Singapore Finance Minister, Tharman Shanmugaratnam, unveiled a number of new tax initiatives designed to improve the city state's wealth management regime in his 2008 Budget Statement last Friday.

To promote the city as a centre for wealth management, Mr Tharman announced the introduction of a new tax incentive that grants tax exemption on locally-sourced investment income and foreign-sourced income received by qualifying family-owned investment holding companies. The new exemption will run from 1 April 2008 to 31 March 2013.

The minister also announced the abolition of Estate Duty, which had been inherited during the British era, to improve Singapore’s attractiveness as a place for wealth to be invested and built up, whether by Singaporeans or foreigners. This measure is effective as of 15 February 2008.

“If we make Singapore an attractive place for wealth to be invested and built up, whether by Singaporeans or foreigners who bring their assets here, it will benefit our whole economy and society, not just the individuals who build up their wealth. It is not a zero sum game," he said.

He urged individuals who had accumulated wealth to contribute to society and take advantage of the enhanced philanthropy incentives introduced last year.

He also announced a five-year extension to the Financial Sector Incentive scheme, from 1 January 2009 to 31 December 2013, to promote the city as a financial centre, particularly in the area of Islamic finance. The enhanced FSI scheme will provide a 5 per cent concessionary tax rate on income derived from performing specific Shariah-compliant activities.