Too early to predict effects of Trump's tax cuts
The Trump administration's proposed tax cuts unveiled yesterday were so scant on detail that many observers said it was too early to determine what implications they might have for American businesses here.
President Donald Trump plans to cut the number of individual income tax brackets from seven to three, with a top rate of 35 per cent and lower rates of 25 per cent and 10 per cent.
He also wants to slash the corporate tax rate from 35 per cent to 15 per cent.
There is also a proposal to levy a 10 per cent tax on the more than US$2.6 trillion (S$3.6 trillion) in earnings that US companies are estimated to have stockpiled offshore, Bloomberg said. This could ease the burden on companies operating overseas as they had faced a 35 per cent tax on global profits, which they can defer until they return those earnings to the US.
Singapore Institute of Accredited Tax Professionals chairman Gerard Ee said the White House's plan to lower US corporate taxes would have repercussions on potential investment decisions.
But he pointed out that a company's choice of location is influenced by many factors, including the proximity to its key markets, access to resources and the overall attractiveness of the business environment.
CIMB economist Song Seng Wun agreed, saying that short of Asia falling into a financial crisis, he believes US firms will likely retain their Singapore operations and are unlikely to repatriate massive sums back to the home country.
"If the US corporates repatriate money back to the US, they have to ask themselves what they will do with it there. If the rest of the world, particularly Asia, is still growing, then it would make sense to keep investing in the region," he said.