Wealthy people aside, fund managers and the financial sector have welcomed the Government's decision at last Friday's Budget sitting to remove the Estate Duty with immediate effect.
They said this will attract the super rich to not only invest in Singapore, but also relocate here. Estate duty affects those with properties worth over S$9 million as well as those with over S$600,000 in non-property based assets like cash, stocks and even expensive cars.
Surviving family members of the deceased must also bear the annoyance of having the authorities carry out checks on whether the estate should be taxed. However, this will not happen anymore.
Finance Minister Mr Tharman Shanmugaratnam revealed at the Budget 2008 that on average, Singapore collected about S$75 million per year from estate duty.
However, experts think its removal could potentially bring in funds worth 1,000 times that.
Philip Overmyer, Chief Executive of Singapore International Chamber of Commerce, said: "It's not a huge tax revenue for the government, and we think it makes things much simpler and easier and more predictable for people with a lot of money that want to come here and bring some of it with them.
"We think it'll attract more people with larger wealth, and we think it's more equitable for the companies and people with high assets which are not property-based."
International wealth management experts, like UBS, have started receiving calls from foreign investors on possible fund relocation to Singapore.
Bill Lexmond, Managing Director of Wealth Planning Consultant, UBS, said: "It's not just to get people's money into Singapore, but to get them here as well. You can say that there's one less reason for anyone to have concern about coming to Singapore."
Associate Professor Eugene Tan from the School of Law at the Singapore Management University, said: "It's not just about removing estate duty that we'll have wealthy people coming here to park their money, to set up philanthropic foundations and all."
"This is the place that values your investment and because society has been receptive towards wealthy people parking their money here. The idea is that we hope these wealthy individuals will then share some of the wealth that they have and so the whole idea of trying to get people to feel for the community that they're in," he added.
The removal of estate duty may be getting a lot of attention, but wealth managers said the announcement of a new tax incentive scheme for family-owned investment holding companies is more significant.
The scheme will allow such companies to enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced investment income.
This is because rich Singapore family enterprises which have been investing their money overseas to avoid paying taxes, like the estate duty, may now relocate their funds back home to be managed here.
Mr Lexmond said it will take up to two years before such policy changes can result in a huge inflow of funds. - CNA/vm
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