Tax Changes For Companies

Tax Exemption on Income Earned by Primary Dealers in Singapore Government Securities (SGS) from Trading in SGS

The Singapore Government Securities or SGS market is a key element in Singapore's domestic debt market. To develop a robust bond market, it is important to first establish a liquid SGS market to define a benchmark yield curve to which private issuers can make reference when pricing their bond issues.

Currently, income earned by all financial institutions from trading in debt securities, including SGS, is taxed at a concessionary tax rate of 10 per cent. Government recognises that Primary Dealers play an essential role in SGS markets, by fulfilling the role of market makers and driving the process of price discovery and trading liquidity. To encourage more financial institutions to take on the role of SGS Primary Dealers and to provide a significant incentive commensurate with the obligations undertaken by SGS Primary Dealers, I have decided to exempt from tax income derived by SGS Primary Dealers from trading in SGS. The incentive will be effective from 27 February 1999, for a period of four years.