26% of bosses disappointed with Singapore tax rules: survey

Will they be relocating soon?

Latest findings from Grant Thornton International Report (IBR), reveales that a quarter (26%) of businesses in Singapore compared to the global average of 61% of business leaders surveyed, did not think their government was doing enough with tax measures to help ease economic pressures.

The countries with the highest dissatisfaction were Argentina (92%), Japan (86%), Poland (82%), Spain (82%), Latvia (78%), Australia (77%) and Denmark (76%).

“Given our government’s friendly corporate tax regime, it is no surprise that findings here revealed a low dissatisfaction. The recent Budget announcement of corporate tax rebate of 30% (capped at $30,000) for the next three years is an added bonus especially to our home grown SMEs. .” Michelle commented.

Moreover, the survey of more than 3,400 businesses in 44 economies finds that 67% would not relocate their business to another country for any level of reduction in their corporate tax rate. 

In Singapore, 66 of business leaders will not consider moving abroad for a lower corporate tax rate.

Globally, business leaders in New Zealand are the most resistant to relocation (94%). They are followed by Georgia (92%), Switzerland (90%), France (88%), Germany (87%) and Ireland (86%). The economies in which the most businesses would move for a lower rate are Russia, India, Taiwan, Greece and Botswana.

Michelle Seat, Tax Director of Foo Kon Tan Grant Thornton LLP said “What matters to most corporates who operate internationally is how they can manage their effective tax rates. So a lower corporate tax rate in one place isn't always enough of a push or a pull factor. However, a combination of factors can make a difference to stay or go.

On the global landscape, over two-thirds of business leaders (68%) would favour lowering the corporate tax rate in their country even if it meant eliminating some current tax deductions. Support was greatest in Vietnam (94%), Lithuania (92%), Malaysia (92%), Peru (90%), Greece (88%), Singapore (86%) Mexico (82%), India (81%) and the United States (81%).

“A trade-off between tax breaks and headline rates of tax, leading to a simple low tax rate with no or few deductions, does have the advantage of bringing simplicity. The difficulty is that tax breaks are hard to remove once in place, especially in those economies which are currently struggling to find growth and which use tax breaks to stimulate certain sectors or industries,” added Michelle.

Important decisions can be taken on the basis of existing tax breaks and if the breaks go, the decision may look like a poor one because the goal posts have changed. Business likes certainty so any change needs a long lead in and clear communication.

The survey was conducted by Experian in November and December 2012 as part of the quarterly Grant Thornton International Business Report with 3,450 respondents in 44 economies.