In its 2020 budget announcement yesterday, the Singapore government revealed the extension of numerous tax benefits, two of which apply to insurance and reinsurance operations.
Both the Insurance Business Development (IBD) umbrella scheme and the IBD-Captive Insurance scheme were set to expire on March 31st, 2020 and have now been extended until December 31st, 2025.
Under the IBD umbrella scheme, approved insurers are granted a concessionary tax rate of 10% for 10 years on qualifying income derived from undertaking both onshore and offshore life reinsurance, as well as onshore and offshore general insurance and reinsurance business, with the exception of fire, motor, work injury compensation, personal accident, and health insurance.
In its 2020 budget, the government explained that in an effort to simplify the umbrella scheme, the IBD-Marine Hull and Liability Insurance Business scheme is set to expire on March 31st, 2020. Furthermore, in order to align the duration of all awards under the umbrella scheme, new and renewal awards under the IBD scheme approved on or after April 1st, 2020 will be granted for five years, as opposed to the previous 10.
So, the change sees approved insurers being granted a concessionary tax rate of 10% for five years on qualifying income derived from onshore and offshore life reinsurance business, as well as onshore and offshore general re/insurance business, excluding fire, motor, work injury compensation, personal accident, and health insurance.
The amendments made by the Singapore government show its commitment as a regional and global hub for insurance and reinsurance business, while looking to ensure both resilience and competitiveness.
