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Estate duty helps tax system to be progressive

02 Aug 2005

I refer to the article ''Time to put an end to estate duty'' (BT, July 27) by BJ Ooi and Dennis McEvoy of KPMG Singapore, suggesting the government consider abolishing estate duty to attract more foreign investment and grow Singapore as an asset management centre.

In recent years we have made significant changes to our estate duty regime to improve our attractiveness as an asset management centre. Movable assets of foreigners are fully exempted from estate duty. Singapore also has one of the lowest tax rates and highest exemption limits among countries with estate duties or inheritance taxes.

As for abolishing estate duty altogether, many countries have some form of death tax, be it estate duty or inheritance tax. Those that have abolished their death taxes typically have some other form of wealth tax or capital gains tax.

In Singapore, only the very wealthy pay estate duty. Estate duty is payable by just 3 per cent of the 16,000 deaths per year. About 2 per cent of the dutiable cases contribute 70 per cent of the duty assessed.