TMF Group’s latest Global Business Complexity Index for the Accounting and Tax sector says digitalization in said fields are critical in overcoming increasing complexity for Singaporean businesses operating across multiple tax jurisdictions.
Singapore ranks highly as one of the easiest places to do business in Asia, however, further digitisation in its accountancy and tax sector will be critical to maintaining its competitive edge, according to a new report by the TMF Group.
The Global Business Complexity Index (Accounting and Tax) Report analyses the key accounting and tax practices and trends across 76 jurisdictions worldwide. The latest report is the first of three in a new series of studies by TMF Group, which are developed based on statistically weighted data and qualitative research by local market experts globally, in order to determine the level of complexity faced by multinational businesses as they look to understand and operate in other countries.
The need for comparable standards of reporting has become paramount because of the growth in the number, reach, and size of multinational corporations.
According to the report, Singapore has adhered relatively well to international accounting standards to achieve greater harmonisation, a trend only seen in 21% of jurisdictions in Asia Pacific.
The transition from local to International Financial Reporting Standards (IFRS), also known as Singapore Financial Reporting Standards (SFRS), highlights this trend of increasing convergence in industry standards in order to reduce financial reporting costs for entities reporting in multiple jurisdictions and foster stability in Singapore’s financial system.
As one of the 83% of jurisdictions globally that impose significant fines for non-compliance to accounting and tax standards, Singapore also implements hefty penalties. These deterrent measures are in place to help prevent corruption and have helped to promote a trusted business environment for international investment in the country.
However, Singapore trails behind its Asian counterparts when it comes to digitisation.
It ranks among the minority (46%) of jurisdictions in the region where it is not compulsory to submit tax invoices electronically. Although electronic invoices are becoming more commonplace in Singapore, the lack of legislation deeming it necessary means that there is still a significant number of companies processing their invoices manually.
According to TMF Group Managing Director Kim Leng Siaw, adopting new digital technologies, such as artificial intelligence (AI), blockchain and cloud computing, will enable faster and more accurate processing of reports, contributing to the competitive edge that Singapore will need to develop into a global accounting hub.
“Business expansion, especially to new territories, is challenging and companies must be able to face the realities of their new markets, which may require a shift from routine business practices. This includes adapting to accounting and tax processes, which are constantly evolving to better suit the business landscape. With the right knowledge and support, companies will be able to swiftly adapt. Singapore has done well by having robust and evolving accounting and tax policies, and we are confident that the sector’s pace of digitisation will pick up in time to come, as more companies embrace technology,” says Kim.
Kim says managing accounting and tax will continue to be a balancing act as jurisdictions strive towards alignment with international standards, while simplifying processes to boost efficiency. While the level of increasing convergence in standards and practices increases the ease to operate for multinational organisations, understanding local business environments will continue to remain essential.
To download a complimentary copy of the report, please click here.
(Ed. TMF Group says its provides administrative support services for international business expansion – organically or through M&A – and investment funds. It claims to be the only company worldwide to provide the combination of fiduciary, company secretarial, accounting and tax and HR and payroll services essential to the success of businesses investing, operating and expanding across multiple jurisdictions.