* Singapore Seeks Investment Boost With New Tax Cut PackageOne of the key measures included in the budget is a cut in the top rate of income tax from 22% to 20% by 2007, which the government has calculated will save taxpayers $460 million over the next two years. Marginal tax rates for all other brackets are also being reduced correspondingly.
Meanwhile, under changes designed to help foster growth in the financial services sector, Lee announced that start-up fund managers will be given a 12-month grace period to meet the requirement that 80% of share capital must come from foreign investors under the tax incentive scheme. In addition, foreign charitable trusts will be given tax exemption on foreign income earned, without restrictions on expenditure levels or where the funds are spent.
The Government has also made special provisions to support Islamic banking by removing the double imposition of stamp duties on real estate mortgage financing structured in accordance with Islamic practices, and by extending concessionary tax treatment to payouts from Islamic bonds.
In an attempt to broaden capital markets, Singapore will confer a 10% income tax rate on approved companies in securities borrowing and lending, including intermediaries, while the Commodity Derivative Trading incentive will also be enhanced, with a concessionary tax rate of 5% on qualifying income from trading exchange-traded commodity derivatives.
To attract more Real Estate Investment Trust (REIT) listings, stamp duty on the instruments of transfer of Singapore properties into REITs to be listed, or already listed on the SGX, will be waived for a five-year period and most of the qualifying preconditions for tax transparency will be removed.
Foreign non-individual investors are being encouraged to invest in the Singapore market with a reduction in the withholding tax on REIT distributions to 10% from 20% for a period of five years.
Small business will also receive new tax incentives, with a one-year loss carry-back for corporate taxes, subject to a cap of $100,000 in losses, to be introduced from the 2006 tax year.