calugaruvaxile wrote: well, if the tax contribution of a company is small, it means low margins. if the company is small, i bet the allocations are quite small too, so are the operating costs. as i would not expect these companies to jeopardize their profits paying high wages, i suspect the salaries there are quite low. so 70% of the workforce is probably on low pay.
i would then guess that this continuous and aggressive campaign of promoting "singaporean core" should actually be targeting the mncs, not the smes (i always thought this is what the govt means). but it seems like the first in line are the smes, and this is something i don't understand.
Margins at SMEs are higher than MNCs, they have to be - they need to make more money per item sold to cover costs. Large MNCs can typically have margins totalling low single figures based on high volumes. This is especially true in consumer electronics type businesses where I know inter-company margins can typically be below 0.5% still pushing increasing profits. On this basis you also need to be careful about the field of business of a MNC because the likes of Canon/Samsung/Google is different from Airbus/Ford that are equally cast MNC.
O&G and Offshore, whilst typically also MNC based (Shell/BP/Haliburton etc.), is also a different calculation but typically here suppliers to the market also have higher margin.
It doesn't mean to say that Profits Tax from MNC doesn't make up the larger portion of taxes collected because, for sure, it will.
On the salaries front there is equal likelihood SMEs pay as much as MNCs purely to retain staff. Retraining, as a cost, is higher per head for SMEs so the loss of one person has a higher impact than in a MNC, who might even have an internal training program.