| Since 1991, banks and merchant banks
in Singapore have been given tax deduction for general
provisions up to a limit of 2 per cent of their loan
and investment portfolios. As the financial markets
become more competitive and sophisticated, banks and
merchant banks are now exposed to greater risks in their
activities. To encourage banks and merchant banks to
increase their level of general provisions to buffer
against any unexpected losses, the limit on tax deductible
general provisions will be raised from 2 per cent to
3 per cent of qualifying loans and investments from
Year of Assessment 1998. A higher level of general provisions
will make for a more sound and stable banking system.
The above package of tax incentives,
which I have just outlined, will further enhance the
competitiveness of our financial services sector. The
package is designed to give an added boost to the growth
of our financial market, and to strengthen Singapore's
position as a regional financial centre. The Government
is committed to developing Singapore into a major financial
hub. We will provide every necessary support to ensure
the growth of our financial services sector.
I will now move on to other tax changes
for companies. |
