GuideMeSingapore

According to a Global Enterprise Survey conducted by the Institute of Chartered Accountants in England and Wales (ICAEW), Singapore has been ranked as having the most business friendly regulatory and taxation environment. The survey spanned Asia (i.e. Singapore, Hong Kong and Malaysia), UK, Europe, US and the Gulf.

The survey results indicate that as many as 80% in Singapore described their regulatory and taxation environment as very business friendly, 63% did so in Hong Kong, but only 9% in Malaysia. This is in stark contrast to UK and the rest of Europe who feel over-burdened with what they consider as business-unfriendly domestic regulatory and taxation conditions. The US and the Gulf were more positive of their domestic regime as compared to Europe.

Interestingly, the results of the survey done by ICAEW are consistent with the recent comparative tax analysis report prepared by GuideMeSingapore that compared the tax policies of six countries: UK, USA, India, Australia, Russia, and Singapore.

The survey results are a reflection of the tax regimes in the respective global economies. Singapore’s corporate tax rate of 17% is almost on par with Hong Kong’s corporate tax rate of 16.5%. This is in stark contrast to the corporate tax rates in other economies such as Malaysia’s 25%, UK’s 21% – 28% and USA’s 39.3%. The Singapore government has gone a step further and introduced several tax incentives for targeted industries and also allows tax exemptions for start-ups. The effective corporate tax rate in Singapore is less than 9% for profits up to S$ 300,000 which is much lower than even Hong Kong’s tax rates thus resulting into Singapore taking the #1 position in tax friendliness.

High rates of tax reduces shareholders’ returns on investments. As a result, business savvy investors tend to avoid high tax jurisdictions. Lesser foreign direct investments implies lesser capital being injected in the private sector which in turn suppresses long-term economic growth. By introducing timely and progressive changes, Singapore has aligned its tax policy with its economic goals and maintains its position as a tax friendly and a tax competitive nation. With Asia leading the world out of the global economic crisis, many international MNCs and SMEs are attracted to the region, especially to low tax jurisdictions like Singapore. Moreover, with “business unfriendly” tax conditions in UK, Europe and US, more businesses are likely to turn to Asia for setting up and expanding their business operations.

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