New tax incentives in the 1997 Budget approved by Parliament in July focused mainly on the financial sector. Effective for five years from assessment year 1998, they will be:
- For income from taxable Asian Currency Unit (ACU) activities where the total taxable income exceeds S$50 million: 5% concessionary tax rate.
- For fund managers with a minimum three-year track record in Singapore employing at least seven fund managers and analysts, managing at least S$10 billion non-resident funds: full tax exemption for income earned from managing non-resident funds.
- For international credit agencies setting up in Singapore, with a minimum 10-year track record in international credit rating, employing at least two qualified credit analysts and incurring annual business spending of at least S$500,000 in Singapore: 10% concessionary tax rate on income earned from providing credit rating services on foreign currency securities in Singapore.
- For income earned by banks from managing initial public offerings of foreign currency shares to be listed on the Singapore Stock Exchange (SES): tax-exempt.
- For ACUs and Approved Securities Companies: tax exemption on income earned from trading in foreign-currency shares listed on the SES.
In addition, under the tax exemption scheme for syndicated offshore credit and underwriting facilities, the requirement that the offshore debt issue must be underwritten by financial institutions in Singapore to qualify for a tax exemption for fees earned by financial institutions in arranging the debt issue has been lifted.