Abolishment of Estate Duty

Written By: Tiang Chuan on August 25, 2008 No Comment

The Estate Duty has been officially removed after the Estate Duty (Abolition) Bill was passed in parliament yesterday (25 Aug 2008). This comes after the Bill was first mooted on 15 February this year. In the words of Mrs Lim Hwee Hua, Senior Minister of State for Finance, the decision to abolish the tax encourages individual to take risks, invest and grow their wealth in Singapore.

According to the Inland Revenue Authority of Singapore, the taxman collected $98 million in Estate Duty in the Financial Year 06/07. The Estate Duty collected in Financial Year 04/05 was a staggering $356 million! To attract wealth into Singapore and make Singapore into a wealth management hub, the Singapore government is willing to forgo such tax revenues.

Not all countries have abolished Estate Duty. Countries like the United States and United Kingdom still practises Estate Duty or Inheritance Tax. For example, the long term US Estate Duty can go as high as 55% after a US$60,000 exemption. For investors with assets in the US, this would be a concern. Why give the US government half of your assets when you can choose to distribute them according to your wishes?

There are ways of avoiding the Estate Duty LEGALLY. Coupled with the removal of Estate Duty in Singapore, it would make sense for the high net-worth to park their money here. In addition, Singapore has a reputation for a highly regulated financial framework that allows foreign service providers to accept investments with a peace of mind. As some investors might have found out, not all money from all countries are treated the same.

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Tags: Estate