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Currently, fund managers approved
under the Tax Exemption Scheme for Fund Management
enjoy a concessionary tax rate of 10 per cent
on the fee income earned from managing non-resident
funds. In addition, fund managers which manage
at least $5 billion worth of non-resident funds
can also enjoy a reduction in the tax rate to
5 per cent on the incremental income earned compared
with the previous year. Further, those which manage
at least $10 billion of non-resident funds are
totally exempt from tax for the income earned
from managing non-resident funds. These tax incentives,
coupled with the Government’s decision to
place more public funds with the private sector
for management, have boosted the growth of our
fund management industry. In 1996 alone, total
funds managed by financial institutions in Singapore
jumped 45 per cent to reach $125 billion. While
growth in the fund management industry may have
slowed somewhat amidst the current financial turmoil,
we remain optimistic about Singapore's long-term
potential as a major fund management centre in
the region. I have therefore decided to introduce
further measures to enhance the competitiveness
of the industry. These complement the initiatives
to promote the fund management industry, announced
by DPM Lee on Thursday, 26 February.
To encourage more fund managers
to expand their operations in Singapore, I have
decided to lower the threshold requirement to
qualify for the full tax exemption. Fund managers
which manage at least $5 billion of non-resident
funds will now enjoy the full tax exemption for
fee income earned from managing non-resident funds
for a period of 5 years. This will replace the
existing concessionary tax rates of 5 and 0 per
cent for fund managers which manage $5 billion
and $10 billion worth of non-resident funds respectively.
For those which already manage $5 billion of non-resident
funds and have made strong commitments to further
increase their level of fund management activities
in Singapore, a longer exemption period of up
to 10 years may be considered. In addition, fund
managers which manage less than $5 billion of
non resident funds may qualify for the tax exemption
for up to 5 years if they increase their fund
management activities in Singapore substantially.MAS
will negotiate these conditions with individual
fund managers, on a case-by-case basis, in the
same way that EDB negotiates pioneer status and
investment allowance awards with individual companies.
This new incentive scheme will
be effective from Year of Assessment 1999 and
will be reviewed after 5 years. |
