Financial Services Tax Bulletin - Archive

Financial Services Tax Bulletin provides updates and analyses of regulatory and other developments relating to corporate tax in Singapore.

Previous Issues

June 2014 - New update on the GST rules for the fund management industry

The release of MAS Circular FDD Cir 02/2014 on 31 March 2014 and the clarification on the "belonging" status of an incorporated fund for the purpose of applying the GST treatment to services to the fund have resulted in certain controversies when it came to the interpretation of the Goods and Services Tax treatment.  As a result, tax practitioners were invited to meet the Monetary Authority of Singapore, Ministry of Finance and the Inland Revenue Authority of Singapore on 28 May 2014, to provide feedback on the Circular.




May 2014 - Singapore added to the list of US IGA countries

The long-awaited IGA between the US and Singapore has been agreed in substance and takes effect from 5 May 2014. The agreement will facilitate compliance with the FATCA rules by Singapore-based financial institutions (Singapore FIs).

Singapore FIs will be permitted to register under the Singapore-US IGA (which is agreed in substance) and will be able to certify their status to withholding agents until 31 December 2014 (the date by which the IGA must be signed in order for this status to continue without interruption) and report the required FATCA reporting information to the US Inland Revenue Services (IRS) via the Singapore Inland Revenue Authority of Singapore (IRAS). This is likely to help ease the compliance burden for the FIs.


April 2014 News Flash- GST changes for the Fund Management Industry

The MAS issued Circular FDD Cir 02/2014 on 31 March 2014 in respect of the GST remission for prescribed expenses for qualifying funds. While the circular confirms the 2014 Budget announcement of the extension of the GST remission to 31 March 2019 and a fixed input tax recovery rate of 90 percent for the period 1 January 2014 to 31 December 2014, it also introduces the rules on how the "belonging" status of a fund is to be determined for GST purposes (Separately, the IRAS has also updated the "belonging" rules in the e-tax guide "GST : Guide for the Fund Management Industry"). This has wide impact on the ability to apply zero-rating to services to an overseas incorporated fund. Read more about the background and implications of the rules in the latest Tax Bulletin.


February 2014 The Court of Appeal ruled on the taxability of gains derived by an insurer

In Comptroller of Income Tax v BBO [2014] SGCA 10 (BBO), the Court of Appeal decided in favour of the taxpayer (and upheld the decisions of the High Court and the Income Tax Board of Review), concluding that gains derived by an insurer from the disposal of certain shares held within its insurance funds are capital in nature. Read more about the background and PwC's observations about the case in the latest Tax Bulletin.






June 2013 Tax transparency

In recent years, there has been a global movement towards greater tax transparency and increasing information reporting for the purposes of combating tax evasion. As a centre for wealth management excellence, Singapore is committed to playing a role in the global fight against tax evasion.

Over the last six months, several measures have been announced which demonstrate Singapore’s commitment to meeting international standards and best practices in this area. Please refer to the latest Financial Services Tax Bulletin for the key measures and a summary of the necessary steps that financial institutions should take to ensure compliance with the new rules.




April 2013 Financial Services Tax Bulletin - The Comptroller of Income Tax v BBO

On 8 April 2013, the High Court handed down its decision in the case of The Comptroller of Income Tax v BBO [2013] SGHC 74. In the landmark decision, the High Court ruled that gains arising from the disposal of investments in the insurance industry can, in certain circumstances, be treated as capital in nature, and hence non-taxable.

In handing down its decision, the courts have granted potential clarification to an issue that has long been the subject of disagreement between the insurance industry and the Comptroller of Income Tax. The outcome of this case should be well received by the insurance industry.




Jan 2013 - MAS Consultation Paper on Related Party Transaction Requirements for Banks

On 22 December 2012, the Monetary Authority of Singapore (MAS) issued a consultation paper and accompanying draft regulations dealing with requirements for banks entering into related party transactions. The MAS is looking for feedback from interested parties by 25 January 2013.

The essence of the consultation paper is that the MAS wishes to further enhance and codify the requirement for banks to enter into any related party transactions on an arm's length basis, and that "material" transactions with and the write-off of exposures to related parties should be subject to prior approval by the bank's board of directors. Subject to the outcome of the consultation, the requirements will be incorporated into the Banking Act in due course.

For a summary of the main themes of the document and our comments on these developments, please download the Financial Services Tax Bulletin.


April 2011 - Withholding tax exemption for specified entities

Despite the relative lack of attention paid to multi-nationals in Singapore's Budget 2011 than in previous years, the financial services sector continues to be a beneficiary with measures introduced to simplify tax rules and ease compliance.  One of them is the withholding tax exemption granted to specified financial institutions on interest and related payments. Details of the scheme were released on 31 March 2011.  In this bulletin, we examine some of the finer points of the scheme.

