3.36 We will also capitalise on our strengths as a key financial centre to develop Singapore as an attractive hub for global philanthropic organisations. Philanthropy is growing exponentially around the world. More MNCs are now establishing charitable foundations and seeking to extend their reach into Asia. We can play a useful role as a centre for these organisations. Local philanthropy, too, is blossoming — witness, for example, the very substantial donations that have been made to our universities and medical schools in recent years. The presence of more global philanthropic grantmakers in Singapore will go hand in hand with the growth of local philanthropy - injecting vibrancy, promoting collaborative ventures and sharing best practices.
3.37 To facilitate the growing interest in philanthropy from both the local and international community, we will make a number of important changes. First, I will remove the 80:20 spending rule for income tax exemption for registered charities. This rule currently requires charities to spend at least 80% of their annual receipts on charitable causes in Singapore within two years in order to enjoy income tax exemption. International philanthropic grantmakers and local foundations, which are looking to contribute towards worthy causes in the region, apart from Singapore, perceive this rule as overly restrictive on their use of funds. Even those who are looking for causes in Singapore see the two-year limitation as too restrictive. Henceforth, I will grant all registered charities and exempt charities automatic income tax exemption. This will enable charities to optimise their activities in Singapore and in the region, and the use of their funds over time to sustain their programmes.
3.38 Second, we will relax the 80:20 fund-raising rule, which requires any organisation seeking to raise funds for any foreign charitable purpose to spend, in Singapore, at least 80% of the funds raised. This lifting of the 80:20 fund-raising rule is done so as not to hinder the efforts of reputable charitable organisations and grantmakers with an international or regional orientation, provided that the funds are raised from private donors rather than from the general public.
3.39 Currently, individuals and companies can obtain double tax deductions for donations to Institutions of Public Character (IPCs) but not for donations to foundations and other grantmakers. I will therefore allow double tax deduction for all donations made to philanthropic grantmaking organisations, as long as these donations are subsequently channelled to an IPC in Singapore. More details on these initiatives will be released later.
3.40 Finally, I will introduce a tax incentive scheme to give income tax exemption to other Not-for-Profit Organisations (NPOs) that can bring economic value to Singapore. Our targeted NPOs include those which have links to key clusters of our economy, such as the International Bar Association (IBA) and the Joint Commission on Accreditation of Healthcare Organisations (JCAHO). EDB will administer this incentive.
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