Tax Bulletin

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Taxability of gains from disposal of investment

In BQY and another v Comptroller of Income Tax [2018] SGHC 75 (“BQY”), the High Court upheld the decision of the Income Tax Board of Review (“the Board”) and found that the profits derived by the appellants from the resale of three residential properties were taxable under section 10(1)(g) of the Income Tax Act (“the Act”).

 

Tax BulletinSingapore Automatic Exchange of Information (AEOI) Alert: Public feedback on draft e-Tax Guide & Updates to IRAS CRS FAQs

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Taxability of gains from disposal of investment

In BQY and another v Comptroller of Income Tax [2018] SGHC 75 (“BQY”), the High Court upheld the decision of the Income Tax Board of Review (“the Board”) and found that the profits derived by the appellants from the resale of three residential properties were taxable under section 10(1)(g) of the Income Tax Act (“the Act”).

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Singapore introduces new transfer pricing rules and guidelines

Singapore issued subsidiary legislation under the Income Tax Act (the Act): “Income Tax (Transfer Pricing Documentation) Rules 2018” (2018 Rules), as well as the 5th edition Transfer Pricing Guidelines (5th Edn TPG) on 23 February 2018. The 2018 Rules codify transfer pricing (TP) requirements for the preparation of TP documentation (TPD) from Year of Assessment (YA) 2019 (financial year 2018). The 5th Edn TPG provide practical guidance on how these rules are to be applied. Additionally, new penalties and fines for non-compliance were introduced as part of the new legislation package. The detailed TP rules set out the Inland Revenue Authority of Singapore (IRAS) powers to enforce the arm’s length principle and reinforces the importance of “getting one’s TP right” for Singapore taxpayers.

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Singapore Automatic Exchange of Information (AEOI) Alert: Public feedback on draft e-Tax Guide & Updates to IRAS CRS FAQs

On 25 August 2017, IRAS released the draft IRAS e-Tax Guide for public feedback. The public consultation period is from 25 August to 25 September 2017. This draft e-Tax Guide is intended to assist businesses and those affected by CRS, in particular SGFIs, in understanding the CRS framework and their CRS compliance obligations.

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Basis of assessment for service companies

The Inland Revenue Authority of Singapore has proposed to fine tune the tax treatment for service companies with effect from the year of assessment 2019, when only companies that meet specified conditions will be allowed to continue to compute their chargeable income based on 5% mark-up on total expenditure. Companies should consider the implications of the proposal as it may affect how they collate information for tax return preparation.

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Singapore Automatic Exchange of Information (AEOI) Alert: Updates to IRAS CRS FAQs and FATCA list of Approved Certificate Authorities

In July 2017, the Inland Revenue Authority of Singapore (IRAS) issued updates to the Common Reporting Standard (CRS) FAQs and provided a Foreign Account Tax Compliance Act (FATCA) update on their website on the US IRS-approved Certificate Authorities as well. Both legislations are to detect and deter tax evasion by taxpayers through the use of offshore bank accounts. FATCA targets US persons, whereas CRS targets all tax residents outside of the US and Singapore.

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Transitional considerations for resolving transfer pricing disputes under the renegotiated India – Singapore Double Taxation Avoidance Agreement

The India-Singapore Double Taxation Avoidance Agreement (“India-Singapore DTA”) came into force on 27 May 1994. Until 27 February 2017, when the 2016 Protocol (“Third Protocol”) came into force, taxpayers on the Singapore-India economic corridor have experienced the deadlock given no access to the alternative cross border transfer pricing (“TP”) dispute resolution mechanisms...

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OECD issues beta version of the Matching Database for the Multilateral Convention to Implement Tax Treaty Related Measures

On 11 July 2017, the Organisation of Economic Co-operation and Development (OECD) issued the beta version of the matching database for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”).

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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.

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Deciphering deductions for borrowing costs

The Income Tax Board of Review held that facility fees paid by the taxpayer in GBG v The Comptroller of Income Tax [2016] SGITBR 2 were not deductible on the grounds that they were capital in nature. The taxpayer did not seek a deduction under section 14(1)(a)(ii) of the Income Tax Act as there was no drawdown on the facilities and hence, no monies borrowed.

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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”), reflecting 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.

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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.

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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.

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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.

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Singapore becomes BEPS Associate! What does this mean for you?

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.

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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.

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Light at the end of the tunnel?

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.

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