Businessmen have hailed the Budget's announcement to exempt from taxation foreign income remitted back to Singapore.

Accountants say that besides making it easier for local businesses to go global, the move will also encourage more companies to set up base in Singapore.

In particular, this is good news for companies such as multinationals and those seeking a listing on the Singapore Exchange.

As announced in the Budget, earnings from abroad, like dividends from overseas subsidiaries and branch profits, will be automatically tax-free from June 1.

This is as long as they are sent back from places with tax rates of at least 15 percent.

This should benefit big locally-listed firms like SingTel and Venture Corp, which have significant interests abroad.

Previously, these firms had to grapple with a troublesome system of tax credits. Analysts say this new simpler system will attract multinational firms to set up holding companies in Singapore to consolidate their finances.

In fact, some believe the change could even influence more businesses to create listing vehicles in Singapore instead of tax havens like the Bermuda islands.

Ajit Prabhu, tax partner at Deloitte & Touche, said: "It is extremely significant, particularly in the context of listing vehicles which companies, particularly foreign companies, might choose when they seek a listing on the Singapore Exchange.

"It becomes a lot more attractive to use either a Singapore listing vehicle or a listing vehicle in Hong Kong, or perhaps Mauritius, which have headline tax rates of at least 15 percent.

"The reason being dividends paid by such listing vehicles to Singapore shareholders would not be subject to Singapore tax, whereas using a Bermuda listing vehicle now would be subject to Singapore tax."

About 90 million dollars of remitted income will be tax exempt, so that's good news, especially for companies. But there are still questions about how the scheme will actually be implemented.

The Inland Revenue Authority of Singapore will be coming out with more details by May this year.