Lawrence Wong
Singapore
“Sir, we will provide more information. I see the value of getting Ministries to put out more information, to share more about how their resources are being used and what outcomes they have achieved.”
“Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the investments.”
“Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good.”
“This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.”
“Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis.”
“Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question. To answer the question, we will continue to monitor cost of living across all segments of society.”
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“Partly because there is still ongoing cryptic transmission in our community, which can easily break out into new clusters with increased activity levels. Also, as we open our borders for people to travel without SHN, we will see more imported cases and infected persons slipping through from time to time. But at that stage, as you heard just now, our main focus would no longer be on daily case numbers. Because the vast majority by then would have been vaccinated and even if they caught the virus, they would be much less likely to become very ill. Instead, our focus will be on the much smaller number of infected persons who need supplementary oxygen or require intensive care. So, at each stage of easing, we will monitor the health outcomes, especially the hospitalisation and ICU cases, closely. We will ensure that these remain acceptable and stable before we proceed to the next step. But if hospitalisation cases, or worse, severe illnesses were to shoot up, we will have to be prepared to slow down, or even pull back. In particular, we have to expect new variants to emerge, which may be more transmissible, more lethal, or more successful at evading the present vaccines. We will find solutions to these variants, especially through booster shots or updated vaccines, which we may need to roll out nationwide. But we must be prepared that the new variants can lead to more severe outbreaks and may well force us to introduce restrictions again from time to time. In short, there are still considerable uncertainties about how the pandemic will unfold globally. But our best bet is to push ahead with a high level of vaccine coverage for our people. This will give us the best chance to resume more normal lives, while keeping our morbidity and mortality rates low.”
“So, if the clusters are under control and hospitalisation rates remain low, we will be able to ease some of the Phase Two (Heightened Alert) measures. But the easing will be differentiated and extended to only vaccinated persons because they are much better protected against the effects of the virus. This means that if you want to attend a large event or a religious service involving more than 100 persons, you have to be fully vaccinated. If you want to go out to dine in a restaurant or work out in a gym, you have to be fully vaccinated. By around early September, we expect to vaccinate about 80% of our population with two doses and we hope to cover a similar proportion of our seniors aged 70 and above. We would then be able to ease the restrictions further, including allowing larger groups to get together, especially if they are fully vaccinated. We would also begin to reopen our borders, especially for vaccinated persons to travel. We will start by establishing travel corridors with countries or regions that have managed COVID-19 well and where the infection is similarly under control. Fully vaccinated persons will then be able to travel to these countries or region without needing to serve the full 14-day Stay-Home Notice (SHN) in a hotel when they return. Depending on the risk level of the country they visit, we will either replace the SHN with a rigorous testing regime or shorten the SHN to seven days at home. This will allow vaccinated persons to travel more freely. Those who are not vaccinated can still travel, but will be subject to the prevailing SHN requirements. Beyond that, we will continue with a series of progressive easings. As we do, we must expect cases to rise.”
“While other countries may have come to terms with a certain level of COVID-19 cases and even deaths, this is not the choice we want to make in Singapore. Here, we look out for one another and we take care of each other. We do not want to see large numbers of COVID-19 patients in intensive care, on oxygen supplementation, let alone succumbing to the virus. So, we must give our fellow Singaporeans more time. Today, many younger Singaporeans are still waiting for their second dose of the vaccine. And many of our seniors who had been hesitant about getting vaccinated are now starting to step forward. So, we will see continued improvements in our vaccination rates. At the same time, there is no need to wait for everyone to be vaccinated before we begin to open up. That would mean holding back the entire re-opening timeline until much later in the year, which is not tenable. So, what is our approach? Let me explain. We will synchronise our reopening with our vaccination coverage, not just of the overall population, but also amongst our seniors, who are the most vulnerable. And we will do so in a series of controlled steps. So, this is what we can all expect in the weeks ahead. In early August, at the midpoint of the Phase Two (Heightened Alert) period, we plan to review the current set of measures. We will assess the overall infection situation. We will also monitor the status of the infected cases to confirm that the link between infection and hospitalisation has been weakened by the vaccines, like in the chart which Minister Ong showed just now. Importantly, by then, two-thirds of our population would have received two doses and we would have vaccinated about three-quarters of our seniors aged 70 and above.”
“I hope our explanations will help you understand why we had to reintroduce these painful but necessary measures to protect our seniors. We also know these measures will be difficult for our workers and businesses. This is why MOF announced a new $1.1 billion support package last Friday to cushion the impact. I will elaborate on this in my Statement later this afternoon on the Supplementary Supply Bill and we hope the support measures will help affected workers and businesses tide over the Heightened Alert period. As we bring the current outbreak under control and continue to speed up vaccinations, we will be able to get our reopening plans back on track. The key is to open up at the correct juncture. Some countries have decided to open up fully, even though their vaccination rates are less than ideal. For example, the Netherlands lifted all restrictions when 45% of its population was fully vaccinated. Cases surged ten-fold to an average of 10,000 a day within two weeks. They have since reimposed restrictions. The UK has about 55% of its population fully vaccinated, although its coverage of its seniors is much higher at above 90%. It lifted all restrictions on 19 July, its "Freedom Day". Cases have surged to 50,000 a day, more than two-thirds of its peak in the last wave and are likely to rise further. Hospitalisation and death rates are starting to creep up again, almost entirely amongst unvaccinated individuals. We are watching what is happening in these countries very closely. What is clear to the Multi-Ministry Taskforce (MTF) and our medical advisors is that we should be very careful about lifting restrictions when a significant proportion of our people are still not fully vaccinated, especially our more vulnerable seniors.”
“Mr Deputy Speaker, Sir, like many countries around the world, our fight against COVID-19 has been difficult and full of ups and downs. The latest outbreak is a major setback for all of us. Many have been surprised at the size of these new clusters. It shows how easy it is for the Delta variant to spread and cause large outbreaks with the potential to overwhelm our hospital system. Furthermore, in a mixed population of vaccinated and unvaccinated persons, we are more likely to see large clusters because vaccinated persons can be infected but experience very mild symptoms. Consequently, they may not realise they are infected and inadvertently, become asymptomatic carriers. By the time the cases pop up, days or even weeks would have passed and the infection would have spread to many people. Because of these large clusters, we faced a heightened risk of widespread community transmission before we attained adequate vaccine protection. We must remember that the proportion of people with two doses and with two weeks after their second shot was still less than 50%. This was when we moved into Heightened Alert. And we are especially worried about our seniors because there are still over 200,000 seniors aged 60 and above who are not fully vaccinated. If they catch the virus, many would likely become severely ill or even succumb to the infection. That is why, as you heard just now from my Co-Chairs just now, the MTF made the difficult decision to scale back activities and return to Phase Two (Heightened Alert). This will help to slow down transmission in the community and crucially, this will give us time to push up vaccination rates further and protect our seniors. I know the restrictions have caused much inconvenience to everyone. We seek your forbearance and understanding.”
