While Singapore ranks highly as one of the easiest places to do business in Asia, it stands to benefit from further digitisation in its accounting and tax sector, according to a new report by TMF Group, a leading provider of high value business services to clients operating and investing globally.
The Global Business Complexity Index (Accounting and Tax) 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 eschew 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 amongst 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. Additionally, 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.
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.
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