Page 8 - RSM Budget 2022 Highlights

CORPORATIONS AND BUSINESSES

Enhancement to Tax Incentive Scheme for Comments
Funds Managed by Singapore-based Fund  Whilst the removal of the incidental condition is
Manager (“Qualifying Funds”) likely to be well received as it gives asset
managers a greater breadth of investment
Current products, the introduction of a lower cap of 5%
Qualifying Funds, comprising basic tier funds of the total investment portfolio will require
(sections 13D and 13O schemes) and enhanced tier monitoring which will become an added
funds (section 13U scheme), are granted tax administrative burden.
exemption on specified income (“SI”) derived from
designated investments (“DI”), subject to conditions.  With the changes taking immediate effect but
specific details only to be released by MAS on 31
The DI currently includes physical commodities that May 2022, asset managers may need to decide
are subject to the following conditions: whether there is a need to rebalance their

portfolio quickly in the interim.
 The trading of the physical commodity must be
incidental to the trading of the derivative  The industry was hopeful that the DI would be
commodity (“incidental condition”) and enhanced to include digital assets given that

investment in such assets is gaining traction.

 The trade volume of such physical commodity is
capped at 15% of the total trade volume of those  Section 13F foreign trusts currently enjoy tax
physical commodities and related commodity exemptions based on the same DI and SI as
derivative (“the cap”). Qualifying Funds. It remains to be confirmed

that the same refinements will also apply to
foreign trusts.
Proposed changes

To continue growing Singapore’s asset management
industry, the conditions imposed on the investments
in physical Investment Precious Metals (“IPMs”)
under the DI list will be refined as follows:

 The incidental condition will be removed, i.e.
investments in physical IPMs need not be
incidental to the trading of derivative IPMs; and

 The cap will be revised to 5% of the total
investment portfolio for the taxpayer’s
incentive award under sections 13D/13O/13U of
the ITA.

MAS will provide further details of the changes by 31
May 2022.

Effective date
The refinements take effect on and after 19 February
2022.

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