Singapore Inc. becoming bolder for acquisitions abroad


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Companies in the city-state announced around US$91 billion of overseas deals this year through September, more than double the US$42 billion of transactions for the same period of 2017. Temasek Holdings and GIC still loom large, but increasingly others are inking their biggest-ever transactions to put Singapore on the world stage.

Many of the next-generation leadership teams in these companies are helmed by executives with multinational experience and they bring a focus on cross-border growth.

Singapore Technologies Engineering Ltd plan a US$630 million deal to buy an aircraft engine components group from General Electric Co. CapitaLand is in the process of acquiring a portfolio of multifamily properties in the US for US$835 million in what is its largest overseas transaction since 2010, while Singapore Press Holdings, owner of The Straits Times newspaper, last month purchased some student accommodation in the UK for US$230 million, its biggest foray abroad. Singapore firms were involved in 468 transactions as buyer of foreign companies this year through September, an increase of 7.8 per cent from the same period of 2017. Globally, M&A activity rose 2 per cent.

Many Chinese companies have too much leverage and are selling off assets to strengthen their balance sheet. Being familiar with the region, Singapore companies are coming in and many do cut-price offers. Firms from Singapore have been involved in 68 acquisitions of Chinese companies so far this year. The volume of transactions jumped from US$4 billion the same period of 2017 to US$20 billion. Temasek’s major transaction was its US$3.5 billion injection to help Bayer AG finance its planned takeover of US competitor Monsanto. GIC was also involved in Blackstone Group’s acquisition of a majority stake in Thomson Reuters Corp’s financial and risk unit.

With the driving force behind overseas acquisitions showing no sign of letting up, Singapore Inc. will continue its offshore push. Firms are looking to acquire new technologies, new sources of growth. The trend should continue as they become more experienced in competing for assets abroad. Since 2005 we help companies expand overseas. Please contact us for a 1 hour free consulting.

Singapore M&A scheme


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An M&A allowance for each YA equal to 25 percent of the value of acquisition is granted for qualifying shares acquired from 1 April 2016 to 31 March 2020, subject to a maximum cap of SGD10 million. This cap effectively allows for qualifying share acquisitions made from 1 April 2016 of up to SGD40 million in aggregate in each YA. The M&A allowance is claimed over 5 years on a straight-line basis.

The maximum stamp duty relief is capped at SGD80,000 for each financial year from 1 April 2016 to 31 March 2020. For qualifying share acquisitions completed during the period from 17 February 2012 to 31 March 2020, a 200 percent tax allowance is granted in the form of double tax deduction on transactions costs, subject to a cap of SGD100,000 per YA. Transaction costs are professional fees that are necessarily incurred for the qualifying share acquisition. However, any fees or incidental cost in respect of loan arrangements such as borrowing costs, stamp duty and any other taxes are excluded.

Key aspects of the M&A scheme are as follows:

  1. available to Singapore-resident companies that purchase the shares of another company through a wholly owned holding vehicle;
  2. where the acquiring company belongs to a corporate group, the ultimate holding company of the acquiring company must be incorporated and tax-resident in Singapore;
  3. acquiring company is carrying on a business in Singapore on the date of share acquisition, has at least three local employees throughout the 12-month period prior to the date of the share acquisition, and is not connected to the target company for at least 2 years prior to the date of the share acquisition;
  4. where the acquiring company uses a subsidiary to make the acquisition, the subsidiary must be a wholly owned subsidiary, must not carry on a trade or business in Singapore or elsewhere on the date of the share acquisition, and must not claim any deduction for capital expenditure of claim M&A allowance or stamp duty relief under the M&A scheme must result in the acquiring company owning:
  • 20 percent of the ordinary shares of the target company if, before the date of acquisition, it owned less than 20 percent of the ordinary shares in the target company;
  • or more than 50 percent of the ordinary shares of the target company if, before the date of acquisition, it owned 50 percent;
  • or less of the ordinary shares in the target company.

The M&A scheme is not available to asset acquisitions.

The unabsorbed trade losses generated by the target company are transferred along with the company and are available for carry forward for set-off against the company’s future years’ taxable profits, subject to the shareholders’ continuity test.

Under certain circumstances, the seller may prefer to realize part of their investment as a pre-sale dividend because dividends paid by Singapore-resident companies are tax-exempt. On taking over the target company, the buyer assumes all related liabilities, including contingent liabilities. It is not possible to obtain a clearance from the IRAS that a potential Singapore target company has no tax arrears.

Since 2005 we help companies to enter new market and already over 250 clients trusted us. Do you want to know more about how we can support your expansion? Please call us in any of our 11 offices in the 4 continents, or just email us for conference call.

How to purchase assets in Singapore


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A purchase of assets in Singapore may give rise to income tax and stamp duty implications for the seller and buyer. Where the asset is a real property, the amount of stamp duty payable on transfer may be substantial. And where capital allowances have been claimed on the assets, they may be recaptured by and taxable to the seller, depending on the consideration. 

For tax purposes, it is advisable to specify in the sale and purchase agreement an allocation that is commercially justifiable. For trading stocks, the transfer can be at net book value. Otherwise, the open market value is substituted as the transfer value. The amount of goodwill written off or amortized to the income statement of the company is non- deductible on the basis that the expense is capital in nature. 

