S O N A M J A M B H U L K A R
R O L L N O . 8 7 4 , B B A L L B
N A T I O N A L L A W U N I V E R S I T Y , J O D H P U R
LEASE FINANCING IN
Meaning: Leasing allows you to pay a
rental for the use of an asset over a
period of time.
This eliminates the need to be concerned
about asset obsolescence and asset
disposal at the end of its useful life.
Leasing at Singapore: overview
Beginning in 1970s.
Lease is mainly provided to corporate
Lessors are specific companies which are in
business of leasing, eg. ORIX leasing Singapore ltd,
Hertz car rental, Gold bell corporation, Singapore
Leasee are usually corporate.
Leasing is also done according to a particular
Leasing in Singapore
Financing of up to 100% of the asset value.
Goods and Services Tax (GST) is charged on the
monthly rental payments.
Title of the asset is retained by the Leasing
Company at all times.
In general, more applicable to equipment with
minimal resale value such as copiers or fast
changing technological assets.
As a newly industrialized country Singapore’s
leasing to total capital investment is relatively
Leasing scenario in Singapore
United States Singapore United Kingdom
Project based Financing
Stamp duty on lease in Singapore
LEASE /TENANCY RATES
(a) Where annual rent does not exceed
(b) Where annual rent exceeds $1,000, Stamp Duty is based on the contractual
rent or market rent, whichever is higher
- For every $250 or part thereof of the
average annual rent for lease term:
-Up to 1 year $1.00
-More than 1 year and up to 3 years $2.00
-More than 3 years or for an indefinite
Leasing Association of Singapore
Asia leasing association – headquarter
Ministry of Finance, 1982
Tax benefits is a reason for lease financing. But in
Singapore taxing statutes no reference is made on
Problems in Leasing Environment
Conventional ordinary lease: barest minimum tax
Low value transaction: No benefit in taxation
Short term leasing: No long economic development
due to short term transaction.
Immaturity of long term debt market
No set scale for establishing residual value
Reluctance for foreign lease: Because of lack of
medium of confidence on foreign currency and no
medium for long term funds in local currency.
No promotional activities: No promotion of correct
concept of leasing so that the correct potential of
leasing can be fully exploited.
High tax rate- 40%: No encouragement for
leasing, need of liberal approach
Lack of government incentives.
Conducive and positive regulatory framework
Economic restructuring: high technology, increased
mechanism and automation
Long term leasing incentives
Amendments in Statutes
Uncertainty in leasing industry
Present framework are unsatisfactory
More development is needed in leasing market
Wide range for leasing in International market
Less Taxing benefits