Aircraft Leasing in Asia: The Amicorp Singapore advantage

AMINEWS
July, 2015


Aircraft Leasing in Asia: The Amicorp Singapore advantage

Asia is the fastest growing aircraft market in the World. According to industry data, airlines from the region will take delivery of more than 10,000 new passenger and cargo aircraft from 2015-2032, valued at more than US$1.5 trillion. This represents 37% of all new aircraft deliveries worldwide over the next 20 years, ahead of Europe, North America and the Middle East.

In value terms, the region will account for 42% of the global market for new airliners, reflecting the higher proportion of wide body aircraft required in Asia-Pacific.

The share of leased aircraft in the global fleet has grown from under 2% in 1980 to 40% in 2014 and the industry expects this figure to rise to 50% by the end of the decade.

Advantage Singapore
Singapore offers clear advantages to those aircraft leasing operations seeking an Asian base, whether because of the increasing demand for commercial aircraft in Asia or the growing strength and significance of Chinese financial institutions.

Aviation leasing companies in Singapore can enjoy the benefits of the Aircraft Leasing Incentive Scheme (ALS) which was started in the year 2007. The salient features are as follows:

Singapore has a headline rate of 17% but under its ALS incentive, the applicable rate on qualifying income can drop to 10% or even 5% for a period of 5 years.
A withholding tax exemption for interest and qualifying payments on loans obtained before March 31, 2017 to finance the purchase of aircraft or aircraft engines is attached to this incentive.
Depreciation of aircraft over a working life of 5 to 20 years subject to approval

Double Tax Treaties with more than 75 countries - Singapore’s treaty network had historically included payments for the right to use commercial, scientific or industrial equipment under the definition of royalties, in the royalty articles of its treaties, with the result that lease payments for moveable assets, including aircraft and aircraft engines, have been subject to withholding tax. However, the Singapore Government has worked towards renegotiating treaties with key countries to either remove or reduce the impact of such withholding tax such as the United Kingdom.

This demonstrates Singapore Government’s willingness to waive its right to tax outbound aircraft lease payments to key treaty partners and promote the aircraft leasing business from Singapore.

Singapore - Ireland DTAA: The comprehensive DTAA between Singapore and Ireland entered into force on 8 April 2011. Historically, aircraft lease payments between Singapore and Ireland have been subject to withholding taxes ranging from 2% to 15% on the gross rental payments to Irish aircraft lessors companies. This often created a stumbling block to Singapore’s link-up with Ireland, the leading aircraft leasing jurisdiction in the world.

From the year 2011, the Business Profits Article of the DTAA provides Irish lessors with full protection from Singapore withholding tax. This allows Singapore and Ireland to work more closely in developing cross border aircraft leasing solutions, an area which both countries have made a point of incentivizing with low tax rates. The DTAA provides greater flexibility for aircraft lessors to operate a two center leasing strategy in meeting the needs of their lessee customer in this part of the World.

Access to Financial Market: Singapore enjoys a high reputation, particularly in the context of Asian deals, and financial institutions here can point to significant transactions.
Benefit from Amicorp’s expertise
Incorporation of the company for leasing structure
Provision of registered office
Domiciliation Services
Bookkeeping
Company Secretarial Services
Corporate Compliance
Provision of experienced local directors

Assistance in the execution of aircraft lease agreements and international registry agreements
Assistance in the execution of agreements with financial institutions



For further information, please contact:


Pankaj Kumar
Director – Corporate Clients (Asia)
Amicorp Singapore

Email: [email protected]