SINGAPORE'S tax environment is ranked 10th in the world and fourth in Asia, according to the 2009 edition of Forbes Asia's Tax Misery and Reform Index.
The 'misery' calculates on an inverted scale whether a jurisdiction's tax policy attracts or repels capital and talent. Qatar, the United Arab Emirates and Hong Kong, which scored the fewest points, are ranked the three most tax-friendly jurisdictions. Qatar only levies corporate income tax, while the UAE has levies social security contributions. None of them levies value-added taxes.
Singapore is ranked behind territories such as Russia, Pakistan, Taiwan, Bulgaria, Cyprus and Georgia.
Tax attorney Jack Anderson, who authored the report, says Asian countries seem to be moving towards European-style social security, with India making the biggest one-year 'gain' as it raised social security charges.
Another Asian country that saw its ranking 'rise' is Thailand, where sensitive and changing political climate is creating an upward tax drift, says Mr Anderson.
'At the G-20 meeting in London there will be a lot of talk about how the US and Asia should 'Europeanise' their Misery Index rates to higher levels of social and income taxes (including adopting new sources of green and carbon tax) to provide the deeper but financially insolvent European-level social safety net and healthcare benefit programmes as a partial response to the crisis, while at the same time generating more tax revenue to cover Keynesian stimulus spending,' he says.
'But will Asia find this a competitive move? China, Japan and India are already on this road, as shown. Asia faced difficult times not long ago and mostly stuck to a low-tax course. Why turn to Keynesian policies that will take a generation to undo?'
Eight of the world's 10 least-friendly tax jurisdictions are in Europe, he notes, with France and Belgium taking two of the top three spots. China is ranked the second least- friendly country in tax terms, as it is putting in place massive infrastructure spending and has raised employer and employee social security levies to cope with workers affected by the downturn. Brazil is the other non-European country in the 'top' 10.
