In order to qualify for each programme, companies must meet certain requirements. These requirements ensure that the companies have sufficient substance in those territories and are conducting the level of business that the host country is looking to attract.
GIFT Programme
Companies are required to operate as a LITC and have a registered office in Labuan IBFC. However, they may have an operational office anywhere in Malaysia.
These companies must also have a minimum annual turnover of USD 100 million and minimum local business spend of MYR 3 million (approximately USD 850,000) payable to Malaysian residents. Companies are also required to employ at least three professional traders earning a minimum salary of MYR 15,000 (approximately USD 4,000) per month and who are tax residents of Malaysia.
GIFT companies are exempted from fulfilling the above numerical criteria for the first five years.
The minimum local business spend of MYR 3 million per year should be billed to Malaysian entities and may include freight charges, bank charges, commissions, depreciation, entertainment, insurance costs, office maintenance, manpower costs, professional fees, rental of office space, skills development fund, telecommunications, transport and travel, utilities, warehousing and storage fees.
The annual licence fee is MYR 40,000 (approximately USD 11,000).
Global Trader Programme
Prior to the GTP incentive being awarded, companies are expected to have shown some track record of operation and have Singapore bank lines in place. Hence, unless the trader is a large global player, it is often recommended that the trader is operational in Singapore for some time before making the application.
Companies are required to demonstrate the following criteria:
- Substantial physical trade
- Significant local business spending
- Sizable employment of trading professionals
- Strategic headquarter functions.
The levels required to meet the substantial physical trade criteria are higher than those required of GIFT participants and must be met from the first year of the company’s operation (compared with at the end of five years for GIFT participants). The requirements increase from Tier 3 (the introductory level of the programme with a 10% concessionary rate) to Tier 1 (the highest level of the programme with a 5% rate). These levels are not published by IE Singapore and are subject to a degree of negotiation.
The significant local business spending must be expenditure paid to Singapore-based entities that are directly attributable to GTP activities. The list of relevant expenditure is very similar to that of GIFT.
Trading professionals in Singapore are expected to include decision makers, who have authority in the following functions or activities in relation to GTP transactions: senior management, procurement and sourcing, sales and marketing, and risk management. These trading professionals must be tax residents of Singapore.
It is also expected that some strategic headquarter functions are based in Singapore. These include: strategic management, finance and treasury management, risk management, market research, logistics management, human resource management, information technology and network services, global procurement, and customer management.
The net effect of all the above items is to ensure that companies applying for the GTP have sufficient track record and substance in Singapore.