THIS WEEK’S TOPIC: As a business leader, do you support the idea of a global minimum corporate tax rate?
Three reasons why I think such an idea will fail:
Firstly, countries are not all cut from the same cloth. For example, one with abundant natural resources such as Australia would have different views and policies compared to countries with scarcely any natural resources like Singapore. The problem deepens for developing countries, where a global minimum tax rate would hinder their ability to woo foreign investments.
Secondly, the proposed idea is to discourage MNCs from shifting profits to lower-tax countries. In reality, I do not foresee that creative accounting practices from companies would stop because of a global tax rate. In fact, such a move might even exacerbate the situation.
Finally, a desirable outcome from a global minimum tax must be the network effect, where things get easier as more countries join in. In practice, countries outside the network can actually tip the scales in their favour because of lower tax rates, thereby weakening the network effect.
Hence, I think that countries should have the flexibility of pursuing tax policies that best suit their needs as a nation, especially post-pandemic.
Mario Singh
Chief Executive Office
Fullerton Markets