The ITA contains provisions for granting initial and annual tax depreciation allowances on capital expenditure incurred on qualifying assets used. In the case of an asset transfer, the unused tax losses and capital allowances remain with the company unless the transfer is a qualifying corporate amalgamation. Stamp duty is payable on documents relating to the transfer of immovable properties and shares in accordance with the Stamp Duties Act. And the stamp duty payable on documents relating to the transfer of immovable properties is computed based on the higher of the purchase consideration. 

Buyer’s Stamp Duty (BSD) is payable by the buyer at the following rates:  

Value  Buyer’s Stamp Duty rate 
On the first SGD180,000  1 percent 
On the next SGD180,000  2 percent 
On any remaining balance  3 percent 

 Additional Buyer’s Stamp Duty (ABSD) may be payable by the buyer on top of BSD for acquisitions of residential property located in Singapore, depending on the profile of the buyer. Foreigners and non-individuals buying residential property located in Singapore must pay ABSD of 15 percent on the purchase. 

 Stamp duty is payable on documents relating to the transfer of shares in a Singapore company that is executed in Singapore. The rate of duty is 0.2 percent on the higher of the consideration or the value of the shares. IRAS will carry out back-end audit checks to ensure the amount of duty paid reflects the true value of the shares transferred, especially for non-arm’s length transfers. 

 Since 2005 we help companies to enter new market and already over 250 clients trusted us. Do you want to know more about how we can support your expansion? Please call us in any of our 11 offices in the 4 continents, or just email us for conference call.

Salina 13th birthday


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The year where Salina set a foot on one more continent, Africa!

As the Chinese, the South East Asian markets are massively betting on the African market expansion. The last four years China invest over USD70 billion in the African Continent. Singapore government is seeing the opportunities for SMEs to expand rapidly and recently organize the “Africa Singapore Business Forum” for promoting business exchange and thought leadership between Africa and Asia.

The last 12 months we helped not only Singaporean companies entering the Africa market, but also European and North American companies. The most dynamic sectors are construction, shipping, logistics, education and energy. Thanks to our business network, we were able to raise capital for several companies to support faster their development in this new Eldorado.

Our London office has a tremendous year! Despite the Brexit, Great Britain remains the largest country attracting foreign investment in the European Union. This has been possible due to the wide variety of sectors offering competitive opportunities. We are thinking about the automotive sector, energy, healthcare, and of course finance and banking.

Thanks to France location, EU hub, our Paris office encounter an exponential growth this year. The French government is investing and betting in the new technologies and multiple the tax cut for the foreign investors and young dynamic entrepreneurs. The Greater Paris’ project will develop the already exceptional infrastructures. JP Morgan will invest USD30 million in the next five year in this gigantic project.

If you are planning to enter these markets, or others, please feel free to contact us in one of our 11 offices worldwide in the 4 Continents. The first consulting hour is free of charge.

Mergers & Acquisitions allowance in Singapore


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To provide impetus for SMEs seeking opportunity to grow through acquisitions, Singapore has announced that the cap on value of acquisition will be increased to $40 million for qualifying share acquisitions.  With the M&A allowance at 25% of the value of acquisition, the maximum allowance is capped at $10 million for all qualifying share acquisitions in the basis period for each YA.

 The share acquisition must result in the acquiring company’s ownership of:

  • At least 20% of the ordinary shares of the target company if it owned less than 20% before the date of share acquisition. Companies that wish to claim M&A allowance based on the 20% shareholding threshold will need to meet additional conditions;
  • More than 50% of the ordinary shares of the target company if it owned less than or equal to 50% before the date of share acquisition.

To qualify, the acquiring company must:

  • Be incorporated and a tax resident in Singapore. Where the acquiring company belongs to a corporate group, its ultimate holding company must also be incorporated and be a tax resident in Singapore;
  • For companies under the HQ Tax Incentive Programme, the Maritime Sector Incentive-Shipping-related Supporting Services Scheme, the Economic Development Board, the Monetary Authority of Singapore or the Maritime and Port Authority of Singapore may waive the requirement that the ultimate holding company must be incorporated and tax resident in Singapore;
  • Carry on a trade or business in Singapore on the date of share acquisition;
  • Have at least three local employees throughout the 12-month period before the date of share acquisition;
  • Not be connected to the target company for at least two years before the date of share acquisition.

When the acquisition is made through an acquiring subsidiary, the acquiring subsidiary must:

  • Not claim any tax benefits under the M&A scheme;
  • Not carry on a trade or business in Singapore or elsewhere on the date of share acquisition;
  • Be directly and wholly-owned by the acquiring company on the date of share acquisition.

The wholly-owned acquiring subsidiary may also be indirectly held by the acquiring company on the date of share acquisition. The acquiring subsidiary and each intermediate company above it must also be set up primarily to hold shares in other companies.

The target company must:

  • Carry on a trade or business in Singapore or elsewhere on the date of share acquisition;
  • Have at least three employees working for the company throughout the 12-month period before the date of share acquisition.

 The above conditions may be met by a subsidiary that is directly and wholly-owned by the target company. For qualifying share acquisitions the conditions may also be met by a wholly-owned subsidiary indirectly held by the target company. Since 2005 we help companies to enter Singapore market. Please contact us for more details on our services.