Benefits from Mergers and Acquisition Scheme

Mr Yee Jenn Jong asked the Deputy Prime Minister and Minister for Finance (a) how many companies have benefitted from the Mergers and Acquisitions (M&A) Scheme since its inception in 2010; (b) how many companies that have claimed tax allowances under this scheme are SME companies; (c) how much M&A tax allowances have been granted; and (d) what are the average and the median deal sizes of M&A supported by this scheme.

The Mergers and Acquisitions (M&A) scheme was introduced in Budget 2010. It supports businesses that restructure and grow through mergers and acquisitions by defraying the costs of such transactions. Under the scheme, the acquiring company in qualifying deals may claim a tax allowance of 5% of the deal value, up to a maximum allowance of $5 million. The cap on allowance helps focus the benefits of the M&A scheme on SMEs. We also remit stamp duties on the transfer of unlisted shares for such deals.

Based on the tax returns for the Years of Assessment 2011 and 2012, there are 42 companies which have benefited from the scheme. Of these, 34 or 81% are SMEs (companies with annual revenue of up to $100 million). The average and median size of deals supported by the scheme is $25 million and $3 million

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respectively. The total allowance granted is $40 million.