Singapore Mulls Deep Tax Cuts

by Mary Swire, Tax-News.com, Hong Kong

12 March 2002

According to reports, policymakers in Singapore are mulling deep cuts in both personal and corporate income tax in order to increase the region's attractiveness to international business and investors.

A sub-committee of the Economic Review Committee - established during last year's recession, and chaired by Finance Minister Lee Hsien Loong - is reported to be weighing proposals on a progressive reduction of the corporate income tax rate from 24.5% to 20%, to be offset by an increase in the country's goods and services tax from 3% to 4%.

The South China Morning Post also suggested on Monday that ERC officials are mulling similarly bold reductions in personal income taxes to be phased in over several years. Any moves to increase GST levels could be controversial, however, as they are likely to shift the tax burden from higher rate taxpayers to Singapore's poorer citizens.

Speaking to the SCMP, a spokesman for the ERC sub-committee said that it was unlikely that concrete proposals on tax reform would be revealed much ahead of the May budget:

'The sub-committee...has not decided on its recommendations on any of the items mentioned, and will not comment on speculation as to what it will decide,' he explained.

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