Singapore announces measures in their 2016 Budget that could provide a competitive advantage over Hong Kong in attracting Chinese and multinational business.
Singapore announced their 2016 Budget on 24th March, outlining a number of measures designed to boost business in the region. The changes announced in the 2016 Budget could be seen as a move to compete with Hong Kong as a key financial centre in Asia, given Hong Kong’s recent measures to entice multinational corporations and companies from China to headquarter their business there.
The big news from the Budget is that the concessionary tax rate to qualify as a regional treasury centre (RTC) will be cut as of 25th March 2016 from ten to eight percent, moving the Singapore tax rate to 0.25 percent lower than the Hong Kong tax cuts proposed last year, which are yet to be implemented. Singapore’s financial policymakers are planning a series of measures under their Finance and Treasury Scheme (FTC), designed to provide incentives to appropriate companies to offer treasury and finance services in the region, and comprising tax cuts, tax exemptions, and financial technology investment.
The Budget specifies that the FTC scheme will be extended to 31st March 2021, with the concessionary tax rate going down to eight percent, however, there will be an increase in the specific requirements in order to qualify for the scheme.
Other measures announced in the Budget aiming to support business in Singapore include:
- Raising the Corporate Income Tax (CIT) Rebate from 30% of tax payable to 50% of tax payable, with a cap of $20,000 rebate each year for Year of Assessment in 2016 and 2017. The higher percentage rebate aimed at better supporting SMEs.
- Finance and tax incentives to support SMEs, including expanding the SME Mezzanine Growth Fund and granting the Mergers and Acquisitions (M&A) allowance on up to $40 million of consideration paid for qualifying deals, instead of the current cap of $20 million, in order to encourage more M&A activity in the region.
- An extension of the Double Tax Deduction for Internationalisation scheme to 31 March 2020
- A “one-stop trade information management system”, the National Trade Platform, designed to support companies operating in trade finance and logistics.