TWO out of five private businesses in Singapore say they do not face 'burdening taxes' - the highest proportion in 34 countries polled by consulting firm Grant Thornton. Almost all, or 97 per cent, of businesses in Singapore also reckon tax issues are a significant factor in deciding where to set up an overseas operating base, ahead of the global average of 77 per cent, the survey found.

Grant Thornton polled 150 medium-large companies based here - defined as having up to 400 employees - on which tax factor is the greatest burden. Respondents could choose from categories including wealth tax, tax on business profits, personal income tax, Customs duty and an option of 'no burdening taxes in my country'.

Of these, 40 per cent of Singapore-based companies chose 'no burdening taxes', while 34 per cent picked tax on business profits.

Nine per cent chose indirect taxes, which included value added taxes, sales taxes and consumption taxes.

Globally, private companies find taxes on business profits and employment the most burdensome, with close to a quarter of all respondents highlighting these forms of tax. Next came personal income tax at 16 per cent and indirect taxes at 12 per cent.

Almost 60 per cent of private firms here also consider a tax-free period of five years the most influential factor in going abroad. This was compared with other incentives such as a low tax rate on business profits, a stable tax regime and incentives for capital investment or research and development.

Grant Thornton polled companies from developed markets such as Sweden, the US and the UK, emerging economies such as Argentina and Asian countries including Singapore, Hong Kong, Japan, Malaysia, Thailand and Vietnam. A total of 7,800 companies were surveyed. The research was done mostly through telephone interviews.

This article was first published in The Business Times on September 25, 2008.