“Mr Deputy Speaker, as I mentioned earlier, we are doing a review together with the industry to look at the existing framework holistically and we will not rule out whether or not legislative changes are required. But we will look at it holistically and see how best we can move forward on this issue, providing assurance to consumers but also ensuring a balance of incentives for all parties to do their part in preventing fraudulent transactions.”
“Mr Deputy Speaker, on the first question, I do not have the figures of the amounts that were involved in these 89 cases. The Member can file a separate question and we can always provide that data. On the second question, indeed, the banks do offer a waiver of the disputed amounts and if there are specific cases that the Member knows about, please let us know. We will be able to look at them on a case-by-case basis, raising this with the banks because, on such instances, they are prepared to offer waiver of the disputed amounts, as I have said, taking into account the individual circumstances of the victims involved. On the third question, on the timeline, we are working towards a review and an outcome by the end of the year. So, we are doing as fast as we can.”
“But certainly, we want to see fewer of such incidents and the reviews and investigations by the Police and IMDA and the safeguards that MAS is putting in place with the financial institutions will hopefully result in fewer incidents in the future.”
“Mr Deputy Speaker, I thank Ms Yeo for the supplementary question. I am sorry to hear about her residents who have been victims of these fraud cases. As I cited just now in my reply, if you look at the overall statistics, the numbers have not been rising and the overall numbers are small as a percentage of transactions. Nevertheless, as I highlighted, this is concerning and we are doing a few things. One, Police and IMDA are investigating these specific cases that have arisen and they will find out, try to determine what exactly has happened so that we can get to the root of it. Two, MAS has also asked the financial institutions to step up vigilance, as I highlighted just now. So, they are putting in place additional measures, including making consumers more aware of such possible frauds that may happen. Thirdly, as I also highlighted, we are working with the industry through the Payments Council to review the framework to provide greater clarity should instances arise where both the financial institution and consumer say, "Look, we did not do anything" and the consumer says, "I never revealed any OTP", as what Ms Yeo said her residents claimed. So, the banks too have put in place sufficient safeguards, complied with all the rules. What exactly went wrong there? We will have to find out but should such an incident arise and we hope in the future, less and less of it will happen, but should such an incident arise, then, we are looking at the review to see how we can provide greater clarity on the responsibilities of both parties – the banks as well as the consumers – in order to resolve such incidents.”
“While these cases represent less than 0.1% of fraudulent online card transactions reported and the number of cases has come down since March 2021, it is nonetheless concerning. SPF and the Infocomm Media Development Authority (IMDA) are investigating these cases. MAS has however asked financial institutions to step up vigilance towards such fraud. Financial institutions have put in place additional measures, such as rejecting card payments made to common merchants previously linked to the unauthorised transactions or placing limits on the transaction amounts that consumers can transact with such merchants. MAS also expects financial institutions to ensure that consumers are treated fairly whilst investigations are ongoing. For instance, banks have waived finance charges and late fees on the outstanding amounts or offered temporary goodwill credits on the consumers’ credit cards in the interim. For those who wish to settle on the issue, banks may also offer partial waiver of the disputed amounts, taking into consideration individual circumstances, such as financial hardship and whether there were indicators of negligence by the consumers. MAS is working with the industry to review the existing framework to provide greater clarity on the responsibilities and liabilities of consumers and financial institutions in the case of fraudulent payment transactions. The review will include the scenario where neither the consumer nor the financial institution was remiss in allowing the fraud to occur, the scenario that Ms Yeo had asked about. The framework should provide a balance of incentives for all parties to do their part in preventing fraudulent transactions, while ensuring that consumers who are not at fault are protected.”
“Mr Deputy Speaker, I am taking this question on behalf of the Senior Minister and Minister-in-charge of the Monetary Authority of Singapore (MAS). Generally, consumers who have suffered financial losses from fraudulent transactions are protected as long as they have acted responsibly. For online card transactions, if a merchant has not adopted a system which requires consumers to authorise transactions using one-time passwords (OTPs), a consumer will not be liable for an unauthorised transaction. For lost or stolen cards, a consumer’s liability is capped at $100 for lost or stolen cards, provided he or she has not been careless and has reported the loss promptly. Likewise, for non-card e-payments, consumers who have practised proper cyber hygiene and have not been negligent will not be liable for any losses arising from unauthorised transactions that do not exceed $1,000. For unauthorised transactions exceeding this limit, financial institutions will investigate further on the root cause of the issue before liability is established. Where the unauthorised transaction arose because of lapses or non-compliance with MAS’ rules by the financial institution, the consumer will not be liable. The question raised by Ms Yeo pertains to a situation where neither the consumer nor the financial institution is at fault. Specifically, the consumer has not given out his credentials to a scammer and there were no lapses or non-compliance on the part of the financial institution. Between September 2020 and February 2021, the Singapore Police Force (SPF) received a total of 89 reports of fraudulent card transactions performed with SMS OTPs, where victims claimed that they neither performed the transactions nor received any SMS OTPs to authorise the transactions.”
“As for how Pillars 1 and 2 will be implemented, the members of the IF will agree on an implementation plan in the coming months. To ensure the coordinated and consistent implementation of the consensus, the IF is considering the development of multilateral instruments for both Pillars 1 and 2. Depending on its own domestic legislation, each jurisdiction may also need to translate these international tax rules into its domestic tax systems.”
“Since 2016, there have been concerted efforts to strengthen international co-operation in taxation matters, to stamp out harmful practices and to increase the taxes paid by multinational enterprises (MNEs). These efforts were first initiated by the OECD to deal with the issue of Base Erosion and Profit Shifting (BEPS) by MNEs. To ensure a wider international consensus, the discussions were subsequently broadened to include more than 130 jurisdictions through a platform called the Inclusive Framework (IF) on BEPS. Singapore has been actively involved in these international discussions as part of the IF. The IF has been discussing two major tax changes. The first proposal concerns the re-allocation of taxing rights of the largest and most profitable MNEs from where they conduct their substantial activities to where their customers are. This is known as Pillar 1. The current proposal is that Pillar 1 will apply to MNE groups with global revenues above 20 billion euros and profitability above 10%. The second proposal is the introduction of an internationally-agreed minimum corporate tax rate for large MNEs, wherever they operate. This is known as Pillar 2. The G7 and IF have proposed a minimum effective tax rate of at least 15% for MNE groups with global revenues above 750 million euros. With respect to how Singapore will be affected by these proposals, as well as our response to them, these have been addressed in my reply to similar questions in Parliament on 5 July 2021. In brief, Singapore has never relied on tax incentives alone to attract investments. We have consistently invested in our talent, infrastructure, R&D, and created a conducive business environment. These have allowed us to build a vibrant economy and create good jobs for our people.”
