Reduction in Corporate Tax: How Low Can We Go?
Soon it will be even cheaper to do business in Singapore. In what was the government’s clearest indication yet, Minister Mentor Lee Kuan Yew disclosed to reporters during a trip to Ho Chi Minh City on 20 January that in the next Budget there would at least be a cut of 1 percentage point on corporate tax rate in order to maintain the country’s competitiveness.
According to the Sunday Times, MM Lee said that the impending cut from the present 20% will bring it closer to Hong Kong’s 17.5 per cent.Â “Otherwise we’ll lose them (businesses) to Hong Kong,” he was quoted. “You know this is a tough and competitive world. People don’t come here because they like Singapore. They come because the returns are better.”
Small businesses worried that the impending GST hike to 7% sometime the end of this year will affect their margins will heave a sigh of relief at this news. Unsurprisingly, businesses are hoping that the rate cut will be more than 1 per cent. With an estimated government revenue deficit of some S$400-500 million due to the tax cut, at least now we know the real reason for the GST hike.
Daniel Goh is the founder and chief editor of Young | Upstarts, as well as an F&B entrepreneur. Daniel has a background in public relations, and is interested in issues in entrepreneurship, small business, marketing, public relations and the online space. He can be reached at daniel [at] youngupstarts [dot] com.