Local Employee Headcount, Salary and Seniority Distribution Measurements for Foreign Companies Receiving Tax Incentives
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the monitoring and enforcement of employment targets for foreign companies receiving tax incentives, as raised by Assoc Prof Jamus Jerome Lim. Assoc Prof Lim inquired about baseline measurements for Singaporean employee headcount and seniority, specific annual growth targets, and the penalties or claw-back actions taken against non-compliant firms. Minister Gan Kim Yong stated that incentives are granted judiciously to projects yielding a net economic benefit and require specified outcomes like local job creation. The Minister explained that targets are calibrated based on the nature of each project and that mechanisms exist to revoke incentives and recover benefits for unmet commitments. Although the Government can enforce these penalties, the Minister noted that the vast majority of companies successfully fulfill their economic obligations.
Transcript
129 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Trade and Industry (a) whether foreign companies receiving tax incentives are required to establish baseline measurements of their Singaporean employee headcount, salary levels and seniority distribution at the point of incentive approval; and (b) what specific numerical targets or percentage increases in Singaporean employment these companies must achieve annually.
130 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Trade and Industry (a) what penalties, including claw-back provisions, are imposed on foreign companies receiving tax incentives that fail to meet their job creation targets for Singaporean employees within the stipulated timeframe; (b) how many have had their tax incentives reduced or terminated in the past five years for failing to meet Singaporean employment commitments; and (c) what is the monetary amount recovered from enforcement actions.
Mr Gan Kim Yong: Like many jurisdictions, Singapore uses a range of grants and tax incentives to compete for investments. These incentives are not automatically granted to all companies looking to invest in Singapore. They are offered judiciously and only if our economic agencies assess that the incentives are necessary to secure the investment in Singapore and if the companies would generate a net benefit for our economy.
Companies receiving tax incentives are required to achieve specified economic outcomes, such as job creation, local employment, business spending or fixed asset investment. Specific targets are calibrated and set according to the nature and scope of each project.
The Government has mechanisms to revoke tax incentives and recover benefits from tax-incentivised companies that fail to achieve their commitments, but the vast majority have managed to do so.