Tax Newsbites

This publication aims to share bite-sized information and updates from Singapore and around the region.

Recent issues

For the period 17 August 2018 to 5 October 2018

The Income Tax (Amendment) Bill 2018 was published on 10 September 2018; The Goods and Services Tax (Amendment) Bill 2018 was published on 1 October 2018; The Stamp Duties (Amendment) Act 2018 was published on 4 October 2018; The Court of Appeal in Singapore held that interest paid on shareholder bonds pursuant to a capital restructuring exercise was not deductible in BML v Comptroller of Income Tax [2018] SGCA 53; The Court of Appeal in Hong Kong held in Commissioner of Inland Revenue v Perfekta Enterprises Limited that a receipt for entering into an agreement to co-redevelop a piece of land is revenue in nature.

For the period 7 July 2018 to 16 August 2018

The Stamp Duties (Amendment) Bill 2018 was published on 6 August 2018; The Inland Revenue Authority of Singapore issued a revised circular entitled "Income Tax Treatment of Real Estate Investment Trust Exchange-Traded Funds (Second Edition)" on 9 July 2018; The Malaysian Minister of Finance has announced the rates for the reintroduced sales and services tax that will take effect 1 September 2018; The Hong Kong government has legislated an ordinance to introduce a transfer pricing regulatory regime and documentation requirement.

For the period 5 May 2018 to 11 June 2018

The Income Tax Advance Ruling application form has been updated to clarify that Part C4 should be completed if the ruling application falls under any of the following five categories:- Rulings relating to preferential regimes, Cross-border unilateral advance pricing arrangement or other cross-border unilateral rulings in respect of transfer pricing, Cross-border rulings providing for a downward adjustments of taxable profits, Permanent establishments rulings, or Related party conduit rulings.

For the period 7 March 2018 to 6 April 2018

The Income Tax (Transfer Pricing Documentation) Rules 2018 (2018 Rules) and the circular on Transfer Pricing Guidelines (Fifth edition) were issued 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 circular provides 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.

For the period 9 January 2018 to 9 February 2018

The Inland Revenue Authority of Singapore (IRAS) issued a circular on the income tax treatment arising from the adoption of Financial Reporting Standards (FRS) 115; The IRAS issued a revised circular on the tax deduction of expenses incurred on renovation or refurbishment works done to business premises; The Federal Revenue of Brazil issued official gazettes that amend the Brazilian tax haven and privileged tax regime list. Singapore has been removed from the Brazilian list of tax havens but certain regimes have been added to the list of privileged tax regime list; The Chinese authorities jointly clarified the treatment and implementation requirements on the deferral treatment for withholding tax on direct re-investment by foreign investors using profits distributed from tax resident enterprises in China; Updates on the India Union Budget 2018 and US tax reform

For the period 16 October 2017 to 16 November 2017

The Income Tax (Amendment) Act 2017 was published on 26 October 2017; Extend the withholding tax exemption for payments pursuant to an Indefeasible Rights of Use (IRU) agreement for the use of, or right to use, international telecommunication submarine cable capacity; Specify the qualifying activities for the International Growth Company incentive; Amend the incentives for approved insurance brokers and the various insurance businesses.  Extend the incentive for qualifying project debt securities.

For the period 11 August 2017 to 15 October 2017

Amendments to the revenue legislation are passed in Parliament; The Inland Revenue Authority of Singapore (IRAS) fine tunes the tax treatment for service companies; The IRAS provides an overview of the application of Singapore’s avoidance of double taxation agreements; The IRAS releases additional information on the voluntary filing procedure for country-by-country reporting; The 2018 Dutch Budget was announced on 19 September 2017; New framework for US tax reform was released on 27 September 2017

For the period 10 June 2017 to 10 August 2017

Singapore signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) on 7 June 2017. The Economic Development Board of Singapore (EDB) released an update on the Intellectual Property Development Incentive (IDI) which was announced in the Singapore Budget 2017; The Ministry of Finance published the draft Income Tax (Amendment) Bill 2017 for public feedback on 19 June 2017; Indonesia issued a new Certificate of Domicile forms for Foreign Taxpayers which is effective 1 August 2017. It has also updated its controlled foreign company tax rules; Indonesia signed a joint declaration committing to implement the automatic exchange of financial account information with Switzerland and Hong Kong.

