WASHINGTON: US tax policies will almost certainly undergo some changes soon after President-elect Donald Trump takes office next year, and this will likely have an impact on how American firms do business around the world.
Mr Jim Hunter, EY Asia Pacific managing partner for tax, said it is still unclear what changes are in store, but that it is “highly likely” that Mr Trump will announce tax reforms early in his term.
“For each of the last five presidents, the first year of their first term was the time when major tax legislation was put forward, and so we would expect the same with President-elect Trump,” he told The Straits Times in an interview on Wednesday.
During the election campaign, Mr Trump pledged major tax cuts for both individuals and businesses. Mr Hunter noted that there have also been tax reform proposals put forward by the US House of Representatives, though it remains to be seen what will be implemented.
“If he (Mr Trump) pushes forward with what he has said on the campaign trail, it would reduce the US headline corporate tax rate to 15 per cent, from its current level of 35 per cent, which makes the US immediately very attractive, and makes it more comparable with Singapore,” Mr Hunter said.
Singapore’s headline corporate tax rate is 17 per cent. However, this is unlikely to mean that companies will choose the United States over Singapore as a base of operations, Mr Hunter added.
“In the end businesses are still going to want to engage in this region so US companies are still going to be active here.” The tax reform proposals on the table are largely geared towards supporting US exports, he noted.
“So an exporting company would benefit very well, especially under the House proposal, so that’s good for companies doing business in this region but not as good perhaps for companies that are offshoring production and manufacturing in this region.”
This should have little impact on Singapore, as it is not as much of a manufacturing hub as other countries in this region, Mr Hunter said.
He noted that these upcoming reforms come amid a time of uncertainty in the tax world.
Tax regulators globally are implementing a slew of new measures, put forth by the Organisation for Economic Cooperation and Development, to combat corporate tax avoidance.
Mr Hunter was in Singapore to attend the EY Asia Pacific Tax Symposium, which took place this week at the Marina Bay Sands Convention Centre and was attended by close to 1,000 people, mostly EY clients.
