Deputy Prime Minister Lawrence Wong highlighted on July 3, 2023, that an average of 250 property transactions annually from 2018 to 2022 were exempt from the Additional Buyer’s Stamp Duty (ABSD) due to obligations set forth in two free trade agreements (FTAs). These transactions accounted for about 2.5% of all property transactions subject to ABSD during the specified period, leading to an approximate remittance of S$150 million in ABSD per year.

In his written parliamentary response, Wong explained that nationals and permanent residents of Iceland, Liechtenstein, Norway, and Switzerland enjoy similar tax treatment as Singaporean citizens when purchasing residential properties in Singapore. This benefit is facilitated by the “national treatment” clause of the Singapore-European Free Trade Association (ESFTA), ensuring fairness in property acquisition.

Furthermore, the US-Singapore FTA also requires Singapore to grant similar “national treatment” concerning stamp duty. Wong pointed out that these agreements were established nearly 20 years ago, prior to the introduction of ABSD in Singapore, underlining the longstanding nature of these obligations.

The Deputy Prime Minister stressed that these national treatment obligations are part of a balanced package that aims to provide significant benefits to Singapore when trading with and investing in these nations. He noted that the advantages extend not only to foreign buyers but also to Singaporeans investing in the US and ESFTA member countries.

Wong also mentioned that the number of property transactions exempt from ABSD and the total amount of remitted duties fluctuate based on market conditions and the prevailing ABSD rates. This variability underscores the dynamic nature of the property market in Singapore, which can be influenced by various economic factors.

In a move to cool the housing market, Singapore raised the ABSD rates for residential properties in late April 2023, doubling the rate for foreign buyers to 60%. This significant increase reflects the government’s commitment to manage housing demand and maintain a stable real estate market.

Ultimately, the implications of the FTA obligations highlight the complexity of Singapore’s real estate regulations and their interplay with international trade agreements. As such, ongoing monitoring of these exemptions and their impact on the property market will be essential for ensuring a balanced approach to foreign investment in Singapore’s housing sector.