For the period 15 April 2017 to 9 June 2017

The Monetary Authority of Singapore (MAS) issued various circular relating to revisions to the Financial Sector Incentive Scheme and the Tax Incentive Schemes for Insurance Companies; The Ministry of Finance (MOF) issued the draft Goods and Services (Amendment) Bill 2017 and the draft Property Tax (Amendment) Bill 2017 for public feedback; The MOF and Singapore Customs proposed amendments to the Customs Act for public feedback; The 2017-2018 Australian Budget was announced on 9 May 2017; The US President announced his FY 2018 budget proposal to the US Congress on 23 May 2017.

For the period 1 March to 14 April 2017

The Inland Revenue Authority of Singapore increased the annual revenue threshold for waiver to file ECI and Form C-S to $5 million; The Stamp Duties (Amendment) Act 2017 was gazetted on 21 March 2017, which subjects the execution of a sale and purchase agreement for shares to stamp duty and introduces new additional conveyance duties to certain qualifying acquisitions and dispositions of equity interests in residential property holding entities; The Monetary Authority of Singapore announced the public consultation of the Singapore Variable Capital Company legislation on 23 March 2017; The Hong Kong Government gazetted the Inland Revenue (Amendment) (No. 2) Bill 2017 on 10 March 2017, which introduces a concessionary tax regime for the aircraft financing and leasing businesses in Hong Kong; UK's Budget was announced on 8 March 2017.

For the period 14 January to 28 February 2017

The Singapore 2017 Budget Speech was announced on 20 February 2017; The Third Protocol amending the existing tax treaty between Singapore and India entered into force on 27 February 2017; IRAS reminds taxpayers that all application for Certificate of Residence have to be e-filed from 1 June 2017; The Indian 2017 Union Budget was announced on 1 February 2017; The Hong Kong 2017-2018 Budget was announced on 22 February 2017.

For the period 1 December 2016 to 13 January 2017

Singapore and India have concluded a protocol to amend the tax treaty; The Income Tax (Amendment No. 3) Act 2016 was published on 29 December 2016; The Inland Revenue Authority of Singapore (IRAS) issued a revised circular on "Transfer Pricing Guidelines (Fourth edition)", which included a safe harbour margin which taxpayers can apply to each related party loan not exceeding S$15 million; The Indonesian Minister of Finance issued regulations on new Transfer Pricing Documentation requirements effective since 30 December 2016; Malaysia's Income Tax Act has been amended to add country-by-country reporting rules, effective from 1 January 2017.

For the period 1 September to 30 November 2016

The Income Tax (Amendment No. 3) Bill 2016 was published on 10 October 2016; The Inland Revenue Authority of Singapore (IRAS) has entered into agreements on the automatic exchange of information with various countries including Australia, Italy, Japan and Norway; The IRAS issued implementation guidance on Country-by-Country Reporting (CbCR); A new requirement for companies to report their related party transactions with effect from Year of Assessment 2018 will be introduced; The Income Tax Board of Review dismissed a claim for deduction of standby credit and facility fees on the basis that they were capital expenditure; Australia's High Court held that four offshore companies were actually controlled by the Australian resident accountant and therefore are subject to Australian income tax; The results of the US 2016 elections for control of the White House and Congress may provide opportunities for major tax law changes in 2017.

For the period 16 July to 31 August 2016

The Inland Revenue Authority of Singapore (IRAS) provided a list of documents that may be submitted to substantiate that the underlying tax has been paid on the income out of which foreign sourced dividend is paid; Australia: The Australian Tax Office has proposed a rating assessment scale for marketing and procurement hub arrangements; India: The protocol to the India-Mauritius tax treaty entered into force on 19 July 2016; Indonesia: The Indonesian Ministry of Finance issued regulations regarding the Tax Amnesty for taxpayers that indirectly hold assets through a Special Purpose Vehicle which is effective from 23 August 2016. The Indonesian Director General of Tax issued the implementing regulation of the Tax Amnesty Law on 29 August 2016.

