Calls for Reform to Tax System to Apply to Individuals Overseas
In a recent survey of members completed by AmCham Singapore, 25% of business representatives indicate that the U.S. policy on taxing its citizens on their global income impacted their company’s hiring of Americans for positions. With over 4,200 American companies operating throughout the city state, more than 1,000 U.S. companies in Singapore could be hiring foreigners over Americans because of the practice of taxing U.S. citizens on their worldwide income.
The United States is one of only two countries in the world that taxes its citizens on their global income. This system results in an un-level playing field as American citizens compete for jobs abroad, including with U.S. companies, as foreigners who are less expensive to employ given the tax rate in Singapore.
As Singapore is a trade and investment gateway to the region, with AmCham Singapore the home for many U.S. regional headquarters, 75% of the survey respondents confirmed that their company hires for regional roles in Singapore, such as head of Human Resources for Asia or ASEAN. In addition, more than 85% responded that their company has decision-making authority when it comes to the sourcing of goods and services from Singapore. The majority of respondents indicated that it is the company’s CEO, CFO, COO or Managing Director making the decisions related to the tender process and/or the hiring of accounting firms, law firms and public relations firms.
“If Americans were hired for these senior corporate roles, their familiarity, prior experience and business networks means there is often continuity in maintaining business relationships with American firms for services such as accounting, legal and public relations,” said Steve Okun, AmCham Governor.
“While the ‘made in America’ label remains strong in Singapore and throughout the region, the ‘hire America’, or at least ‘hire Americans’, is not so much,” said Dwight Hutchins, Chairman, AmCham Board of Governors.
Survey results indicate that only 10% of U.S. headquartered multi-national corporations (MNCs) with an office in Singapore have a workforce consisting of Americans filling 20% or more of the positions of country manager, regional vice president and above.
As the Trump Administration and U.S. Congress undertake major reforms to the nation’s tax system that includes a territorial tax system for U.S. corporations, so too, should such a principle be applied for citizens. “We urge U.S. policymakers to adopt a system in which U.S. citizens overseas compete on a level playing field with their foreign counterparts, such as through a residence-based taxation for individuals or the raising of the amount of the Foreign Earned Income Exclusion,” said Ann Yom Steel, Executive Director, AmCham Singapore. “Only by including individuals as well as corporations in territorial tax reform will there be a level playing field, which will promote U.S. exports and create more investment and jobs for U.S. companies and American citizens.”