“The highest marginal personal income tax rate for tax resident individuals, corporate income tax rate, GST rate and water conservation tax rate since 1991 are as follows:”
“In a further evolution of the framework, the Constitution was amended in 2008 to implement the Net Investment Return (NIR) framework, which allowed the Government to spend from the long-term expected real return on the net assets invested by GIC and MAS. The returns under the NIR framework include capital gains. Temasek was included in the NIR framework in 2016. Today, the Net Investment Return Contribution (NIRC) is the largest single contributor to the annual budget. It is estimated to be $19.6 billion for FY2021, or 20% of the Budget.”
“The Constitution was amended in 1991 to create the institution of the Elected President to protect Singapore’s Past Reserves. This was a major shift in our fiscal framework, to prevent any profligate government from spending beyond its means by drawing down on the reserves built up over previous generations. Our physical endowment of land is scarce and finite, and protected as part of our Past Reserves. Land sales simply convert physical assets to financial assets. As such, proceeds from land sales accrue fully to Past Reserves and are not available as revenue for spending in the Budget, for the reasons explained by the Second Minister for Finance Indranee Rajah in Parliament on 5 April 2021. Instead the proceeds are invested and the Government can spend from the income generated by these investments. The framework for spending from investment income has evolved over time, reflecting the careful deliberations by the Government on how to spend from the returns generated by the reserves, balancing the needs of current and future generations. Prior to 2001, the Government could spend all of the investment income that was accumulated during its term. Investment income at that time referred to interest and dividends received, and excluded capital gains. In 2001, the Constitution was amended to protect at least 50% of the net investment income (NII) earned from the Past Reserves of the Government. This amendment underscored the Government’s commitment to take a longer-term view, to save some of the investment income to ensure that our reserves would continue to grow, so that future generations would be better able to deal with rainy days.”
“In Singapore, the share of Goods and Services Tax (GST) out of total tax revenue1 was 8.0% in Financial Year (FY) 1994 and an estimated 16.2% in FY20212. In OECD countries3, the average share of Value-Added Tax (VAT) or sales tax out of their total tax revenue4 is about 21.5% in FY2019. This does not include general consumption or sales taxes imposed at local government levels.”
“MAS is working closely with the industry to mainstream green finance and has convened an industry-led Green Finance Industry Task force to develop a taxonomy for Singapore-based financial institutions to identify and classify activities that can be considered green or in transition. The task force recently concluded a consultation in March 2021 on the proposed environmental objectives, focus sectors and approach for classifying green and transition activities, and is studying the feedback received. In its next phase of work, the task force will develop a set of principle-based criteria and quantifiable thresholds to set out how activities can be classified according to their level of alignment with environmental objectives. A further consultation will be issued in 2022 before finalising the taxonomy by end-2022.”
“Climate change is real, and the Singapore Green Plan 2030 is a major policy priority for the Government. Green Finance is an important enabler of the Singapore Green Plan 2030. Green bonds are a type of borrowing where proceeds will be exclusively applied to finance projects that are deemed environmentally sustainable. We announced at Budget this year that the Government has identified about $19 billion worth of projects that can be financed by green bonds, as a start. Eligible large-scale projects can be financed through sovereign green bonds under the Significant Infrastructure Government Loan Act (SINGA), while smaller scale green projects, such as Tuas Nexus, will be financed through the issuance of green bonds by the respective Statutory Boards. We will build on the trust that investors have in us, by setting and observing high standards for our green bond issuances. We are in the midst of working with the Monetary Authority of Singapore (MAS), bond issuing agencies and industry partners to establish the standards, assessment criteria and reporting requirements for our green bond issuances, taking into account international standards. These details will be published when ready. As a financial centre, Singapore has a special role to channel capital to investments that fulfil environmental objectives, which in turn would create new jobs and opportunities in the green economy. MAS’ Green Finance Action Plan sets out its intentions to support Singapore’s and Asia’s transition to a sustainable future, by strengthening the resilience of the financial sector to environmental risks, developing green finance markets, harnessing technology to support green finance solutions and building knowledge and capabilities.”
“I encourage Members of this House who have not done so, to help amplify our efforts by sharing information on the relevant schemes with your constituents.”
“This ensures our target beneficiaries receive the necessary support quickly and minimises the need for applications. There are other schemes which are on an application basis, so as to better meet the specific needs of the company, or to obtain more real-time data for assessment. This include business transformation grants and loans. Second, whether it is broad-based automatic disbursement or application-based grants, we adopt various channels to maximise outreach and awareness. Our agencies issue press releases, infographics and social media posts that provide key details of each scheme, including eligibility criteria, benefits and application processes. Details of support measures are also accessible through agencies’ websites. In addition, collaterals are disseminated to our partners like trade associations and chambers, and the labour unions, so that they can help to spread the word to businesses and the community. We have also developed interactive digital navigators such as the SupportGoWhere and GoBusiness portals, to allow businesses and individuals to self-assess their eligibility and apply for schemes. For those who require more assistance with their application process, the Government also provides additional support. Businesses may approach any of the 12 SME centres across Singapore for dedicated advice on what schemes which would best suit their needs. For groups who may not be as digitally savvy, we make an extra effort to reach out to them through non-digital means. For instance, LTA and NEA actively stepped up their outreach to taxi drivers, hawkers and market stall holders. Posters in our four official languages were also put up at common community areas such as Town Councils and Community Centres, and on digital displays at HDB lift lobbies.”
“The Government remains committed to support our businesses and citizens through this pandemic. Since the start of the pandemic last year, we have disbursed more than $26.7 billion of Jobs Support Scheme to help our firms to retain their local employees. We further provided over $1.8 billion to more than 200,000 self-employed workers under the Self-Employed Person Income Relief Scheme (SIRS). Various financing schemes, such as the Temporary Bridging Loan Programme, have also helped over 25,000 firms secure loans worth a combined total of more than $22 billion. In the recent Phase Two and Phase Three (Heightened Alert), we are providing targeted support to sectors more significantly affected by the tightened measures. We will continue to monitor the situation closely and calibrate our support for our businesses and our people accordingly. As our economy recovers, we will also have to adjust our relief support while providing substantial support for companies to transform and create good jobs. This includes measures like the SGUnited Jobs and Skills Package, including the Jobs Growth Incentive. As COVID-19 will be with us for some time, businesses should also continue to find ways to adapt and adjust to this new normal, and strengthen the resilience of their plans and processes. Ms He Ting Ru also asked if we can give businesses more information on the schemes available and how we ensure that eligible recipients are aware of and receive the necessary support. First, where appropriate and feasible, we design our schemes such that benefits are computed and disbursed automatically. Examples include major support schemes like the Jobs Support Scheme and the Jobs Growth Incentive.”
