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SPEECH BY MR S ISWARAN, MINISTER OF STATE FOR TRADE AND
INDUSTRY, AT THE SEMINAR ON THE ATTRIBUTION OF BUSINESS
PROFITS AND THE TAXATION OF PERMANENT ESTABLISHMENTS ON
FRIDAY, 20 JUL 2007, 9.00AM AT SHERATON TOWERS, BALLROOM 1 & 2
Ladies and gentlemen,
I am pleased to join you this morning at this seminar on the Attribution of
Profits and Taxation of Permanent Establishments. Let me first extend a warm
welcome to all the delegates, especially our guests from overseas. I understand
some of you have already spent a week in Singapore, and I hope you had the
time to take in the sights and culinary delights of Singapore.
Aligning our Income Tax Regime to Business Needs
2 The Singapore Income Tax regime is comparatively young and has its
origin in the period after the Second World War. At that time, the cross border
movement of people, goods, capital and services was relatively small. But with
globalisation, the world has become interconnected and more interdependent and
the volume of trade and investment has increased exponentially. Businesses
seek higher returns by locating different parts of their value chain in diverse
geographies to enjoy competitive advantages pertaining to labour, land and taxes.
Consequentially, businesses face more complicated tax issues.
3 Today, a business is concerned not only with how its foreign income will be
taxed in its home country, it will also have to contend with how the host country in
which it operates would want a share of the tax due. Clearly, if both countries
taxed the same income, this undue tax burden will have an adverse impact on
cross border trade and investments.
4 To mitigate the effect of international double taxation, countries usually
enter into bilateral treaties for the avoidance of double taxation. Apart from setting
out the rights to tax, a Double Taxation Agreement (DTA) may also provide an
avenue for the resolution of tax issues. To this end, Singapore has been taking
proactive steps to encourage and support its businesses venturing abroad.
5 Presently, Singapore has 54 comprehensive treaties in force. Another nine
treaties are pending ratification and we are in the process of negotiating with more
tax jurisdictions. We also have limited agreements for the mutual exemption of air
transport and/or shipping profits with seven other tax jurisdictions. Our companies
can therefore take advantage of the wide network of DTAs with our major and
emerging trading partners to enjoy tax certainty, reduce tax burden and resolve
issues with foreign tax jurisdictions.
6 Our treaty policy has evolved to keep pace with economic developments.
From receiving credits for tax forgone for investments into Singapore, we are now
prepared to offer credit for underlying tax.
Raising Knowledge in our Tax Community
7 While these laws help our businesses venture overseas, it is also important
to have a sound understanding of the different taxation systems in countries
where our businesses invest. This is where seminars such as this are particularly
relevant. After all our tax law is only as good as the tax professionals who
administer and interpret them.
8 Today, you will have the opportunity to discuss the complex area of
taxation with 250 other tax professionals. The various panel discussions will offer
businesses an understanding and appreciation of their tax exposures when they
venture overseas in their search to maximise returns. I am hopeful that the open
and comprehensive sharing and exchange of learning between the regulators and
practitioners will benefit both parties.
Launch of the Advanced Tax Programme and Masters in Taxation
9 It is therefore timely that the Tax Academy has chosen this platform to
launch the Advanced Tax Programme. This is an advanced and intensive tax
course for tax professionals. To cater to working adult-learners, classes will be
held in the evenings and on weekends, beginning September 2007. This
advanced tax course will cover a wide spectrum of topics on income tax, Goods
and Service Tax, regional tax, and stamp and estate duties. The Advanced Tax
Programme will equip graduates with a more comprehensive and thorough
understanding of the complexities of tax issues. It will be led by professionals who
have extensive experience in taxation.
10 I am also heartened to see that the Tax Academy has linked up with SIM
University to launch a Masters in Taxation course with the Advanced Tax
Programme as the foundation for admission. Graduates of the Advanced Tax
Programme will be eligible for exemptions from four of the ten courses required for
the Masters in Taxation. This qualification will be an important milestone in any
tax professionals’ quest for excellence. It will also be yet another significant step
for the Tax Academy of Singapore in its efforts to be the regional tax knowledge
11 On this note, I would like to offer my congratulations to the Tax Academy
on your achievements and it is with great pleasure that I now declare the seminar
on the “Attribution of Business Profits and the Taxation of Permanent
Establishments” open. I wish all tax regulators, professionals and practitioners
here fruitful discussions, warm company and an enjoyable stay in Singapore.