G20 Decisions May Help Singapore Economy

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While the press has focused on the negative impact of the recent G20 decision to impose strict tax disclosure rules, GuideMeSingapore.com analysis predicts that the new rules may help the Singapore economy.

As expected, Singapore has not been classified by the OECD as a tax haven but as a financial centre that has committed to the internationally recognized tax standard

GuideMeSingapore.com will be releasing a report analyzing the impact of the G20 meeting in United Kingdom on the Singaporean economy. Andrew Chen, founder of the site, summarized the upcoming report's findings as follows:

The G20 meeting focused primarily on fostering international economic cooperation in confronting the financial downturn. It took concrete measures to discourage protectionism, encourage free trade, and made a joint commitment of over $1.1 trillion in fiscal stimulus to resuscitate the global economy. Most of this amount will be used to boost financing through the IMF and will be directed to emerging markets. This is good news for Singapore as increased global trade has historically correlated with strong performance of the Singaporean economy. Restoration of growth in emerging markets will lead to increased business opportunities in Singapore given the country's close ties to most emerging markets in Asia.

The G20 meeting also took action on ensuring that all countries comply with internationally agreed standards for sharing tax information. Before the meeting, several analysts predicted that such a decision would adversely impact Singapore as it may discourage foreign fund investment. GuideMeSingapore.com disagrees with this assessment, particularly in light of the strong measures taken by the Singapore government after the meeting as described below.

After the conclusion of the G20 summit, the Organisation for Economic Cooperation and Development (OECD) issued a list of countries that are failing to comply with its guidelines. The OECD placed countries in four categories based on the actions they have taken to comply with the "internationally agreed tax standard":

  • Those that have substantially implemented the standard, including most advanced countries such as Britain, the US, France, Germany and China
  • Tax havens that have committed to - but not yet fully implemented - the standard. These include Andorra, Monaco, Gibraltar and Lichtenstein
  • Financial centres that have committed to - but not yet fully implemented - the standard. These include Switzerland, Singapore, Chile and three EU countries - Belgium, Luxembourg and Austria
  • Those that have not committed to the standard, including Costa Rica, Malaysia, the Philipines and Uruguay.

In response to the OECD action, Singapore's government said on April 3 that it intends to carry out legislative changes later this year to implement the OECD standards. "As expected, Singapore has not been classified by the OECD as a tax haven but as a financial centre that has committed to the internationally recognized tax standard," Singapore's Finance Ministry spokesperson said in a statement released recently. "This recognizes that Singapore has endorsed the OECD standard for the exchange of information through Avoidance of Double Taxation Agreements and intends to implement the standard by effecting legislative amendments later this year and negotiating and concluding relevant DTAs," the statement said.

GuideMeSingapore.com asserts that with this strong commitment by the government to abide by the OECD regulation, all talk about sanctions against Singapore by G20 countries becomes moot. Singapore's tax system is a well-regulated framework that has been designed to spur economic activities through low taxes, simplified tax rules, and transparent policies. Singapore could attract some of the foreign investment funds that leave other financial centers that do not make such clear cut commitment to abide by the OECD regulation.

In summary, GuideMeSingapore.com expects that the G20 meeting will not adversely affect Singapore's economic future and demand in sectors that GuideMeSingapore.com tracks - Singapore incorporation and Singapore immigration - will continue to be strong.

About GuideMeSingapore.com
GuideMeSingapore.com is a Singapore-focused portal that provides comprehensive, accurate and up-to-date information to global business professionals and entrepreneurs about doing business, relocating, and living in Singapore. For further details, visit our Singapore company website.

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Simon Rogove
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