“But we generally do not differentiate corporate tax treatment based on the place of incorporation or the tax residency of the company. Where corporate tax is concerned, the focus is on their income sourced in Singapore, as well as their income sourced abroad upon remittance into Singapore, and not their place of incorporation or their tax residency status.”
“Based on IRAS data available for the Year of Assessment (YA) 2010 to YA 2019, the total turnover of companies has increased from S$2.1 trillion in YA 2010 to S$4.6 trillion in YA 2019. The profit before tax for these companies were S$128 billion and S$503 billion for YA 2010 and YA 2019 respectively. The total corporate income tax paid were S$10.2 billion for YA 2010 and S$16.3 billion for YA 2019. Our corporate tax system allows companies to enjoy tax deductions, tax allowances, group relief, loss carry back, tax exemptions or tax rebates. So the average effective tax rates for all companies were 3.2% for YA 2010 and 2.7% for YA 2019. For all SMEs or companies with turnover of up to S$100 million, their total turnover were S$365 billion in YA 2010 and S$520 billion in YA 2019 respectively. SMEs’ total profits before tax were S$31 billion for YA 2010 and S$44 billion for YA 2019 respectively. The total corporate income tax paid by SMEs were S$3.8 billion for YA 2010 and S$4.8 billion for YA 2019 respectively. The average effective tax rates for all SMEs were 3.4% for YA 2010 and 2.8% for YA 2019. For all non-SMEs or companies with turnover exceeding S$100 million, their total turnover was S$1.7 trillion in YA 2010 and S$4.1 trillion in YA 2019 respectively. Their total profits before tax were S$97 billion for YA 2010 and S$459 billion for YA 2019. The total corporate income tax paid by non-SMEs were S$6.4 billion for YA 2010 and S$11.5 billion for YA 2019 respectively. The non-SMEs’ average effective tax rates have ranged about 8% to 10% for the same period. Mr Chua has also asked for a breakdown of the figures for foreign and Singapore-incorporated companies, as well as for tax-resident and non-tax resident companies.”
“Hence, we do not have data on the total amount of corporate tax breaks that companies enjoy. Instead, taxpayers are only requested to declare in their tax returns a subset of identified tax deductions and allowance to facilitate periodic policy review, like the writing-down allowances for the cost of acquiring intellectual property rights. Based on this subset of tax deductions and allowances, the total annual amount of such tax deductions and tax allowances ranged from $128 billion in Year of Assessment (YA) 2011 to $218 billion in YA 2019. CIT Rebate was granted from YA 2013 to YA 2019. The yearly amount of corporate tax savings to companies ranged from $200 million to $580 million.”
“Corporate tax deductions and tax allowances are given to defray expenses incurred wholly and exclusively in the production of their income, or to meet certain policy objectives. Such tax deductions and tax allowances are deducted from the companies’ gross income, together with other adjustments, before determining the amount of chargeable income to be taxed. For instance, businesses can claim 100% tax deduction for wages, rentals and other relevant expenses incurred in the production of income. We provide 100% tax allowance for investment in plant and machinery, or for acquisition of intellectual property. To encourage businesses to invest in R&D especially R&D done in Singapore, we have up to 250% tax deduction for the relevant expenses. To encourage businesses to venture abroad, we have 200% tax deduction for qualifying expenses. From time to time, the Government has provided Corporate Income Tax (CIT) Rebate, to ease cashflow for companies. The CIT Rebate is typically given as a percentage of tax payable, subject to a cap. This cap ensures that the rebate benefits especially taxpaying SMEs which are companies with annual turnover of less than $100 million. We do not differentiate corporate tax treatment based on the nationality of the business owner. This is also in line with the reciprocal obligation under tax treaties for non-discrimination. As IRAS does not track corporate taxpayers based on their ownership, we are unable to provide data for foreign-owned companies. To ease taxpayers’ compliance burden, we generally allow taxpayers to claim tax deductions and allowance in their tax returns without prior approval from IRAS. IRAS will then audit the taxpayers on a risk-based approach.”
“Based on IRAS data available for the Year of Assessment (YA) 2019, the total revenue of companies whose profit margins are above 10% is S$802 billion. Their profit before tax and corporate income tax paid were S$542 billion and S$11 billion respectively. Their effective tax rate, as measured by corporate tax divided by chargeable income, was 4.6% for YA 2019. There are in total about 52,000 such companies with profit margins above 10% for YA 2019. We do not differentiate corporate tax treatment based on the nationality of the business owner. This is in line with the reciprocal obligation under tax treaties for non-discrimination of companies. As IRAS does not track corporate taxpayers based on their ownership, we are unable to provide further breakdown of this data for foreign-owned companies.”
“Mr Speaker, to give Members some time to consider my Statement, I would like to adjourn the debate. [(proc text) Question put, and agreed to. (proc text)]”
“I would like to thank, once again, our frontline workers and the many unsung heroes who have worked tirelessly throughout this past year and a half to support our battle against the pandemic and I also thank all Singaporeans for your forbearance and cooperation with our safe management measures. Throughout the darkest moments of this pandemic, we have seen the Singapore spirit shine brightly. So, let us move forward with renewed confidence about the future because we will overcome this crisis together and we will emerge as a better, stronger and more united Singapore. Thank you, Mr Speaker. [Applause.] Mr Speaker, pursuant to Standing Order No 44, I beg to move, "That the Ministerial Statement made by me be considered by Parliament." [(proc text) Question proposed. (proc text)]”
“As my fellow Multi-Ministry Task force (MTF) Co-Chairs and I have shared, we are preparing a roadmap for Singapore to transit to such a scenario where we learn to live normally with COVID-19. We see promising signs from countries that are ahead of us in vaccinations. Israel is one such example. Its vaccination rate is amongst the highest in the world – about 60% of its population has been fully vaccinated with the Pfizer-BioNTech vaccine. It has opened up most of its economy, relaxed many of its measures. It has seen a recent rise in cases, mostly due to the Delta variant, but the new outbreaks have not led to higher hospitalisation rates because of the protection from the vaccine. So, for Singapore, we are targeting for two-thirds of our population to be fully vaccinated by National Day. It is an ambitious target but we are making steady progress towards it. We are also going all out to engage our seniors and get more of them vaccinated. We have already reached higher than two-thirds for our seniors but it is not high enough and we want to get an even higher rate. With high vaccination rates, we will be able reopen our economy safely. We will then ease the safe distancing rules progressively, especially for vaccinated persons, and we can look forward to larger gatherings, concerts, performances, sporting events and, eventually, to travel again. Sir, this has been a long and difficult journey. We have been running this marathon together for some time. I know many are fatigued and tired. But we are seeing light at the end of the tunnel.”
