SINGAPORE Law and Practice Contributed by: Dorothy Marie Ng, Monica Yip, Tay Peng Cheng and Tan Shao Tong, WongPartnership LLP
4.6 Agreements With Local or Governmental Authorities
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity There are no particular requirements to be included in the constitution of a company used to invest in real estate. Singapore companies used to invest in real estate will generally have the capacity and authority to acquire and deal with real estate as express objects in their con - stitution. Similarly, the deeds of trust constitut - ing business trusts or REITs will provide for the capacity and authority to acquire and deal with real estate. Companies and business trusts are subject to a corporate tax rate of 17%, and listed Singapore REITs may qualify for tax transparency treatment (see 5.3 REITs ). 5.3 REITs In both private and public forms, REITs are vehicles used for investment in Singapore real estate. Except for prohibitions on foreigners pur - chasing “residential property” as defined under the Residential Property Act 1976, there is no restriction on foreign investment in REITs. Listed Singapore REITs may qualify for tax transparency treatment if they distribute at least 90% of their specified table income derived from Singapore real estate. Qualifying unit holders receiving distributions from such listed Singa - pore REITs will not be subject to Singapore with - holding tax. In particular, qualifying unit holders who are individuals will be exempt from Singa - pore income tax on such distributions. Resident corporate unit holders will be subject to tax on such distributions at the corporate tax rate of 17%, while non-resident corporate unit holders will be subject to a final withholding tax rate of 10%.
Generally, subject to obtaining the relevant per - mits/approvals, an owner/developer would be able to develop a project without any require - ment to enter into additional agreements with the relevant authorities to facilitate the project. An owner/developer is at liberty to enter into a separate agreement with a utility supplier for the provision of utilities. 4.7 Enforcement of Restrictions on Development and Designated Use In general, where there appears to be a breach of planning control, the relevant authority has the right to enter the real estate and to serve a notice on the owner or occupier requiring them, inter alia, to provide information relating to use of the real estate. Once a breach is ascertained, the relevant authority has the right to serve an enforcement notice, which may require, inter alia, the alteration, demolition or removal of any building or works. The possible penalties for non-compliance are fines and/or imprisonment. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Investment in real estate assets can be made by individuals, companies, partnerships (including limited liability partnerships), business trusts or REITs. Generally, limited liability companies are consid - ered to be the entities that best protect owners (shareholders) from personal liability while retain - ing the right to control the operations. They also provide an alternative to a direct asset sale by way of sale of their shares.
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