Singapore Signs Agreement for Avoidance of Double Taxation with Tunisia

Singapore and The Republic of Tunisia signed an Agreement for the Avoidance of Double Taxation (DTA) on 27 February 2018.

Some of the withholding tax rates under the DTA are as follows:

Dividends — 5%. Since Singapore’s domestic withholding rate for dividends is nil, dividends will be exempt from withholding tax in Singapore.

Interest — 5%/10%. Exempted from tax if paid between the specified relevant government authorities of the contracting states. 5% if received by banks or similar financial institutions; 10% in all other cases.

Royalties — 5%/10%. The 5% rate applies to payments of any kind received in
consideration for technical services.

The DTA is currently awaiting ratification and does not have the force of law. The full text of the DTA is available on IRAS’ website.

Download Crowe Horwath’s Singapore Budget 2018 Newsletter

How can Singapore adapt and thrive in a rapidly-changing world? 

Budget 2018 seeks to address this question by providing support to businesses and individuals to overcome the challenges and capture the opportunities arising from shifts in the global geo-political landscape, the emergence of new technologies and an ageing society.

In this newsletter, we provide a summary of some of the initiatives and tax changes announced in Budget 2018.

Download Crowe Horwath Singapore Budget 2018 Newsletter here.

IRAS Updates e-Tax Guide on Renovation and Refurbishment Works

The Inland Revenue Authority of Singapore has updated its e-Tax Guide on tax deductions for expenses incurred on Renovation or Refurbishment (R&R) works done to business premises, with the inclusion of four (4) additional qualifying items:

  1. Hacking works on premises
  2. Water meter installed to enable renovation works
  3. Hoarding works
  4. Insurance for renovation works qualifying for Section 14Q deduction*

*Section 14Q was introduced into the Income Tax Act to assist especially small and medium enterprises reduce business costs by allowing tax deductions for qualifying R&R costs incurred that may otherwise be non-deductible.

IRAS also clarified that expenditure incurred by “any works carried out to a place of residence provided to or to be provided to employees”, is not eligible for Section 14Q deduction claims.

For further details, please refer to IRAS’ e-Tax Guide.
Source: Inland Revenue Authority of Singapore

Simplified Statement of Claims Form for Qualifying Funds with Effect from 1 July 2018

The Inland Revenue Authority of Singapore (IRAS) has updated its website on claiming Goods and Services Tax (GST) on expenses for qualifying funds, to include a simplified statement of claims form that they will be required to submit via myTax Mail in order to process their claims, with effect from 1 July 2018.

According to IRAS, with the new simplified statement of claims form, qualifying funds will only be required to complete a 3-line statement of the GST claims. Previously, they were required to provide a detailed categorization of them.

Supporting documents are not required to be filed unless requested by IRAS.

What are the Documents Required for First Time Submission?

From 1 July 2018, qualifying funds submitting their Statement of Claims for the first time are required by IRAS to provide the following documents together with their Statement of Claims:

  1. Approval letter from MAS (except those funds under 13C, 13G, 13CA and DUT)
  2. MAS annual declaration / self-assessed declaration form (if any)
  3. Appendix 1 of the simplified Statement of Claims

Quick Link:
Simplified Statement of Claims Form (IRAS)

For further details, please refer to IRAS’ website.

Source: Inland Revenue Authority of Singapore

Transfer Pricing: IRAS Updates Indicative Margin on Related Party Loans Not Exceeding S$15 Million.

The Inland Revenue Authority of Singapore (IRAS) recently updated the indicative margin which taxpayers can apply on each related party loan not exceeding S$15 million provided or obtained during the period from 1 January to 31 December 2018. The indicative margin will be updated by IRAS at the start of each calendar year as shown below.

A. For related party loans not exceeding S$15 million obtained or provided during the period 1 January 2017 to 31 December 2017:

Indicative Margin: +250 bps (2.50%)

B. For related party loans not exceeding S$15 million obtained or provided during the period 1 January 2018 to 31 December 2018:

Indicative Margin: +175 bps (1.75%)

While the indicative margin is optional, it allows taxpayers an alternative to carrying out detailed transfer pricing analysis in compliance with the arm’s length principle for their related party loans.

For further information on the rules regarding the application of the indicative margin, please refer to IRAS’ Transfer Pricing Guidelines.

Source: Inland Revenue Authority of Singapore