“We also convened the Emerging Stronger Task force, co-chaired by Minister Desmond Lee and Group CEO of PSA International Mr Tan Chong Meng, which has set out many useful recommendations to better position Singapore for future growth. We will double down on these efforts and develop new initiatives over the coming months to accelerate our progress. To achieve these goals, we will need strong partnerships across the community, private and public sectors. Our experience throughout this pandemic has shown that we are stronger and more effective when we are united and when we work together. In this regard, I am glad that the Emerging Stronger Task force has prototyped the Alliances for Action, where groups of private and public stakeholders come together to identify opportunities and create new solutions. We will build on this prototype and scale up more of such private-public collaborations. To conclude, Sir, I know that there is a deep longing in all our hearts to go back to how things were before the pandemic: to gather freely with our family and friends; to be able to travel freely for business and leisure; to be able to participate in religious activities and enjoy entertainment and sports events like football, although you can watch the European Championship (Euros) now on television; to go about our daily lives without masks. For many people, such a way of life can seem like a lifetime ago and they feel a sense of helplessness, not knowing when normalcy will return, if at all. I share and understand these concerns. The reality is that COVID-19 is unlikely to go away anytime soon. But with vaccinations and with improvements in treatment, we can make SARS-CoV-2 look more like influenza in terms of morbidity and mortality.”
“So, our priority is to speed up vaccinations and we have the ability to reach a very high level of vaccination coverage over the next one or two months. This will enable us to progressively reopen and reconnect with the world. We are already discussing with other jurisdictions that have effectively controlled the infection to work out travel corridors with them for vaccinated persons to travel more freely, either without the need for Stay-Home Notice (SHN) or with a reduced SHN duration. While we will not be able to prevent occasional imported infections, a high vaccination rate and our public health defences will prevent major outbreaks. Beyond the immediate term, we are investing in new capabilities and building ourselves up strongly for the future. We are accelerating our automation and digitalisation efforts to help our businesses, especially SMEs, improve their productivity and transcend the limitations of our size and geography. We are intensifying our efforts in SkillsFuture to equip our local workforce with deep skills and to power our next bound of growth with a strong Singaporean Core. We are creating new investments and jobs in the green economy and strengthening our position as a regional centre for green finance. We are investing in R&D to be at the forefront of new technological revolutions and to spur more innovative startups and enterprises. Through all of these efforts, we will emerge from this crisis as a smarter and greener economy and a more innovative and inclusive nation. The foundations for all these have been laid in previous Budgets under Deputy Prime Minister Heng.”
“So, as we reopen our borders and allow more workers to come in, we expect the outlook for these industries to improve. Likewise, domestic consumer-facing sectors like retail and F&B can expect to recover as we progressively ease our restrictions and allow larger groups to gather. But the recovery will be more gradual in some of the hard-hit sectors like aviation and tourism-related industries because it will take a longer time for international air travel volumes to return to pre-COVID-19 levels. So, there might be some consolidation in these industries. We, the Government, will do our part to reskill the affected workers and help them transition to other growing sectors that need manpower. At the same time, we will continue to provide targeted support for these industries to preserve their core capabilities and to position them for recovery, which will come when travel restrictions are eventually lifted. For FY2021, our Budget position remains expansionary. We expect an overall deficit of $11 billion or 2.2% of GDP – similar to what was previously announced at Budget 2021. One important part of the recovery process is the reopening of our borders. This is not just about GDP growth. It is, in fact, an existential issue for Singapore because we survive and thrive on our ability to connect businesses and people to the region and the world. There has been feedback from the business and investment community that Singapore might lose out to other hubs that are moving more aggressively to reopen their borders. We understand these concerns. But we are also very mindful that if we were to reopen prematurely before we reach high enough vaccination levels, we could end up with another wave of infections and, worse, a surge in hospitalisation and ICU cases.”
“To continue to help SMEs in need, I will extend the Temporary Bridging Loan Programme and the Enhanced Enterprise Financing Scheme Trade Loan for an additional six months to 31 March next year. Beyond this support, the Government will continue to support our businesses to digitalise and innovate to prepare them for recovery and growth post-COVID-19. (In English): Mr Speaker, looking ahead, the global economic outlook continues to be highly uncertain as it depends critically on the path of the pandemic. On the upside, the US is picking up strongly while the EU is showing the beginnings of a strong recovery. A faster-than-anticipated global vaccine rollout and effective pandemic containment could boost growth prospects. On the other hand, there are many downside risks, including the threat of new waves of infections, which could force a return to lockdowns in some jurisdictions and a slower timeline for the reopening of borders. As a small open economy, Singapore's outlook depends crucially on these external developments. The uncertainty surrounding our economic outlook is, therefore, larger than usual. Nevertheless, barring unforeseen circumstances, we continue to expect GDP growth of at least 4% to 6% this year. But the recovery will be uneven across sectors. The outward-oriented sectors which account for about 70% of our economy are projected to benefit from the pick-up in external demand. The construction, marine and offshore engineering sectors are not short of projects but they face a severe manpower crunch due to the COVID-19 restrictions. We have provided Foreign Worker Levy rebates to cushion the impact and other support measures to help these companies adapt and resume work safely. But these cannot make up for the shortfall of workers.”
“Since then, Slake has doubled down on their efforts to go digital. It took up the Enterprise Development Grant to develop a virtual brand for new revenue streams, tapped on the Food Delivery Booster Package. It recently also expanded its social media marketing and is now well-positioned for growth opportunities during this period and beyond. Mr Speaker, with your permission, let me say a few words in Mandarin. (In Mandarin): [Please refer to Vernacular Speech.] In May this year, the Government tightened the restrictions and provided a series of support measures to the most affected individuals, workers and firms. The Government will fund these measures by reallocating the budget of various Ministries and the measures will cost about $1.2 billion. When coming up with these measures, I am especially mindful of our SMEs' situation. SMEs are the backbone of our economy. However, they tend to have less resources due to their size. SMEs also tend to require more assistance when dealing with a crisis. This is why we tend to tilt our policies towards SMEs by providing more support to them. For example, our SMEs enjoy low taxes in Singapore. More than 50% of our SMEs do not pay any corporate income tax at all. In addition, although SMEs comprise more than 95% of local companies, they contribute less than one-third of our total corporate income tax revenue. The Government has paid out a total of $26.7 billion under the Jobs Support Scheme (JSS) to date and about two thirds of which went to SMEs. Since the start of 2020 till today, Enterprise Singapore's financing schemes have supported more than 25,000 enterprises with over $22 billion worth of loans, and 99% of the recipients of the loans were SMEs.”
