Tax Bulletin

Income Tax (Amendment) Bill 2018

The Income Tax (Amendment) Bill 2018 (the Bill) was passed in Parliament on 2 October 2018.

The Bill mainly contains tax changes announced in the 2018 Budget Statement, such as enhancement of the tax deduction for costs on intellectual property (IP) licensing. In addition, it introduces a number of measures which arose from the on-going review of Singapore’s income tax system. These include enhancements to the Inland Revenue Authority of Singapore’s powers which are intended to strengthen a whole-of-government approach to law enforcement, clarification of the tax treatment for leases arising from the adoption of Financial Reporting Standard 116 Leases and the introduction of secondary mechanism for Country-by-Country Reporting. Lastly the Bill proposes legislation relating to changes that were first announced in the 2017 Budget, such as the IP Development Incentive and a transitional measure for existing recipients of the Aircraft Leasing Scheme.

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

Other issues

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.

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.

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.

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...

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.

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.

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.

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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