For the period 1 June to 15 July 2016

The Income Tax (Amendment No. 2) Act 2016 was gazetted on 4 July 2016; Ministry of Finance issued draft Income Tax (Amendment No. 3) Bill 2016; The IRAS issued a draft circular "Proposed Income Tax Treatment Arising from the Adoption of FRS 109; MOF announced that Singapore will commit to implement Country-by-Country Reporting for financial years beginning on or after 1 January 2017 for multinational enterprises; MOF released guidelines on the new Business and IPC partnership scheme; The revised France - Singapore tax treaty was gazetted and entered into force on 1 June 2016; India: The Indian Central Board of Direct Taxes has established a working group to examine consequences arising from amendments to the Indian-Mauritius tax treaty; Indonesia: The Tax Amnesty Law was passed by the Indonesian Parliament on 28 June 2016; Philippines: The Philippine Bureau of Internal Revenue has issued a revenue memorandum order that sets out new procedures in claiming preferential tax treaty benefits.

For the period 15 April to 31 May 2016

The Monetary Authority of Singapore announced concession on tax deduction of up to 200% for issuance costs attributable to retail bonds; The Protocol to India's tax treaty with Mauritius has been signed; India: The Central Board of Direct Taxes issued an instruction providing that income from transfer of unlisted shares would be treated as ‘capital gains’ irrespective of period of holding; India: The Pune bench of the Income-tax Appellate Tribunal held on facts that treaty benefits could not be denied to a Singapore tax resident company in respect of royalty and interest income; Malaysia: The Inland Revenue Board of Malaysia released a public ruling explaining the rules for tax incentives for the venture capital industry; UK: The UK Supreme Court ruled in favour of the HMRC in a tax avoidance case.

For the period 16 February to 15 April 2016

The 2016 Budget Statement was delivered on 24 March 2016; The Income Tax (Amendment) Act 2016 was published on 11 April 2016; The Income Tax (Amendment No. 2) Bill 2016 was published on 14 April 2016; Australia: Australia has introduced a new 10% final withholding tax on the disposal of certain taxable Australian property by foreign residents; China: The final stage of the B2V Reform will be rolled out from 1 May 2016; India and UK: Country-by-country reporting regulations were introduced in the UK Budget 2016 and the India Union Budget 2016; US: The Internal Revenue Service and US Treasury proposed regulations that would treat debt instruments issued to related persons as equity in certain circumstances.

For the period 1 December 2015 to 15 February 2016

The Income Tax (Amendment) Bill 2016, Income Tax (Exchange of Information Arrangement) Order 2016 and the Goods and Services Tax (Amendment) Bill 2016 were published in the Government Gazette website on 25 January 2016; The Income Tax (Exchange of Information Arrangement) Order 2016 was issued on 21 January 2016; The Inland Revenue Authority of Singapore (IRAS) added a new FAQ to clarify that India's dividend distribution tax does not qualify for foreign tax credit; Singapore's respective tax treaties with Luxembourg, Ecuador, San Marino and Seychelles were ratified and entered into force; Australia: The Australian Taxation Office (ATO) issued guidelines that implement OECD standards for transfer pricing documentation and country-by-country reporting; India: The Indian Authority for Advance Rulings (IAAR) in a ruling dated 11 January 2016; Malaysia: The Malaysian Inland Revenue Board (IRB) released two Public Rulings to clarify the tax rules for loan transactions between related persons.

For the period 1 November to 11 December 2015

PwC Singapore launched a paper that makes recommendations to reform Singapore's tax system; The Ministry of Finance has accepted 31 of 70 consultation suggestions on the draft Income Tax (Amendment) Bill 2016; The IRAS updated its website content to clarify that the Temporary Employment Credit is taxable; Singapore-Russia DTA: Singapore and Russia signed a Protocol to amend the existing tax treaty; Australia: The Australian Parliament approved the multinational tax anti-avoidance bill on 3 December 2015; Taiwan: The legislature repealed a controversial capital gains tax on share trades by active investors before the tax ever entered into force.