“During times of crises, we recognise that lower-income households and SMEs face bigger challenges. That is why we have designed our interventions to benefit them the most. In particular, our COVID-19 support packages provide more help for SMEs. For example, about two-thirds of the $26.7 billion of JSS paid out to-date went to SMEs. About 90% of the benefits from the corporate income tax rebate in the Year of Assessment 2020 went to SMEs. For many SMEs, access to credit is a critical lifeline to tide them through this crisis. That is why we have supported over $22 billion worth of loans to over 25,000 enterprises through Enterprise Singapore’s financing schemes since the start of 2020. Ninety-nine percent of the recipients were SMEs. While economic conditions have improved, such access to credit remains critical to our SMEs. Therefore, I will extend the Temporary Bridging Loan Programme and the Enhanced Enterprise Financing Scheme – Trade Loan for an additional six months from 1 October 2021 to 31 March 2022. The parameters for both schemes remain unchanged, including the Government risk-share of 70%. The Monetary Authority of Singapore (MAS) will also extend the MAS Singapore Dollar Facility for Enterprise Singapore Loans accordingly. I encourage businesses to make use of this extension and other available schemes to ready themselves for the new normal. Many of our SMEs have already seized the opportunity to build new capabilities and future-proof their businesses. Take the example of Slake, which started out in 2014 as a humble neighbourhood bistro in Siglap. In 2017, even before the pandemic, Slake pivoted to online ordering to reach more customers by taking up the Productivity Solutions Grant. These investments paid off during the Circuit Breaker last year.”
“Mr Speaker, the way we have gone about providing support this round, as well as our ongoing support schemes over the years, reflect our fiscal approach in supporting Singaporeans and businesses in Singapore. Even before the crisis, we have been careful to ensure a fair tax regime for everyone. Our overall income tax revenue, both corporate and personal, as a percentage of GDP, is low, at only around 6%, about half of the OECD average of 12%. For individuals, we layer on a progressive system of transfers that provides more help for those in greater need. And as we have shared in this House before, the bottom 20% of households by income, for example, receive around $4 of benefits for every dollar of tax they contribute. We also have a competitive tax regime for companies, particularly our SMEs, as they are the backbone of our economy. While there is a global movement to change corporate tax rules, which we discussed at length just now, these changes are only applicable to a select group of global companies and not to smaller enterprises. So, our SMEs in Singapore can continue to enjoy low taxes. Let me share some numbers. Our SMEs, or those with turnover of up to $100 million, comprise more than 95% of active companies in Singapore, but they contribute less than a third of our corporate income tax revenue – 95% versus one-third. In fact, more than 50% of such companies do not pay any corporate tax at all. Besides taxes, we recognise that SMEs are concerned with business costs, like rental, labour and utilities. We do not directly offset such costs in normal times but, instead, provide a wide range of schemes to help them improve productivity and build new capabilities. So, from 2015 to 2019, before COVID-19, about 70% of Government grant disbursements went to SMEs.”
“So, we are not asking for new monies in this Bill but are seeking a reallocation of monies to fund the support package. Let me explain what this entails. About $0.6 billion out of the $1.2 billion will come from the capitalisation of development expenditure under the Significant Infrastructure Government Loan Act, or SINGA, in short. There are two projects that meet the criteria for financing under SINGA: the Deep Tunnel Sewerage System and the North-South Corridor. We had set aside funds for these two projects in Budget 2021, before SINGA was passed. With SINGA, we will borrow for these projects and capitalise their development expenditure from the fourth quarter of this year. The amount that was originally budgeted to finance these two projects can now be reallocated to fund this support package. This is a one-off adjustment, because SINGA was passed after we started the financial year. Going forward, the amounts that will be capitalised under SINGA will be incorporated as part of future annual Budget Estimates and, so, we will not have such reallocation space in future. The remaining $0.6 billion will be reallocated from underutilisation of development expenditure mainly due to delays in projects arising from COVID-19. It does not mean we are cancelling the projects. We still want to do the projects and we will have to catch up on our development schedules as the situation stabilises. So, the delayed expenditure will still need to be incurred in future financial years. But, in the meantime, there is some fiscal space for reallocation. That is why I am introducing this Supplementary Supply Bill to effect the total reallocation of $1.2 billion to fund the support package.”
“We will not hesitate to use the full measure of our fiscal firepower to protect the lives and livelihoods of Singaporeans. But we also need to be careful about the state of our public finances and ensure they are sustainable for the future. In many countries, COVID-19 has led to massive increases in debt levels, which have not been seen since the end of the Second World War. Not many people are paying attention to how all of this debt will be serviced. They may look affordable now, but will not be so once interest rates increase to more normal levels. The day of reckoning will come and the burden will surely fall on the young and future generations. We are one of the very few exceptions to this trend of rising public debt around the world. We are very fortunate to be where we are today, thanks to the foresight and fiscal prudence of our forefathers. When the Reserves Protection Framework was introduced in 1991, no one could have foreseen that a pandemic of this magnitude would hit us one day. But it is precisely this discipline of setting aside resources for rainy days that has put us in a strong fiscal position to respond decisively to the current crisis. We already expect to draw up to $53.7 billion from our past reserves. It is an amount which we are not likely to be able to put back anytime soon, if at all. Our expenditure in FY2020 was the highest ever in the history of our country; and this unprecedented fiscal response has also led to the largest Budget deficit in Singapore’s history. Now that things are better, we should refrain from drawing further on past reserves. Instead, we will fund the support measures using resources that were approved in this year’s Budget. That is the responsible way to manage our finances.”
