Mr Speaker Sir,   

I declare my interest as a board member and shareholder of Crystal International Group Limited, whose group turnover is in excess of EU$750m, and whose related entities have received / are in the process of applying for tax incentives. 

新加坡拥有充满活力和多元化的企业生态，这里有接近4万家跨国企业，过去几年贡献了大约百分之30的就业机会和百分之56的附加值。2022年，流入新加坡的外国直接投资达到1950亿美元，年度同比增长强劲。跨国企业是健康经济的重要组成部分，推动增长领域的发展，.并和参与它们供应链里的中小企业合作，共同为经济创造价值。 

Singapore is home to a vibrant and diversified corporate ecosystem. There are close to 40,000 international companies in Singapore, contributing about 30% of employment and 56% to value added over the past few years. Foreign direct investment inflow into Singapore reached $195 billion in 2022, reflecting robust growth year-on-year. MNCs are an important part of a healthy economy, driving growth sectors and working in partnership with SMEs in their value chain to deliver value to the economy. 

商界支持”经济扩展奖励计划” (Economic Expansion Incentives)，因为这是新加坡吸引和留住跨国企业的重要国家战略, 接下来，我将以英语继续发言。 

The business community supports the Economic Expansion Incentives scheme as an important aspect of our national strategy to attract and anchor MNCs in Singapore.  

The latest amendment to the Economic Expansion Incentives (Relief from Income Tax) Bill seeks to enhance the existing incentives scheme by introducing a new “Approved Activities” scheme in place of the “Approved Royalty Incentive” scheme.  This change includes transitional provisions to facilitate a smooth transition to support the shift to the new scheme.  

This transformation is a response to the evolving complexity of business structures, which necessitates a more dynamic and robust framework for managing tax incentives. The new scheme simplifies the process for businesses to manage shared costs across various agreements and streamlines the administration of tax incentives by considering the operations of large companies that are engaged in multiple contracts for a fixed activity. 

Nevertheless, with the shift from an approval-centric system to an activity centric system, it becomes essential to define what constitutes an “approved activity” more clearly. Given the diverse and concurrent projects businesses often undertake, the government could offer clear guidelines and examples of eligible activities. Providing this clarity will facilitate the application process, reduce duplications, and lessen the need for handling exceptions. 

Shifting focus to a wider perspective, Singapore's dedication to fostering a favourable tax landscape for businesses remains steadfast. This dedication is exemplified by the latest revision to the Economic Expansion Incentives (Relief from Income Tax) Bill. In the previous year, this bill was amended to support companies undertaking emission reduction initiatives, encompassing investment in technology and equipment that contributes to quantifiable reductions in greenhouse gases. This proactive change, spurred by feedback from the industry, underscores the significance of continual regulatory reviews. It ensures that our tax incentives stay in step with both national goals and the changing landscapes of business and investment. 

However, it is crucial to be cognizant of broader international trends, like the forthcoming Base Erosion and Profit Shifting (BEPS) 2.0 guidelines, which pose a challenge to the effectiveness of Singapore's tax incentives, particularly for multinational enterprises with a global turnover of at least €750 million. In response to these changes, the Singapore government has pledged to bolster non-tax benefits to preserve and enhance Singapore’s competitive appeal in a landscape that's rapidly evolving due to the new BEPS 2.0 norms. 

From a competitive vantage point, these incentives remain particularly crucial especially for certain mobile activities such as finance and research and development. Such activities are pivotal and economically significant to Singapore. The stark reality is that some multinational enterprises may hesitate at the prospect of meeting the conditions of these incentives, like substantial investment thresholds and local employment quotas, if the tax benefits do not translate into significant global savings.   

With this in mind, it is imperative for the government to explore how our incentives might evolve to align with the Pillar 2 regulations of the BEPS framework. Tax professionals have identified a variety of 'BEPS-protected' incentives that comply with the Pillar 2 Global Anti-Base Erosion (GloBE) rules. Therefore, studying these models could provide us with a pathway to adapt and preserve the efficacy of Singapore's tax incentives.  

One viable path forward could be the introduction of Qualified Refundable Tax Credits (QRTCs). These credits would be refundable, translating into cash or cash equivalents over a four-year period. QRTCs could be strategically directed towards fostering innovation, acting as an enhancement to the current R&D tax incentives.  

Another possible solution might be the Market Transferable Tax Credit (MTTC), which can function as an investment tax credit. This credit would bolster sustainability and innovation-driven investments. Comparable tax credits are in operation in countries like the UK, Ireland, and the USA, where they are treated as income rather than mere tax deductions for GLoBE purposes.   

Another way to manage the impact of BEPS 2.0 on businesses and investments is to offer more expenditure-related incentives. For example, Singapore does not offer building allowances unless they meet the conditions for the Land Intensification Allowance. However, not all business activities are suited to intensify land use, and certain investments do not even qualify for such allowances in the first place, such as clean rooms and even R&D facilities. 

These types of investments are significant, and a multifaceted strategy is crucial to navigate the intricacies introduced by Pillar 2. Such a strategy ensures Singapore remains a top-tier destination for innovation among multinational enterprises. 

In conclusion, the government's continuous refinement of our tax incentive strategies reflects our strong dedication to evolving alongside the global business and taxation landscape, reinforcing Singapore’s allure as a prime location for multinational companies.  

These reforms not only appeal to MNCs but also generate a ripple effect that benefits small and medium-sized enterprises by enhancing their international ties, increasing business opportunities, and fostering technological partnerships.  

For a small, open economy like ours, these initiatives are critical to preserving our competitive edge and ensuring a favourable climate for sustainable economic development and the success of businesses of all scales.