Commissioner and Chief Executive Officer of Inland Revenue Authority of Singapore, Mr Tan Tee How
Chairman of Tax Academy Board, Mr Ong Yew Huat
President of SMU, Professor Arnoud De Meyer
Distinguished Guests
Ladies and Gentlemen,

Thank you for inviting me to the inaugural conference organised by the SMU-TA Centre for Excellence in Taxation. I would like in particular to extend a very warm welcome to all our delegates and speakers, especially our friends from ASEAN and those who have travelled from further afield to join this conference.

Since 2013, the global taxation community has been grappling with the implications of the Action Plan to counter Base Erosion and Profit Shifting (BEPS). Today’s conference attempts to find a positive way forward by framing the challenges as a question, and that is whether we can establish “A New Equilibrium in Tax Competition and Global Tax Co-operation?”

Singapore supports the BEPS project, and participates actively in BEPS-related discussions through several platforms. Our interest in the BEPS movement stems from the basic belief that tax policies and administration play an important and positive role in a country’s development. As an open economy that is fully plugged into the global ecosystem, we support having a level-playing field across all tax jurisdictions. We also support measures that promote transparency and counter profit-shifting.

Today’s conference poses the question of “a new equilibrium’. To address this question, we should perhaps start by asking what the sources of disequilibrium are, and what it takes for the playing field to become more level. In our assessment, there are three points for consideration.

First, there is great unevenness in the robustness of tax administrations across jurisdictions. We know how important it is to have tax systems that support businesses and promote investment, and how helpful it is to have simple, clearly-defined tax policies and rules. But that goal has not been so simple for all tax jurisdictions to achieve. Instead of pushing for more onerous global tax rules layered on top of domestic rules, we would be better off with greater clarity, simplicity and consistency in both global and domestic tax rules.

Second, countries on the receiving end of global tax rules are at varying stages of development, with varying capacities to implement and enforce those rules. Leaders of the BEPS movement should be cognisant of the need to be inclusive, and avoid putting everyone in the same straightjacket. The conditions for investment and growth are especially fragile in emerging economies; we should not put further obstacles in the way of their development through disproportionate uncertainties in tax matters, in the name of curbing cross border tax avoidance.

Third and most importantly, we must recognise each country's sovereign right to determine its tax policies to attract investments, support entrepreneurship and promote growth. Countries compete on the attractiveness of our tax measures in the same way we compete in the quality of our human capital, infrastructure or administrative efficiency. There is a cost to developing a competitive advantage in any dimension, including tax measures. It is entirely up to each country to design its overall value proposition at a cost that it can afford. With the exception of tax incentives that are profit-shifting measures in disguise, it makes no sense at all to curb tax incentives that are based on real economic substance. In fact, there is inherent unfairness if any country is pressured into giving up its legitimate tax incentives, just as it would be unfair to require them to hold back human capital development because their competitors are not able to match up.

Singapore, like many countries, has been studying the BEPS recommendations. At its best, we think that the BEPS movement can lead to greater clarity for companies on the rules of engagement in global taxation. This will promote legitimate investments and economic activities that create jobs and help governments grow the incomes of their citizens. In our view, a global convergence towards higher taxes globally would be a poor outcome for the BEPS project, and a severe impediment to uplifting global growth prospects. The BEPS project should, instead, work towards global convergence on free and fair competition in taxation.

There are further risks in the BEPS movement. For example, through attempts to curb harmful tax practices, harmful barriers to trade and investments, like double taxation, may also creep in. The global tax community would do well to guard against such tendencies.

To create a level playing field that we all desire, BEPS recommendations should be consistently applied across all states as well as non-state jurisdictions. Any efforts to review the adherence to these new international standards should also be conducted in a fair, open and objective manner. This will provide a stable global environment that facilitates investment and growth, while minimising opportunities for tax arbitrage.

On this note, it is my pleasure to declare open the SMU-TA CET’s inaugural conference. I wish you all a fruitful discussion.

Thank you very much.