_rage:I am hazarding a guess on why we are picking up breadcrumbs
Becoz we are a CONFUSED HUB?
We aspire to be:
- Medical Hub
- IT Hub
- BioTech Hub
- Gaming Hub
- Financial Hub
- etc...
so much so that people are just not convinced we are serious about the industry we are in, and thus only provide us breadcrumbs? -
U forgot football team being trained to take on Worl cup?Originally posted by soul_rage:I am hazarding a guess on why we are picking up breadcrumbs
Becoz we are a CONFUSED HUB?
We aspire to be:
- Medical Hub
- IT Hub
- BioTech Hub
- Gaming Hub
- Financial Hub
- etc...
so much so that people are just not convinced we are serious about the industry we are in, and thus only provide us breadcrumbs? -
forgottenOriginally posted by will4:U forgot football team being trained to take on Worl cup?
it was a total embarrassment -
We are going to be a hub of hubs.
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and outsourcing?Originally posted by Kinokuniya:We are going to be a hub of hubs. 
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another 1 comingOriginally posted by will4:U forgot football team being trained to take on Worl cup?
F1 racing
IR Hub?
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UNSW is a blow to Spore n also crazy horse which left after opening for a short period.Originally posted by duotiga83:another 1 coming F1 racing
IR Hub? -
oh that reminds meOriginally posted by will4:UNSW is a blow to Spore n also crazy horse which left after opening for a short period.
education hub
entertainment hub
sigh... CONFUSED hub.
A corporation knows that at most it can focus on 3 markets (which will balance off the risks in each sector) so as to perform well on all 3. Any more than that, and the focus dwindles off
Its the standard human "All things come in 3s"
Which part of the above does our govt not understand? They probably also never heard of the primary school lesson "A jack of all trades but a master of none" -
that's whyOriginally posted by will4:No ordinary people running the show.
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its a SIN hub
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Originally posted by Rock^Star:
If Low Corporate Taxes promote entrepreneurship, somehow despite this, the US and Israel are yet the top in the game when it comes to high tech entrepreneurship and even more interesting, when the latter spends heavily in war, though they do receive some measure of funding.
Singapore depends very heavily on Foreign Direct Investment (FDI). Low corporate taxes have been a feature since Singapore started its pursuit of FDI in the 1960s.
[b]Mat Toro argued in the GST thread that low corporate taxes boost entrepreneurship. So how many world class brands have we seen from Singapore over the years as compared to Taiwan?
Taiwan has a 'messy' parliament - but has many world class brands.
Singapore has a 'stable' parliament - but has only a 2 or 3 to boast of.[/b]
Frankly speaking, countries with too little micromanagement from the Govt have proven more entrepreneurial than us. What does that tell us? Perhaps we need to loosen up our University education which is still pretty rigid? Or perhaps the Govt should act as a motivator for the local economy instead of directing every inch of it to the extent of exhorting people to go to specific disciplines? Perhaps the Govt could instead revamp A*Star and have them actively encourage scientific research here of many diverse fields instead of being so specific? -
Mother of all hubsOriginally posted by Kinokuniya:We are going to be a hub of hubs.