CORPORATE TAX MANAGEMENT

Singapore - Singapore's corporate tax rate at 17% remains the third lowest among Asia Pacific countries polled.

According to data released by KPMG International, the average Asia Pacific corporate tax rate has fallen from an average of 27.5% in 2009 to 27% in 2010. Japan has the highest corporate tax rate at 40.7%. Pakistan and Sri Lanka are next at 35% each. Cities with the lowest corporate tax rate are Macau and Hong Kong at 12% and 16.5% respectively. The average Goods and Services Tax (GST) or Value-Added Tax (VAT) equivalent rate for the region has remained steady at 10.8%.

But a number of countries in the region are considering or are in the process of implementing, substantial reforms of their tax systems, said KPMG. Owi Kek Hean, head of KPMG Tax Services in Singapore, said governments are undertaking aggressive monetary and fiscal measures in response to the global economic crisis in the last two years. He added that the push for more revenue from governments will result in an increase in indirect taxes and a broader tax base for corporate income taxes.

China currently has the highest indirect tax rate at 17%, followed Pakistan (16%) and Bangladesh (15%). Japan and Taiwan are at the opposite end of the scale at 5%.

Thailand will increase its standard VAT of 7% to 10% from 1 October 2010 while India will introduce a new GST in April 2011. China has also endorsed a legislative plan to introduce a new federal VAT system by 2013.

Australia's Future Tax System Review Panel has recommended that corporate tax be reduced to 25% over the short to medium term. Its government is partially supporting it by adjusting corporate tax rate to 29% for the 2013/14 income year.

New Zealand is poised to increase their GST rate to 15% as of 1st October 2010 from 12.5% with its corporate tax rate reduced from 30% to 28% from 2012 onwards.

"Only businesses that proactively respond to the change ahead can mitigate the new tax risks which are expected to emerge," said Owi. "These organisations will also be well placed to capitalise on the new opportunities which these changes may present."

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