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Singapore has grown in importance
as a regional centre for the issue of bonds and
other debt securities. However, our bond market
is still less developed compared to our equity
market as most corporations still prefer to raise
funds through equity listing on the stock exchange
or through direct borrowing from banks. This is
generally true of most markets in Asia. A vibrant
bond market is important to the overall development
of Singapore as an international financial centre.
I have therefore decided to introduce a package
of incentives to promote the development of an
active bond market in Singapore. They are:
- tax exemption on fee income earned by financial
institutions in Singapore from arranging debt
securities in Singapore, including the underwriting
and distribution of such securities;
- a 10 per cent concessionary rate of tax on
interest income earned by financial institutions
and corporations in Singapore from debt securities
arranged by financial institutions in Singapore;
- tax exemption on interest from debt securities
arranged by financial institutions in Singapore
and earned by non- residents who do not have
any permanent establishments in Singapore. The
exemption will apply automatically to debt securities
which meet the criteria. There will be no need
to seek approval for the tax exemption for each
debt issue as is currently the case; and
- a 10 per cent concessionary rate of tax on
income earned by financial institutions in Singapore
from trading in debt securities.
The new tax treatment for fee
and interest income will apply to debt securities
issued within a period of 5 years commencing 28
February 1998. The incentive for income earned
from trading in debt securities will be granted
for a period of 5 years from 28 February 1998. |
