Review of G7 Corporate Tax Reform and Its Impact on Singapore’s Economy


Last June 5, 2021, The Group of Seven (G7), a collection of representatives from the world’s wealthiest nations–gathered to discuss the global corporate tax rate reform. The aim of this historic tax agreement was to create equal opportunities for all businesses, preventing multinational corporations and digital technology companies from abusing low-tax jurisdictions.

From the original proposition of a 21% corporate tax rate, the G7 Finance Ministers have reached a consensus of a minimum global corporate income tax of 15%.

What are the Implications of this Tax Reform?

At the G7 meeting in the United Kingdom, the finance ministers came to an agreeable conclusion regarding two main points.

The first point mandates large companies to pay taxes to the countries they conduct business in. In other words, this agreement enables countries to enforce taxes on the profits made by the companies based on their total revenue.

The second point expresses the minimum global tax rate of 15% to counteract the existence of low-tax jurisdictions.

How does this Affect Singapore’s Economy?

As one of the most technologically-enabled countries, Singapore has become the top destination for multinational enterprises like Facebook, Microsoft, and Alphabet’s Google to set up hubs and gain a local consumer base. 

Additionally, Singapore has become an attractive business spot because it’s considered a low-tax jurisdiction. Despite its 17% tax rate, it awards schemes and incentives to companies considered beneficial to Singapore’s economic development. As a result, some multinational company incorporations pay lower than 17%, while others pay even lower than the proposed minimum of 15%. Through this strategy, the country has successfully lured numerous investors to expand their businesses in Singapore. 

Now a question arises: what will be the implications of the minimum tax rate on the existing incentive programme?

Multinationals that see Singapore as an advantageous gateway to a wider Asian market will be weighing in on the impact of the minimum tax rate in relation to the convenience and efficiency of operating in the country. That said, the uncertainty of the situation might discourage potential investors from expanding to Singapore, which may lead to lower revenue for the country. 

Although it poses a potential problem, it’s still too soon to come to conclusions on the reform’s impact on the country. But experts say that in order to benefit from it in any way, the new rules should not impede or unintentionally weaken the incentives that attract businesses to innovate and invest in the country. 

Despite the anticipated effects of the agreement on the country, Singapore still has more to offer international firms. Besides the low tax rate and incentive programme, Singapore’s competitiveness can be attributed to its skilled workforce, reliable legal system, modern infrastructure, and elevated living standards. With these assets, the country still remains an attractive location for substantial and profitable economic endeavours. 

What are the Next Steps for Singapore?

Given the complexities of this matter, it may take years before a final decision has been made and new rules have been implemented. However, while a global minimum tax rate has not yet been imposed, Singapore needs to plan out their next steps as a means to prepare for the inevitable changes in the global tax regime.

In order to maintain its position as the top destination for the expansion of multinational corporations, Singapore needs to continuously monitor global tax developments and adapt as needed. When new standards arise, Singapore must immediately take action and adjust its policies to align with the latest enhancements. 

Once a global consensus is reached, Singapore’s top business professionals and tax experts will work together to modify the corporate tax system. They will ensure that the necessary changes will be compatible with international regulations.


While this tax reform presents certain risks, it’s highly unlikely that Singapore will be significantly affected based on the changes in taxation alone. Although there will be shifts in the country’s gross revenue as a result of the changes, Singapore will still remain a strong investment capital for foreign entities.

Posted in Accounting, Outsourcing Accounting, Taxation
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