Financial Sector Incentive (Standard Tier) Incentive in Singapore

The Monetary Authority of Singapore (MAS) administers several tax incentives under the Financial Sector Incentive (FSI) Scheme for the financial services sector to develop key financial services and banking activities in Singapore. Under the scheme, approved Financial Institution(s) (FI) such as a licensed bank, may enjoy a concessionary tax rate on certain income generated from qualifying activities.

In this regard, as an entry point, a FI apply for the “Standard Tier” award (FSI-ST) with the MAS that provide tax benefits to a broad range of financial activities, such as trading in certain loans, providing broker and custodian services, trading in derivatives, foreign exchange transactions, etc.

From 1 June 2017, an FI that is awarded the FSI-ST scheme may enjoy a concessionary tax rate of 13.5% on income derived from qualifying activities prescribed for a period of 5 years upon approval by the MAS. The prevailing corporate income tax rate in Singapore is 17%.

Currently, the application window for the existing FSI scheme is up to 31 December 2023¹.

FI(s) that are keen to apply for the FSI-ST tax incentive may need to demonstrate to the MAS the following for their consideration²:

Headcount growth in key business functions.
Growth or expansion in business activities
Economic contributions to other sectors.
Incentivized income is commensurate with economic activities performed in Singapore.

Mazars has a dedicated Banking team in Tax, Audit and other supporting advisory services and our Financial Services experts can assist financial institutions with the following services:

Assess the applicable tax incentives in considerations of the activities undertaken;
Application of the applicable tax incentives;
International tax structuring of the companies, funding and investments to maximize tax efficiency;
Coordinate with different stakeholders (i.e., bankers, lawyers, government agencies, external fund managers, etc.) to secure the application of the tax incentives, etc;
Tax due diligence services for acquisitions and divestments;
Tax compliance services (i.e., tax return filings, annual declaration submissions, GST registration and filings, FATCA & CRS advisory and filing).

If you have any questions or require any assistance, please contact Elaine Chow.

Do you have any questions for us?

___________________________________

[1]: https://sso.agc.gov.sg/SL/ITA1947-S239-2017?DocDate=20210630&ProvIds=pr4-#pr4-

[2]: https://www.mas.gov.sg/schemes-and-initiatives/financial-sector-tax-incentive-schemes