“In fact, many individuals and businesses have learnt to adapt and pivot to new ways of working and doing business, allowing them to keep going in the face of tightened restrictions. We are also building on a strong base of support measures announced earlier this year in Budget 2021 and which are still in place. For example, we have the Jobs Growth Incentive and other measures in the SGUnited Jobs and Skills Package to facilitate workers moving to jobs in growth areas. We also have measures to foster innovation, help businesses adopt new technologies and build deep digital capabilities and we continue to have various assistance schemes for individuals and households, including the GST Vouchers, CDC Vouchers and the COVID-19 Recovery Grant. Mr Speaker, under these circumstances, I do not believe there is a need to draw on our past reserves. Drawing on past reserves is a major move. We do so only in exceptional circumstances. That was the case last year. Our economy shrank by 5.4%, the largest fall since Independence. Our resident unemployment rate rose to nearly 5%. At the start of this financial year, because we were starting out on a new term, we had to draw on past reserves again to finance the continuing COVID-related measures in the Budget. We are not in the same situation this time. Our economy is recovering; our employment situation is steadily improving. On the COVID-19 front, we have improved testing and tracing capabilities and we can now control the infection with more targeted restrictions. We have also made good progress on vaccinations. Almost 40% of our population has been fully vaccinated and we are going as fast as we can with nearly 80,000 doses being administered every day. Let me be clear.”
“To support smaller businesses, including those in the heartlands, we extended rental support for Small and Medium Enterprises, or SMEs, and eligible non-profit organisations through one month of rental waiver for tenants of Government-owned commercial properties and half a month of cash payout for those who are end-tenants and owner-occupiers of qualifying private commercial properties. Third, we helped individuals impacted by the safe management measures. We supported taxi and private hire car drivers through the COVID-19 Driver Relief Fund. To further assist our hawkers who were impacted by the dine-in restrictions, we provided subsidies for table cleaning and centralised dishwashing services. We also introduced a COVID-19 Recovery Grant (Temporary), or CRG-T, scheme to provide short-term support to employees and self-employed persons who suffered from sudden and significant income loss during this period. The coverage for this CRG-T scheme extends to end-July. In coming up with this package, we consulted closely with workers, union leaders and business leaders to hear their concerns and challenges and I thank them for their understanding and close cooperation as we navigate this crisis together. The additional support measures for the period of Heightened Alert are expected to cost $1.2 billion. We sized the package based on what we assessed to be appropriate to meet the needs of businesses and individuals during this period. As mentioned earlier, most parts of our economy continued to operate over the past two months. It was not the same as the circuit breaker last year where many activities were curtailed and literally the whole economy was shut down.”
“That is why we started to ease the restrictions from 14 June, when we moved from Phase Two to Phase Three (Heightened Alert); and we expect to open up further from 12 July to allow larger groups of five people to dine together. In line with this calibrated approach during the Heightened Alert, we have targeted our support measures to help businesses and individuals most impacted by the tightened restrictions. The details of the support measures have been announced previously. So, let me just provide a quick summary. First, we enhanced the Jobs Support Scheme, or JSS, to help enterprises retain local workers. From 16 May to 11 July, we provided different levels of JSS enhancements based on the impact of our measures on various sectors. We provided 50% JSS support for sectors which had to suspend all or most of their operations. These included F&B, gyms, fitness studios, as well as performing arts organisations and arts education centres. We also enhanced support to 30% for sectors that were not required to suspend operations but were, nonetheless, significantly impacted by the reduced footfall. These included the retail sector, cinemas, museums, art galleries, historical sites, indoor playgrounds and other family entertainment centres. To ease businesses back towards reopening, we will taper JSS support to 10% for two weeks from 12 July. Second, we helped businesses with their cash flow by providing relief for rental costs. We provided two months of rental waiver for hawkers in Government-owned premises.”
“The world is unlikely to reach a point where enough people are immune to stop the virus’ spread before the emergence of new variants. Delta may not be the worst variant of this virus. I shudder to think what the Omega variant would look like. We must be prepared to see new strains that are more transmissible, vaccine-resistant and even able to evade current diagnostic tests. For Singapore, we can take heart that we are in a much better position to deal with the pandemic now, than at the start. We have more robust public health defences, including testing and contact tracing capabilities, which have enabled us to quickly detect and contain the spread of new clusters. We have procured enough mRNA vaccines as part of our national programme and are now able to offer these vaccines to all eligible persons in Singapore. And to deal with the latest round of outbreaks, we decided there was no need to go into an economy-wide circuit breaker like what we had done last year. Instead, we adopted more targeted measures calibrated based on the severity of the outbreaks. So, in early to mid-May, we saw the emergence of new clusters, most notably at Tan Tock Seng Hospital and Changi Airport, and a sustained increase in unlinked community cases, we moved into Phase Two (Heightened Alert) on 16 May to protect Singaporeans and to control the spread of the virus. We introduced measures aimed at reducing transmission risks in indoor settings where people do not have their masks on and where there is a higher chance of large clusters forming. These included F&B dining-in, gyms and fitness centres, as well as live arts and cultural performances. These additional measures have worked in curbing the spread of the virus, while allowing most parts of the economy to continue operating.”
“Mr Speaker, Sir, it has been a year and a half since the start of the COVID-19 outbreak. When the pandemic first broke out, some thought it might be all over after a year. Unfortunately, this scenario has not materialised. We are dealing with a very tricky virus. Each time you think you have it under control, it comes storming back. So, we are continuing to see rolling waves of infections around the world, driven by new variants of the virus Late last year, we had the Alpha variant, which was first detected in the United Kingdom, and which was about 50% more transmissible than the original strain detected in Wuhan. Now, we are dealing with the Delta variant. It is estimated to be 60% more transmissible than the Alpha variant. That means it is about two and a half times more contagious than the original strain. Even countries which kept their borders tight like China and Australia are seeing outbreaks of new clusters linked to this variant. The Delta variant is fast becoming the world’s dominant strain of SARS-CoV-2. It has spread throughout Asia and is now making its way to countries around the world. For example, Members would have read reports of how new infections are surging across the African continent because of the Delta variant. Some countries that started relaxing their measures are also seeing new infections due to this strain. The good news is that the mRNA vaccines, be it Pfizer-BioNTech or Moderna, offer excellent protection against severe illness, even with the Delta variant. But in places where the vaccination rates are not high enough, especially amongst the elderly population, the increase in infections may unfortunately lead to higher hospitalisation, ICU admissions and eventually fatalities.”
“Mr Speaker, it is a very important question and I do not want to belabour the broad points because, at this stage, I think it is a little early to dive into details. The upshot of these tax changes, as I said just now, is that it will make it harder for Singapore to attract investments; there should be no doubt. So, let us be realistic about what the impact will be. It will make it harder for us to attract investments and we have to work harder, particularly, given our size, the fact that Singapore is such a small city-state, compared to so many other locations around the world which offer equally, if not more, attractive and compelling attributes. So, whether it is for technology, whether it is for finance, whether, it is any other major investment that will now be impacted, we just have to work that much harder. Basically, in a post-Pillar One and post-Pillar Two world, the large MNCs of the world will bear a larger tax burden. That is what it comes down to, anywhere they go. Assuming Pillars One and Two are applied evenly, uniformly, around the world, they will have to bear a larger tax burden. So, we, on our part, will therefore have to work that much harder, whether it is on upgrading of our workforce, our infrastructure, our connectivity, our overall business environment; all of these factors will, therefore, become more salient in our ability to attract and retain investments and, ultimately, with the objective of creating good jobs for Singaporeans.”
