ESTATE DUTY ABOLISHED
by Lawrence Fong

2008-03

I am currently serving my final stint in of military service for Singapore. Despite doing my civic duty, I thought it important to point out some of the exciting changes in the Singapore Budget. As a start, a major change is set to bring the republic on par with Hong Kong in the realm of Estate Planning.

Wealthy people aside, fund managers and the financial sector have welcomed the Singapore’s decision at last Friday's Budget sitting to remove the Estate Duty with immediate effect. The abolition of the “Heaven’s Gates Tax” was implemented to attract the super rich not only to invest in Singapore, but also relocate here.

Up to now, estate duty affects those with properties worth over S$9 million as well as those with over S$600,000 in non-property based assets like cash, stocks and even expensive cars and watches. Executors, Administrators and Beneficiaries of the deceased must also bear the annoyance of having the Estate Duty Commissioner carry out checks on whether the estate should be taxed. However, this will not end with immediate effect.

Finance Minister, Mr. Tharman Shanmugaratnam, revealed at the Budget 2008 that on average, Singapore collected about S$75 million per year from estate duty. However, experts think its removal could potentially bring in funds worth 1,000 times that amount.

In addition, wealth managers said the announcement of a new tax incentive scheme for family-owned investment holding companies is more significant. The scheme will allow such companies to enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced investment income.

This is because rich Singapore family enterprises which have been investing their money overseas to avoid paying taxes, like the estate duty, may now relocate their funds back home to be managed here.

Bring it on!