27 January, 2018
The prospect of the introduction of wealth taxes in Singapore could lead to a growth in the use of trusts in the city state, a specialist in private wealth law has said.
An introduction of wealth taxes in Singapore, such as through the capital gains tax regime or reintroduction of estate duty or via inheritance tax – which taxes the recipients, is reported to be under consideration by the Singapore government.
Singapore's finance minister Heng Swee Keat said in his budget last year that the country needs to grow its revenues either through introducing new taxes or raising the rates of existing taxes. This message was reinforced by Lee Hsien Loong, Singapore's prime minister, in November 2017, according to a report by Business Times.
Singapore's government is expected to increase the rate of the country's goods and services tax (GST).
That tax generally "affects the lower income more", the Business Times said Valerie Wu based in the Singapore office of Pinsent Masons, the law firm behind Out-Law.com, said that there is therefore likely to be pressure on the government to introduce taxes on the rich.
She said, though, that there are legitimate ways in which clients using Singapore as a jurisdiction could protect themselves against any forthcoming new wealth tax.
"These developments are being watched closely by the industry – both clients and service providers alike," Wu said. "They could potentially result in greater use of Singapore trust structures to shield the impact of any such potential taxes."
For further information, please contact:
Valerie Wu, Partner, Pinsent Masons
valerie.wu@pinsentmasons.com