For the period 1 September to 31 October 2015

IRAS issued a consultation paper on the income tax implications arising from the adoption of FRS 115. IRAS updated several webpages on Productivity and Innovation Credit (PIC); IE Singapore has released circulars on its website on the International Growth Scheme (IGS) and Double Tax Deduction for Internationalisation (DTDi); Australia: Multinational anti-avoidance legislation was introduced and would be effective on 1 January 2016 to tax certain non-residents as if they have a permanent establishment in Australia where certain conditions are satisfied; China: The State Administration of Taxation (SAT) released a draft circular that covers transfer pricing and anti-avoidance measures as well as country-by-country reporting (CbCR) requirements; Indonesia: The Minister of Finance introduced Debt to Equity Ratio for tax calculations purposes, applicable from fiscal year 2016; Malaysia: Budget 2016 was announced on 23 October 2015; International: The OECD released its final recommendations on the Base Erosion and Profit Shifting (BEPS) Action Plan.

For the period 1 August to 31 August 2015

The IRAS revised its website content to provide areas of focus for compliance and examples of specific compliance related mistakes and issues identified in its Compliance Focus Programmes; The Australian Treasury released exposure draft legislation to implement new OECD standards on transfer pricing documentation; China's State Administration of Taxation announced new tax measures to support the One Belt, One Road initiative; The Indian government has enacted rules for FATCA reporting and notified that the due date for 2014 reporting is 31 August 2015.

For the period 1 July to 31 July 2015

The IRAS revised its circulars on "Income Tax & Stamp Duty: Mergers and Acquisitions Scheme"; The Hong Kong government extended profits tax exemption for offshore funds to private equity funds, with retrospective effect; China's State Administration of Taxation issued a public notice (SAT Gong Gao [2015] No. 47) clarifying that with effect from 19 July 2015, the interest derived by an overseas branch of a Chinese bank from Chinese entities is not subject to withholding tax; The New Zealand government released an issues paper seeking feedback on the new bright-line test on the sale of residential property; The UK Budget, released on 8 July 2015, announced a tax rate cut and focused on tackling tax avoidance and aggressive tax planning.

For the period 1 May to 30 June 2015

Draft Income Tax (Amendment) Bill 2015 issued for public consultation; IRAS updates on the deductibility of reinstatement costs, tax concessions for listed real estate investment trusts; GST Board of Review case of GAQ v Comptroller of Goods and Services Tax; Singapore and Thailand signed a new tax treaty (to be ratified); Australia: The Australian Federal Budget for 2015/2016 was announced on 12 May 2015; China: The State Administration of Taxation announced administrative rules on cost sharing agreements, and on capital gains tax deferral and special tax treatment; Malaysia: The Malaysia tax authorities announced a tax amnesty programme; Thailand: The Thai Cabinet approved the draft Transfer Pricing Act; Switzerland: Swiss Supreme Court case concerning the application of the tax treaty concept of beneficial ownership to total return swaps; US: US Treasury releases proposed revision to the US model income tax convention; WTO: The World Customs Organisation issued a guide on the interaction between customs valuation and transfer pricing.

For the period 1 April to 8 May 2015

YA 2015 corporate tax filing forms are now available from the IRAS website; The IRAS has extended the FATCA reporting data to 31 July 2015 for Reporting Year 2014 only; China and Indonesia signed a memorandum of understanding regarding the interpretation of the interest article in the China-Indonesia tax treaty; The Indian government sent tax notices to foreign institutional investors demanding Minimum Alternative Tax of 18.5% of book profits until financial year 2014/2015; Malaysian Ministry of International Trade and Industry issued principal hub guidelines.

For the period 1 February to 31 March 2015

Singapore's Budget 2015 was announced on 23 February 2015; The IRAS has updated its website to include new content on examples of abusive PIC schemes, as well as PIC claims for automation equipment; China issued two public notices on overseas indirect equity transfers, and transfer pricing rules on services and royalty payments to overseas related parties; Hong Kong's Budget 2015/2016 was announced on 25 February 2015; India's Budget 2015 was announced on 28 February 2015; The United Kingdom announced its 2015 Budget on 17 March 2015.

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