Learn about the global tax rate reform and how it affects tech companies in Singapore.
Earlier in June, finance ministers from the Group of Seven (G7) nations (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) reached an agreement to levy a 15% global corporate tax rate on multinationals and drive fairer taxation.
At first, many business leaders were concerned about what this could mean for tech multinationals looking to expand into Asia. However it appears that the reforms are more likely to level the playing field with other low-tax jurisdictions in Asia. In fact, this development further underlines Singapore's significant infrastructure, talent, and commercial advantages as a tech hub.
Singapore has much to offer to multinationals other than competitive corporate taxes. Technology companies are attracted by its political stability, sound policies, robust cyber and data security capabilities, ease of financing, intellectual property protection and a strong talent pool.
Thinking beyond tax
Even amid the pandemic, Singapore's Economic Development Board (EDB) managed to secure S$17 billion in foreign investments. Emerging tech giants such as China's Tencent, Alibaba and Bytedance have set up regional offices here to reach the fast-growing Southeast Asian region.
Singapore's prime location at the heart of fast-growing Asia and its well-developed infrastructure has made it a regional tech powerhouse.
In fact, Singapore was hailed as the "Silicon Valley of Asia" in KPMG's global ranking of leading tech innovation hubs outside San Francisco.
According to the consulting firm, the country "offers an advanced IT infrastructure, strong government support and IP protection laws, and a deep pool of talent".
Singapore was ranked first in digital infrastructure by Economist Intelligence Unit's Asia Digital Transformation Index, ahead of Japan, Hong Kong, and South Korea. One of its initiatives, Research, Innovation and Enterprise 2025 Plan (RIE2025) has mapped out a five-year S$25 billion investment to prepare Singapore for future epidemics.
It also included investments in communications technologies R&D with a focus on 5G and a nationwide artificial intelligence (AI) model-building and adoption.
The Intellectual Property Office of Singapore (IPOS) has also launched the world's fastest patent application process that reduces the time taken by 80 per cent. This is a key requirement for many tech companies looking to expand into the region. It has even granted an international AI firm a patent in only three months.
Singapore's workforce resilience has helped it retain top spot for competitiveness. While the labour market has contracted during the pandemic, it showed signs of recovery throughout 2021. The information and communications, financial services, and professional services sectors have shown signs of employment growth – an indicator of swift recovery.
Futureproofing tech capabilities
Singapore is actively investing in future-proofing its capabilities.
The government has identified artificial intelligence (AI, cybersecurity and the Internet of Things as focus areas to invest and build capabilities in.
Finance Minister Lawrence Wong announced in 2020 that the government will set aside S$1 billion over the next three years to build up cyber and data security capabilities. This will help strengthen Singapore's data protection ecosystem.
EDB has also introduced an immigration visa to attract founders, leaders, and technical experts in the tech industry. You can learn more about the eligibility requirements here.
Such sound policies and well-regarded stability ensure that Singapore remains attractive as a viable tech hub regardless of global corporate tax movements.
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