Finance and Treasury Centre (FTC) Incentive Detailed Introduction (Singapore Incentive Policy)

The Finance and Treasury Centre (FTC) incentive is introduced by the Singapore Economic Development Board (EDB), aimed at encouraging enterprises to enhance their financial management capabilities and establish Singapore as the core base for their global or regional strategic finance and treasury management activities. Through the FTC incentive scheme, enterprises can optimize capital operations, reduce financial costs, and leverage Singapore's financial infrastructure and policy advantages for international expansion.

1. Background and Purpose of the Finance and Treasury Centre (FTC) Incentive

The FTC incentive scheme is launched to attract multinational enterprises to establish finance and treasury management centres in Singapore, centralizing the management of global or regional capital and financial activities. Through this policy, Singapore aims to become a leading global financial centre and capital management hub, providing enterprises with a favorable business environment and tax incentives.

2. Content of the Incentive Policy

Tax Benefits:
Qualifying enterprises can enjoy a concessionary corporate income tax rate of 8% on qualifying financial activities conducted at the finance and treasury centre, which offers significant tax advantages compared to Singapore's standard corporate income tax rate of 17%. Qualifying financial activities include but are not limited to:

Global capital management and foreign exchange transactions.
Inter-company internal fund lending and refinancing.
Foreign exchange and interest rate risk management and hedging.
Treasury centre serving as a centralized management hub for regional treasury, providing financial support and capital deployment.

Policy Scope:

Enterprises need to establish an independent treasury centre or department in Singapore and centrally manage their regional or global financial activities.
Enterprises must meet the activity scope and value-added conditions set by the Economic Development Board, specifically including the complexity of treasury management, the value-added degree of financial operations, and contributions to Singapore's financial industry.

3. Types of Eligible Enterprises

The FTC incentive primarily targets multinational companies and regional headquarters conducting large-scale business operations globally or in the Asia-Pacific region. These enterprises typically need to centrally manage capital and financial activities across multiple countries to achieve more efficient capital flow and financial risk management. Eligible enterprise types include:

Multinational companies engaged in commodity trading, logistics and transportation.
Multinational enterprise groups establishing regional or global headquarters.
Enterprises requiring complex financial operations such as capital deployment, cross-border financing and currency exchange.

4. Application Requirements

When applying for the FTC incentive, enterprises need to meet the following basic requirements:

Purpose and Operating Scope of Treasury Centre Establishment: The treasury centre needs to be established in Singapore and undertake financial management responsibilities for at least two countries or regions.
Staffing and Functional Requirements: Enterprises need to deploy professional treasury management teams in Singapore to perform functions including capital deployment, foreign exchange risk management and financing arrangements.
Value-Added Conditions: Applicant enterprises need to demonstrate the economic value-added effects of their treasury centre, such as improving capital management efficiency, reducing financial costs, and promoting the development of Singapore's financial industry.

5. Advantages and Enterprise Benefits

Enterprises establishing finance and treasury centres can enjoy the following benefits:

Tax Savings: By enjoying the 8% concessionary tax rate, enterprises can significantly reduce their tax burden on qualifying financial activities and improve overall financial performance.
Optimized Capital Operations: Enterprises can more effectively conduct cross-border capital allocation and management, achieving centralized capital operations and rapid response to market changes.
Risk Management: Leveraging Singapore's mature financial market system and diverse financial instruments, enterprises can better manage financial risks such as foreign exchange risk and interest rate risk.

6. Singapore's Advantages as a Finance and Treasury Centre

Singapore has unique geographical advantages and comprehensive financial infrastructure in the Asia-Pacific region, providing strong support for enterprises establishing treasury centres. The following are Singapore's main advantages as an FTC:

Stable Economic Environment and Sound Legal System: Singapore has a transparent financial regulatory system and comprehensive legal framework that helps protect enterprises' financial security.
World-Leading Financial Market: Singapore hosts numerous international banks and financial institutions, providing enterprises with rich financial services and product choices.
Policy Support and Talent Advantages: The Singapore government supports financial industry development and has attracted a large pool of professionals with financial and treasury skills, meeting enterprises' needs for establishing treasury centres.

7. Application Process

The process for enterprises applying for the FTC incentive typically includes the following steps:

Preliminary Assessment: Enterprises submit a letter of intent to the Singapore Economic Development Board, outlining their treasury centre establishment plans and proposed financial activities.
Detailed Submission: Enterprises need to prepare a detailed business plan explaining the treasury centre's operating model, value-added activities and economic benefits.
EDB Review: The Singapore Economic Development Board will evaluate the enterprise's application and determine incentive conditions based on the project's scale and value-added degree.
Agreement Signing: Once the application is approved, the enterprise will sign relevant agreements with EDB, confirming the concessionary tax rate and validity period.

The Finance and Treasury Centre (FTC) incentive scheme provides significant incentives and support for multinational companies and regional headquarters establishing treasury management centres in Singapore. This policy not only helps enterprises achieve tax savings and optimize capital management, but also enhances their risk management capabilities, enabling them to better respond to global market challenges. Through the FTC incentive, Singapore further consolidates its position as a financial centre in the Asia-Pacific region, providing enterprises with a favorable business environment and strategic support.