Singapore is extending a series of targeted tax breaks aimed at attracting more businesses to use the island as a base for their international trading operations.
In a drive to encourage more companies to use Singapore as a regional hub for world-wide trade, the Southeast Asian island is extending its Global Trading Programme (GTP) until 31 December 2026.
Under the GTP, approved companies benefit from concessionary corporate tax rates of 5% or 10% for three or five years on any income deriving from qualifying transactions which include physical trading, brokering of physical trades and derivative trading income, subject to conditions.
Launched in 2001 and originally intended to lapse after 31 March 2021, the extended programme, administered by Enterprise Singapore (ESG), will be refined to further strengthen Singapore’s global trading position and encourage more commodity financing activities on the island.
In addition, the qualifying activities for of the country’s Structured Commodity Financing (SCF) scheme, was incorporated into the current GTP scheme with effect from 19 February 2020.
This means companies deriving income through SCF activities can now benefit from the concessionary tax rates without having to separately apply to qualify for the GTP.
However, the concessionary tax rate of 5% on income from qualifying transactions in liquefied natural gas (LNG) will lapse after 31 March 2021, after which LNG will be treated no differently from other qualifying commodities under the GTP.
Broadly, the programme is aimed at attracting companies involved in international trading that have good track records, but also requires firms to meet a number of specific criteria. These include an annual turnover of US$100m; spending of S$3m per year in the local economy; and employing at least three professionals involved in relevant activities such as trading, risk management, sales and marketing.
Each application is thoroughly examined by ESG, with approval given to those companies that can demonstrate commitment to driving and improving Singapore’s economy.
While the GTP clearly offers an attractive tax incentive for businesses involved in international trade, interested organisations are advised to seek advice and support from local specialists based in Singapore to help secure qualification to participate in the programme.
For more information, please contact:
Nexia TS, Singapore
T: +65 6536 1312
Date: March 2020