“Mr Speaker, Mr Chua has, in fact, asked quite a detailed series of questions on our effective tax rates, not just for MNCs but for local enterprises, and quite a range of different breakdowns in a separate Parliamentary Question (PQ). So, we will provide the full answer there. Those are data that we will share. Yes, effectively, our effective corporate tax rate is low, not just for MNCs, but for all companies, especially for SMEs in Singapore. They are low. And they are low for a reason because we want to encourage business innovation, business investments and we want to make sure that businesses can create good jobs for Singaporeans. So, with Pillar Two being in place and with the consensus around Pillar Two forming at an effective rate of 15%, we will, of course, have to start thinking about what changes and adjustments are needed with regard to our corporate tax system to be in line with international standards, as I have said earlier. At this stage, I would just say it is premature to speculate or to talk about what these tax adjustments will be. But as I mentioned earlier, the key principle is we will preserve our sovereign tax rights, our rights to taxation, even within the international agreement, and we will work out together with businesses what adjustments and changes might be needed in our corporate tax system. Secondly, we will also, at the same time as we adjust our corporate tax system, make sure that we work even harder on non-tax factors to make sure that Singapore remains competitive and attractive to investments. That is not something we should take lightly for the reasons I have explained earlier.”
“And whether or not we will be able to make up with sufficient revenues elsewhere, that is something that we will have to work out. I should explain why we even ended up with Pillar One. And the reason is that many jurisdictions feel that in this new digital world, digitalisation has enabled large MNEs, especially the digital companies to do well, to grow dramatically and to be able to acquire more customers in jurisdictions outside of where they operate. They can acquire customers remotely. And therefore, many of these market jurisdictions have started to unilaterally impose, what they call, digital services tax on these companies. It is not in our interest to have a taxation system that is fragmented and to have other jurisdictions impose unilateral taxes. That is not helpful for Singapore as a small and open economy. And that is why we feel it is better that we participate actively in the Inclusive Forum and be part of the multilateral discussion to shape a set of international tax rules that can be adapted to this new business model of the digital world. So, indeed, that is what Pillar One is about. As and when there is an agreement on Pillar One, the agreement will provide for the coordination of this new international proposal together with the removal of all digital services tax and other similar measures that have been unilaterally imposed by certain market jurisdictions. That is why we have decided we could go along with this Pillar One consensus view, so that businesses can work with one set of rules rather than have to deal with a patchwork of fragmented rules. But as I mentioned, there are still details to be worked out even under Pillar One and these are issues which we will continue to actively discuss at the Inclusive Forum.”
“Mr Speaker, there has been already extensive discussions at the Inclusive Forum on many of these matters. And recently, 130 jurisdictions in the Inclusive Forum, including Singapore, have reached a consensus on the key parameters of the corporate tax changes. That includes the global effective minimum tax rate of 15%. But there are still many design elements and implementation details that need to be worked out, as I mentioned earlier. For example, how would the effective tax rate be determined? There are some technical details there to be resolved. Or whether there will be sectoral carve-outs, as I have mentioned. For now, under Pillar Two, the one carve-out that is being proposed is for shipping. Why? Because really, shipping operates under a very special tax regime. Shipping has no, by definition, physical presence. It moves everywhere and to many different countries. And so, you have different kinds of taxes for shipping, like tonnage tax, that falls outside of the scope of corporate taxes. Therefore, the intent or at least the proposal on the table now is to carve out shipping from Pillar Two. But these things are fluid. They continue to be discussed at the Inclusive Forum. Singapore is an active participant in the forum and we will do our part to shape the consensus in line with our national interest and also to ensure a level playing field for everyone. On the second question on Pillar One, yes, there will be a negative impact, because Pillar One means reallocating tax revenues for some of these large firms to where the markets are located. So, this will have certainly a direct impact on our revenues. Exactly how much, like I said, it is difficult to give any detailed estimates now when the detailed rules are still being finalised.”
“It has always been so and we will continue to work hard on this front. I think we should also be mindful and clear that with these tax changes, going forward, as a small city-state with no natural resources, with limited land, it will be that much harder for Singapore to attract investments. And that means we will have to work even harder to attract and retain investments based on these non-tax competitive factors. Up to now EDB and our economic agencies have been very effective in bringing investments into Singapore and creating jobs for Singaporeans, but we should never take that for granted. We should never assume that these investments will just fall on our laps and they will automatically happen year after year. It will get harder, so we will need all Singaporeans to support this critical mission; and that includes everyone in this House. And I am saying that with a reference to the upcoming debates on FTAs, because what we say, the tone of the debate does matter. If investors start to feel that Singapore is starting to become less hospitable to foreign investments and talent, they will surely look for other options and there are many compelling options everywhere in the world. And we will end up worse off.”
“Mr Speaker, with regard to the question of carve-outs, as I mentioned earlier, the current proposal on the table is for regulated financial services to be carved out from Pillar One. As for Pillar Two, as I have mentioned, it applies to the larger MNEs. So, whether or not family offices and VCCs will qualify, will really depend on the facts of the case, and ultimately, what are the final criteria that are used for the definition of large MNEs. So, we will continue to monitor this closely. And as I said earlier, we will respond accordingly once the international rules are worked out and finalised. We will respond in two ways. Number one, we will protect our sovereign rights on taxes. And we will make sure we adjust our corporate tax system accordingly, in line with the international standards and in close consultation with businesses in Singapore, ensuring that as far as possible, we keep a low compliance burden on businesses. Number two, we will continue to work hard at improving and enhancing our competitiveness in other areas, especially in terms of the non-tax factors that Ms Foo highlighted. So, to Ms Foo's question, yes, this is work in progress. We have always been looking at how we can restructure, transform our economy, invest in enterprise capabilities, as well as the capabilities of our workforce. And we will work even harder at that. Our objective is to continue to remain attractive and competitive; attractive to substantial investments and substantial economic activities to be based here. We are not trying to get companies to register in Singapore without a physical presence. That is not our intent. We want to anchor substantial activities here, with the aim of creating good jobs for Singaporeans. That must be the objective of our economic policy.”