Previous issuesFebruary 2017
Roundup of Singapore’s 2016 BEPS Developments and what these mean for enforcement efforts beyond?
2016 marked several major developments in the Singapore’s tax landscape arising from the Organisation for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) Project. Aligning with international tax practices aside, these developments also show Singapore’s resolve in protecting its tax base in the face of an increasingly volatile international tax environment. These developments will have a significant impact on your business operations if you are an MNE Group which engages in cross-border transactions.
We recapitulate below the key developments in Singapore for the past year. This should give a flavor of the Inland Revenue Authority of Singapore’s (“IRAS”) enforcement efforts moving forward.
Singapore’s latest Transfer Pricing Guidelines released on 12 January 2017 incorporate further BEPS Actions developments
The Inland Revenue Authority of Singapore (“IRAS”) released its 4th edition Transfer Pricing Guidelines (“4th Edn TPG”) on 12 January 2017. This reflects the IRAS’ approach to regularly update, generally on an annual basis, its transfer pricing guidance to align with international tax developments and accepted practices, including those emanating from the Organisation for Economic Co-operation and Development (OECD)’s BEPS1 initiative.
In its latest 4th Edn TPG, besides clarifying or elaborating on certain aspects of the guidance given in the previous edition, the IRAS has also explicitly incorporated Singapore’s position on TP-related aspects to align with various announcements made by the Ministry of Finance (“MoF”) when Singapore committed to joining the OECD’s “Inclusive Framework for Implementing Measures against Base Erosion and Profit Shifting (“BEPS”)” on 16 June 2016 as well as other BEPS developments.
Singapore tax authorities issue long-awaited Singapore Country-by-Country Reporting (CbCR) implementation guidance
The Inland Revenue Authority of Singapore (“IRAS”) released the e-Tax Guide on Country-by-Country Reporting which aims to provide practical guidance on CbCR implementation in Singapore. This comes as part of Singapore’s commitment to implement the four minimum standards under the inclusive framework under the Organisation for Economic Co-operation and Development (“OECD’s”) BEPS Project.
In our tax bulletin, we provide a summary of these clarifications (including scope of application, definitional issues and gaps thereof) and our thoughts on how some of these may impact taxpayers in Singapore.
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  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.
Singapore becomes BEPS Associate! What does this mean for you?
Singapore joins the Inclusive Framework for Implementing Measures against Base Erosion and Profit Shifting (“BEPS”)
On 16 June 2016, the Singapore’s Ministry of Finance (“MoF”) announced that “Singapore joins the Inclusive Framework for Implementing Measures against Base Erosion and Profit Shifting (“BEPS”)”.
This announcement should not come as a surprise to many as Singapore has consistently expressed support for the key principle underlying the Organisation for Economic Co-operation and Development (“OECD’s”) BEPS Project, which is profits should be taxed where the real economic activities generating the profits are performed and where value is created. The announcement however marks an important signal to all that Singapore is “at the table” to ensure the consistent implementation of measures under the BEPS Project and a level playing field across jurisdictions.
Singapore tax authorities tighten APA process in latest Transfer Pricing Guidelines
On 4 January 2016, the Inland Revenue Authority of Singapore (“IRAS”) published its latest third edition of Transfer Pricing Guidelines (“3Edn TPG”). This came barely a year following release of the second edition of Transfer Pricing Guidelines (“2Edn TPG”) on 6 January 2015, which introduced contemporaneous transfer pricing documentation requirements in Singapore for the first time.
Light at the end of the tunnel?
Our early observations on the finalisation of the OECD BEPS Project and what it means for Singapore
The Organisation for Economic Co-operation and Development (OECD)’s Base Erosion and Profit Shifting (BEPS) Project came to a close on 5 October 2015, where the OECD released their final recommendations. A number of these recommendations have significant implications on Singapore’s open economy – in particular those relating to Singapore’s tax incentive regime and our regional hub position. In this newsletter, we consider how some of these recommended changes to fundamental key principles around tax treaty access, transfer pricing and transparency impact Singapore.
Draft amendments to the Income Tax Act
On 26 June 2015, the Ministry of Finance (MOF) issued the draft Income Tax (Amendment) Bill 2015 (the draft Bill) for public consultation.
The draft Bill mainly contains tax changes proposed at the 2015 Budget. In addition, a number of non-Budget changes to existing tax policies and administration have been proposed. These arose from the on-going review of Singapore’s income tax system.
The consultation exercise ended on 24 July 2015, and as always, PwC has provided our feedback to the MOF, some aspects of which we share in this newsletter.
Country by country reporting – What does this mean for you?
On 8 June 2015, the Organisation for Economic Co-operation and Development (OECD) released the Country-by-Country Reporting (CbCR) implementation package as part of Action item 13 of the Base Erosion & Profit Shifting (BEPS) initiative. The CbCR workstream, a key pillar underpinning the BEPS initiative, will complement the OECD’s efforts to stamp out BEPS activities by enhancing tax transparency through the sharing of key tax information of Multinational Corporation (MNC) groups.
In broad terms, the purpose of CbCR is for MNC groups to disclose key aspects of their global tax profile to revenue authorities for risk identification purposes. This article discusses the implications of CbCR from a Singapore perspective