Singapore urged to abolish estate duty to attract foreigners

Singapore urged to abolish estate duty to attract foreigners

Feb 13, 2007, 5:07 GMT


Singapore - Singapore should cut personal income taxes and abolish the estate duty if the country wants to attract more foreign talent, consultants said in a published report on Tuesday.

While most executives expect a cut in individual taxes to be announced when the budget in unveiled in parliament on Thursday, there is no such certainty over the estate duty, a lucrative source of revenue.

If a decesaed person's residence is worth more than 9 million Singapore dollars (5.8 million US dollars), or his non-property assets amount to more than 600,000 Singapore dollars (387,000 US dollars), they are liable to be taxed.

Retaining the estate tax deters wealthy foreigners from relocating to Singapore, since it exposes them to an added layer of cost compared with residences in other countries,' Ooi Boon Jin, an executive director with KPMG, told The Business Times.

Malaysia, Australia, Hong Kong and New Zealand are among the economies that have abolished estate duty in recent years.

The city-state is eager to boost its population by 40 per cent from 4.5 million people currently to 6.5 million, primarily from migration.

Sum Yee Loong, a director at Deloitte Singapore, believes the estate duty will be reduced to 5 per cent, instead of the current rate of 5 per cent for the first 12 million Singapore dollars (7.7 million US) and 10 per cent for the remainder.

The top personal tax rate currently stands at 20 per cent, while Hong Kong's is lower at 16 per cent.

'To compete in terms of attracting foreign investments and talent, Singapore's personal tax rates should be as competitive as that of Hong Kong, Deloitte's director Jill Lim was quoted as saying.

Others expecting lower individual tax rates said such reductions will help cushion the 2 per cent hike in the goods and services tax (GST) from 5 to 7 per cent.

The government announced the GST increase last year, but not the specific date.

Minister Mentor Lee Kuan Yew, Singapore's founding father, said earlier that corporate taxes would fall below 20 per cent. Consultants are predicting a drop of 1.5 to 2 percentage points.

Lowering the corporate tax 'attracts more foreign direct investments into Singapore,' Leslie Wa, chief executive officer of HLN Technologies, told the newspaper.





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