GTP is a tax incentive scheme that encourages large trading companies to locate their headquarters in Singapore.
International Enterprise Singapore (IE Singapore), a government agency under Singapore’s Ministry of Trade and Industry, launched the GTP to help Singapore companies establish a global presence in other countries. IE Singapore introduced the GTP to promote the country as the preferred base for international trading firms. It did so by providing incentives in the form of tax concessions to such firms.
Global Trading Company
The Income Tax Act defines the terms Global Trading Company and Qualifying Company as follows:
A global trading company is a company carrying out business in international trading of:
A qualifying company (i.e. a company that will qualify as a Global Trading company) is a company registered in Singapore and either:
An approved global trading company or
A wholly owned subsidiary (i.e. 100% ownership) of a global trading company.
The qualifying company will receive the tax benefits only on income derived from qualifying commodities.
Companies that qualify for the GTP
Enjoy a concessionary corporate tax rate (5% or 10%) for a renewable 5-year period on qualifying trading income (including offshore trading income) that includes any income from physical trading, derivative trading income, etc.
Companies eligible for this benefit must carry out most of their trading operations in Singapore. GTP companies are eligible for the 5% tax rate only if a substantial amount of their business is executed in Singapore, they utilise the country’s financial services and hire local Singaporeans to work in their company. This criterion is in addition to the eligibility conditions that a company must fulfil to qualify for GTP.
Since 2003, medium-sized international companies (who wish to choose Singapore as their base for their global trading operations) for the scheme. They qualify for the 10% concessionary tax benefit for a non-renewable period of 3 years. During this period, if the companies are successful in establishing a global trading network and operations according to the requirements of the GTP, they will be eligible to apply for the GTP scheme for a 5-year renewable period.
GTP Eligibility Requirements
As outlined by IE Singapore, a company is eligible to apply for the GTP if:
The company is a well-established (either medium or large-sized) international company and the company conducts international trading, procurement, distribution as well as transportation of the products covered under the scheme
The company must have a global network and a good track record; and
The company wishes to set up a regional base of its principal offshore trading and business activities along with their support functions in Singapore. These include marketing, development and planning, logistics management, finance and treasury functions, etc.
To be eligible for the GTP, the following additional conditions need to be fulfilled. The company must have a minimum:
Annual turnover of $100 million;
Local expenditure of S$ 3 million and
3 trading professionals employed. These professionals can be either local Singaporeans or foreigners. The professionals must be engaged in risk management, sales, marketing activities, etc.
Products Covered by GTP
The GTP covers income generated from the following products and commodities:
Petroleum and Petroleum Products
Electronic and Electrical Products
Building and Industrial Products
This list is not conclusive and is updated by IE Singapore from time to time.
Additionally, IE Singapore has stated that the following physical trades will qualify for the GTP:
Offshore Trade; and
You can find additional details of the scheme here.