For a summary of the main themes of the document and our comments on these developments, please download the Financial Services Tax Bulletin.



October 2010
Bank levies – an update

In the light of bank tax or levy proposals from several countries, as well as from supranational bodies such as the EU and the IMF, this bulletin gives an update on the status of the proposals from the UK, Germany, France, the US and Hungary.

For a summary of the main themes of the document and our comments on these developments, please download the Financial Services Tax Bulletin.






OECD Forum on Tax Administration: Voluntary code of conduct for banks and revenue bodies

A Framework for a Voluntary Code of Conduct for Banks and Revenue Bodies has recently been released following the Forum on Tax Administration meeting in Istanbul in September. The document sets out a framework for a voluntary code of conduct for banks and revenue bodies. It also includes a commentary on the framework and summary of the South African experience with its Banking Accord and a summary of the UK experience with the Code of Practice for banks.

For a summary of the main themes of the document and our comments on these developments, please download the Financial Services Tax Bulletin.



June 2010 - Details of 2010 Budget changes to tax incentive schemes

Further to the 2010 Budget presented by the Minister for Finance, the Monetary Authority of Singapore (MAS) issued two circulars on 1 April 2010 and 11 May 2010 providing details of the changes to the following incentive programmes:

(1) Financial Sector Incentive (FSI) scheme

(2) Tax Incentive schemes for Futures Members of the Singapore Exchange (SGX) and Members of the Singapore Commodity Exchange Limited (SICOM)

For an overview of these changes and highlights of their implications to financial institutions, please download the Tax Bulletin.



May 2010 - Offshore Insurance Business Schemes

The Minister of Finance had proposed some changes to the Offshore Insurance Business tax incentive schemes (OIB Schemes) during the 2010 Budget. Subsequently, the Monetary Authority of Singapore (MAS) has released details of these changes in its circular dated 28 April 2010. For an overview of these changes and a list of the frequently asked questions (FAQs) on the changes introduced and the actions you need to take, please download the Tax Bulletin.

Update on 9 June 2010: Withdrawal of OIB Tax Incentive award from 1 August 2010 in cases of non-submission of Declaration Form (for existing OIB Tax Incentive award recipients)

The MAS has clarified that if copies of the Declaration Form are not received by 31 July 2010, the OIB Tax Incentive awarded to you will be considered as revoked from 1 August 2010 onwards.

July 2009

OECD developments on taxation - In a rapidly-changing globalisation economy, the role of the OECD has progressively broadened from its historical mission. The challenges brought on by the global economic crisis have bolstered international support for long-standing OECD projects, specifically those focused on tackling tax evasion and transparency. This bulletin analyses the challenges the OECD faces and what are some future developments.

New OECD report on building transparent tax compliance by banks - The Singapore tax authorities participated in the OECD Forum on Tax Administration that led to the release of a report on the role of banks as tax intermediaries. The Report, entitled 'Building transparent tax compliance by banks', examines the role of banks in aggressive tax planning and the relationship between banks and revenue bodies. This bulletin summarises the latest thinking of the OECD on the role of tax intermediaries and considers its impact on the financial services industry.

May 2009

On 12 May 2009, the Monetary Authority of Singapore (MAS) issued two circulars that spell out the enhancements to the credit facilities syndication and commodity trading tax incentives. It also clarified the tax treatment of gain on sale of foreign equity securities by qualifying financial institutions. This Bulletin discusses these developments and their impact.

October 2008

The Inland Revenue Authority of Singapore (IRAS) have recently issued a circular on transfer pricing consultation, setting out how they intend to review taxpayers’ compliance with the arm’s length standard. They have also provided additional guidance on advance pricing arrangements. These developments, together with their participation at a regional transfer pricing conference and the release of a draft circular on loans and services, represent a step-up by the IRAS in ensuring that taxpayers observe internationally accepted transfer pricing principles when conducting business with related parties.We are pleased to present you with the October issue of Financial Services Tax Bulletin, which summarises these developments and considers their impact on the financial services sector in Singapore. Read on to find out how they affect your business.

January 2007

The Organisation for Economic Co-operation and Development (OECD) Committee on Fiscal Affairs has published new versions of Parts I, II and III of its Report on the Attribution of Profits to Permanent Establishments in late December 2006. This Bulletin discusses the changes made to the earlier versions of these documents as well as the implications to financial institutions arising from the OECD efforts in achieving greater international consensus on interpretation of Article 7 (Business Profits) of the OECD Model Convention.