CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Singapore Defends Expiry Of Islamic Finance Tax Breaks

Singapore Defends Expiry Of Islamic Finance Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

08 April 2013


In his welcome remarks at the Islamic Finance News Singapore Roadshow, Ng Nam Sin, Assistant Managing Director of the Monetary Authority of Singapore (MAS), pointed out that, despite the expiry of certain tax incentives, Singapore is still looking to develop the city's Islamic finance capabilities by ensuring it a level playing field with conventional financial products.

To ensure that level playing field between Islamic finance and conventional financial products, he said that Singapore "has recognized the unique characteristics of the former in both regulatory and tax treatments. We have ensured the neutrality of the rules insofar as Islamic financing is similar to conventional financing in economic substance and risks. Where the structures are unique, we have and will continue to work closely with industry stakeholders to ensure that level playing field is preserved."

Ng noted that, "over the past few years, the range of financial instruments in Singapore has expanded. Leveraging on the depth and diversity of Singapore's capital market, … the growth potential for Islamic finance in Singapore is strong. As such MAS remains committed to further grow this important sector of our financial services industry."

He confirmed that, despite the lapsing of two tax incentives for Islamic finance introduced in the 2008 Budget, which, like all Singapore's tax incentives, have a fixed tenure – in this case, of five years, Islamic finance activities will continue to be incentivized alongside conventional finance activities under Singapore's other existing schemes.

"The lapsing of the two incentives is no reflection of MAS’ continuing commitment to develop Islamic financial services in Singapore," he concluded. "Singapore’s proposition for Islamic finance must be broader than just tax advantage. Singapore’s success as an international financial sector stems from its high standards of regulation; deep and liquid capital market, the presence of international buy side players, and a critical mass of financial intermediaries with expertise to address a wide range of financing needs. It is these strengths that allow Singapore to support the growth of Islamic finance."

The 2008 Budget enhanced Singapore's Financial Sector Incentive by granting a 5% concessionary tax rate on income derived from performing specific Shariah compliant activities, from April 1, 2008, to March 31, 2013 (both dates inclusive), and also gave a 5% concessionary tax rate to an insurer on income derived from offshore Islamic insurance (takaful) or reinsurance (retakaful) business, for the same period.

Those tax incentives have now expired, and the income tax rate on Islamic finance activities will now revert to 12%, rather than the normal corporate tax rate of 17% in Singapore. According to the Government, the tax treatment of Islamic contracts remains aligned to the treatment of conventional financing contracts to which they are economically equivalent .

However, others have remarked that Singapore is now lagging behind Malaysia, which is establishing itself as the major Islamic financial hub in the region, by going beyond the provision of a level playing field in the inclusion of tax exemptions for income derived from Islamic financial products and structures.

TAGS: Finance | tax | investment | business | tax incentives | financial services | capital markets | insurance | corporation tax | Singapore | tax breaks | standards | regulation | islamic finance | services

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 






Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »