Singapore’s entire economic model can be essentially encapsulated in 2 words: tax incentives.
That’s essentially all it has done. Dangle tax incentives (or grants) to foreign companies, and get them to set up shop. Simple. If these companies subsequently get displaced or go bust, just find new ones. Hence now that big financial institutions are running out of money and therefore can’t expand more, who do we go for? That’s right, the Sovereign Wealth Funds!
So much for encouraging productivity growth. And transforming our economic model. Right…
Straits Times, Oct 18th 2010
Tax Incentives to entice SWFs
A NEW incentive is being dangled at sovereign wealth funds and their investment offices to entice them to set up base here, as part of Singapore’s plan to grow its financial sector.
These funds will get tax exemption on prescribed income, but they must be owned by foreign governments.
Finance Minister Tharman Shanmugaratnam made the point on Monday during the second reading speech of the Income Tax (Amendment) Bill, which was later passed by Parliament.
The aim of the new incentive is to ‘encourage the building up of a cluster of sovereign funds as a niche class of financial institutions that promotes the development of our financial sector’, said Mr Tharman.
When contacted, the Ministry of Finance said applications for the incentive can be made to the Monetary Authority of Singapore within a five-year period, starting from April 1 this year.
It added that sovereign funds and their investment offices granted the incentive will enjoy tax exemption for a 10-year period on a list of specified income.