Finance & Treasury Centre
A Finance & Treasury Centre (FTC) is a specialized unit within a company that handles all its financial and treasury operations. It acts as a central hub for managing cash flow, risks, and financial resources. Here's a closer look at what an FTC does:
Key Functions:
Cash Flow Management: Overseeing the company's incoming and outgoing cash, ensuring smooth operation and meeting financial obligations.
Risk Management: Identifying, analyzing, and mitigating financial risks associated with foreign exchange fluctuations, interest rates, and credit.
Investment Management: Investing surplus funds to generate returns and meet the company's financial goals.
Financial Reporting and Analysis: Preparing financial statements, analyzing financial performance, and providing insights to support strategic decision-making.
Financing Activities: Securing loans, managing debt, and issuing financial instruments.
Benefits of an FTC:
Centralized Control: Streamlines financial operations and provides better visibility into the company's financial health.
Improved Efficiency: Optimizes cash flow management, reduces costs, and improves financial processes.
Enhanced Risk Management: Proactive identification and mitigation of financial risks.
Strategic Decision-Making: Provides data and analysis for informed financial decisions.
Why Singapore is a Popular Location for FTCs:
Favorable Tax Incentives: Singapore offers the Finance & Treasury Centre Incentive program with reduced tax rates and withholding tax exemptions.
Strong Financial Infrastructure: Singapore boasts a well-developed financial system with access to a wide range of financial products and services.
Strategic Location: Situated in Southeast Asia, Singapore provides easy access to growing regional markets.
Overall, a Finance & Treasury Centre plays a critical role in optimizing a company's financial health and performance. Singapore's supportive environment makes it an attractive location for establishing an FTC.
Finance & Treasury Centre Incentive
The Finance & Treasury Centre (FTC) Incentive is a program offered by the Singapore Economic Development Board (EDB) to attract and develop treasury management activities in Singapore.
Here's a breakdown of the key benefits and how it works:
Benefits:
Reduced corporate tax rate of 8% on income derived from qualifying FTC activities and services provided to Approved Network Companies (ANCs).
Withholding tax exemption on interest payments for loans obtained from outside Singapore, used for approved activities.
The incentive period is five years, with a possibility of extension for continued development.
How it Works:
Companies apply to the EDB for approval as an FTC.
If approved, the company enjoys the tax benefits mentioned above for five years.
Companies can potentially extend the incentive by demonstrating a commitment to further expand their FTC activities in Singapore.
Eligibility criteria
There are two main categories of eligibility criteria for the Singapore's Finance & Treasury Centre (FTC) Incentive:
Company Registration and Activities:
Registered in Singapore: Your company must be incorporated and registered in Singapore.
Established International Operations: The EDB generally prefers companies with existing international business activities.
Substantive Activities: The core function of the FTC should involve strategic financial activities, not just basic administrative tasks. This includes managing cash flow, foreign exchange, interest rates, and credit risks. You should also be involved in corporate finance advisory services, business planning, and investment research for the company.
Quantitative Requirements (First-time Applicants):
Employment: You need to employ at least 4 dedicated FTC professionals based in Singapore within the first year (Year 1) and maintain this level throughout the incentive period.
Total Business Expenditure (TBE): The company must incur an annual TBE of at least S$1.5 million specifically for the FTC by Year 1 and maintain this level for the entire incentive period.
Additional Points:
There are different criteria for companies that have already received the FTC award and are applying for a subsequent renewal. These typically involve maintaining existing staff levels and demonstrating continued growth of the FTC activities in Singapore.
The EDB assesses applications based on both quantitative and qualitative factors. Your overall business plan and commitment to developing your Singapore-based FTC operations will be considered.
Additional Resources:
Here are some resources for further details:
You can find more information about the program and eligibility criteria on the EDB website: Singapore Economic Development Board - Finance and Treasury Centre Incentive
Singapore Economic Development Board - Finance and Treasury Centre Incentive: Singapore Economic Development Board - Finance and Treasury Centre Incentive
Finance & Treasury Centre Incentive Factsheet: Singapore Economic Development Board - Finance & Treasury Centre Incentive Factsheet
How Bestar can Help
Bestar can help you with the Singapore FTC Incentive. Here is how:
Ways Bestar Could Help:
Company Registration and Structuring: Bestar offers company registration services in Singapore. We could assist you in incorporating your company, which is a requirement for the FTC Incentive.
Business Planning and Strategy: Bestar has expertise in financial planning and strategy. We could help you develop a business plan for your Singapore-based FTC that aligns with the EDB's requirements. This plan should demonstrate your commitment to growing your FTC activities in Singapore and meeting the quantitative benchmarks (employment and expenditure).
Tax and Financial Consulting: Bestar has tax and financial consultants on board. We could advise you on the specifics of the FTC Incentive program, including tax benefits and compliance requirements.
Recruitment: Bestar could potentially help you find qualified FTC professionals to staff your Singapore office and meet the employment criteria.
Contact Bestar: Reach out to Bestar and inquire about our services related to the Singapore FTC Incentive.
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