Tax Bulletin

Update on GST treatment of brokerage services

The IRAS updated its e-tax guide “GST: Guide for the Fund Management Industry” on 1 September 2016 with a clarification that a stock broker can only zero-rate his services to a fund manager if both the fund manager and the fund manager’s customer belong overseas for GST purposes. This development may result in additional GST costs to the fund manager and its customer.


Enhanced tax deduction to promote philanthropy and volunteerism

The Business and Institution of a Public Character (IPC) Partnership Scheme (BIPS) was first introduced in the 2016 Budget and aims to encourage businesses to support philanthropic activities through employee volunteerism or secondments. It forms part of the Government’s efforts to promote philanthropy and volunteerism. Broadly, businesses which support employees who volunteer with or provide services to IPCs will enjoy tax deduction of 250% of the wages and related expenses associated with those activities, subject to certain caps.


General Anti-avoidance Rules

Singapore’s general anti-avoidance rules (GAAR) are found in section 33 of the Income Tax Act. Until recently, there was only one income tax case, Comptroller of Income Tax v AQQ and another appeal [2014] SGCA 15 (“AQQ”) dealing with the application of this section. It is therefore not surprising that the Inland Revenue Authority of Singapore (IRAS), in its guidelines issued on 11 July 2016 on the application of the GAAR, adopts an approach based on the principles enunciated by the Court of Appeal (CA) in AQQ. Given today’s international fiscal environment, the IRAS’s guidelines on tax avoidance serve to reinforce Singapore’s stance against abusive arrangements and its reputation as a substantive business hub.

Tax Bulletin

General Anti-avoidance Rules

September 2016