The MAS issues a circular on enhancements to the tax incentive scheme for qualifying debt securities

The Monetary Authority of Singapore (MAS) issued a circular on 23 May 2008 on the renewal of and enhancements to the tax incentive schemes for qualifying debt securities (QDS) announced during the 2008 Budget Speech.

Under the QDS scheme, qualifying income is exempt from withholding tax if derived by a qualifying non-resident person, or taxed at a concessionary rate of 10% if derived by a qualifying company or body of persons in Singapore, provided the QDS are issued by 31 December 2008. This has been extended for five years to cover QDS issued from 1 January 2009 to 31 December 2013.

Further, Islamic debt securities and QDS with a tenure of at least 10 years will enjoy enhanced tax treatment in the form of tax exemption for all investors on qualifying income derived from these securities. The three types of QDS that enjoy this tax exemption (i.e. Islamic debt securities, long-dated QDS and qualifying project debt securities ) will be categorised under a new QDS Plus (QDS+) scheme.

Details of the tax incentive for Islamic debt securities are provided in the MAS circular dated 30 May 2008 , while the qualifying conditions for tax exemption for long-dated QDS are that they must:

• Be issued between 16 February 2008 and 31 December 2013;
• Have an original maturity of at least 10 years;
• Not be redeemable, convertible, callable or exchangeable within the first 10 years; and
• Not be Singapore Government Securities (SGS) or QDS re-opened with a resulting tenure of less than 10 years to the original maturity date.