Second reading of the Income Tax (Amendment No. 3) Bill 2016

On November 13, 2016 By taxsgIn General News, Income Tax Act, Latest Tax News, Legislative Updates

11 November 2016

The Income Tax (Amendment No. 3) Bill 2016 (Bill) was read for the second time by the Senior Minister of State for Finance and Law, Ms Indranee Rajah in Parliament on 10 November 2016.

The Bill encompasses income tax changes as announced in the 2016 Budget Statement, amendment on the implementation of the Country-by-Country Reporting, changes arising from periodic reviews of the income tax regime and suggestions accepted on the draft Bill from public feedback received in July.

To recap, the major changes outlined by Ms Indranee Rajah relate to the following:

Raising of the existing corporate income tax rebate from 30% to 50% of tax payable, with a cap of $20,000 rebate each year for Years of Assessment (YA) 2016 and 2017.

Enhancement of the M&A scheme to allow the 25% tax allowance on the first $40 million of the cost of qualifying share acquisitions incurred each year, up from $20 million.

Extension of the non-taxation of companies’ gains on disposal of their equity investments until 31 May 2022.

Extension of the Double Tax Deduction for Internationalisation scheme to 31 March 2020.

Capping of the total amount of personal income tax reliefs that an individual can claim at $80,000 per YA wef YA 2018.

Introduction of a pilot Business and Institutions of a Public Character (IPCs) Partnership Scheme from 1 July 2016 till end of 2018.

Implementation of Country-by-Country Reporting.

Other changes arising from the Ministry of Finance’s periodic review of the tax regime relate to:

Delinking of the income tax relief limit for CPF cash top-ups from the CPF top-up limit from 1 January 2016.

Granting of tax deduction of up to 200% for qualifying expenditure incurred on qualifying retail bonds issued from 19 May 2016 to 18 May 2021.

For further details, please refer to the Ministry of Finance’s website.

Source: Ministry of Finance

IRAS issues third edition of the GST guide on exports

On September 19, 2016September 19, 2016 By taxsgIn Corporate Tax, Goods and Services Tax, Goods and Services Tax Act

19 September 2016

On 19 September 2016, the Inland Revenue Authority of Singapore (IRAS) issued the third edition of the e-Tax Guide, “GST: Guide on Exports (3rd Edition)”.

This Guide explains the various circumstances and documentary requirements for which a supply of goods can be zero-rated.

A general principle for zero-rating exports of goods is that the supplier must, at the point of supply (to be determined based on the time of supply rules), be certain that the goods supplied will be/ has been exported, and the supplier has/ will have the required export evidence to substantiate the zero-rating of this supply.

The onus is on the supplier who zero-rates his exports of goods to support his GST declarations with export evidence. This includes:

Commercial transaction documents (e.g. customer’s order, sale invoice, delivery note, packing list, insurance documents, and payment received), and
Commercial transport documents (e.g. bill of lading, air waybill, export permit, or any other documents specified by the Comptroller in the Guide).

However, the Comptroller may request for documents and/ or impose conditions not specified in the Guide to support the zero-rating of supplies if it is assessed to be necessary.

In the third edition, the requirement regarding the indication of vehicle number in the export permit for exports via land was updated. For exports via land, the vehicle number should be indicated at the time the export permit is declared. If the vehicle number is not known at the point of the export permit declaration, the vehicle number could be stated on the supporting documents (e.g. invoice, delivery order, packing list upon collection of the goods) subsequently after the permit declaration.

The previous edition was published on 11 February 2016.

For full details, please refer the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.

Income Tax (Exchange of Information Arrangement) Order 2016 comes into operation on 1 May 2016 [S 34/2016]

On February 5, 2016 By taxsgIn Corporate Tax, e-Gazette, Legislative Updates

2 February 2016

The Income Tax (Exchange of Information Arrangement) Order 2016 was first published in the Government Gazette, Electronic Edition, on 25 January 2016 and comes into operation on 1 May 2016.

In the Order, the Declaration of Exchange of Information Arrangement states that Singapore is a party to the Convention on Mutual Administrative Assistance in Tax Matters.

The Schedule of the Order is listed as follows:

Chapter 1 – Scope of the Convention
Chapter 2 – General definitions
Chapter 3 – Forms of assistance
Chapter 4 – Provisions relating to all forms of assistance
Chapter 5 – Special provisions
Chapter 6 – Final provisions

Singapore signed the Convention on Mutual Administrative Assistance in Tax Matters on 29 May 2013.

Source: Government Gazette

Results of feedback on draft Income Tax (Amendment) Bill 2016

On November 25, 2015November 25, 2015 By taxsgIn Corporate Tax, Income Tax Act, Latest Tax News

24 November 2015

The Ministry of Finance (MOF) has, on 17 November 2015 accepted for implementation 31 of the 70 suggestions on the draft Income Tax (Amendment) Bill 2016 (formerly know as the Income Tax (Amendment) Bill 2015). The suggestions were received during the public consultation exercise held from 26 June to 24 July 2015.

According to the MOF, the remaining suggestions were not accepted for implementation as they are “inconsistent with the policy objectives of the proposed legislative changes”.

Key suggestions received that were accepted by the MOF where the Income Tax Act will be amended are summarised as follows:

Enhance the Double Tax Deduction (DTD) for Internationalisation scheme: In situations where an overseas entity bears the manpower expenses but subsequently recovers the salary cost from the Singapore entity, it is not clear if such recharges qualify.
Introduction of the International Growth Scheme (IGS): Current definition of “international growth company” does not include a company in Singapore that performs services to persons that are domiciled outside Singapore.
Extension and enhancement of the Maritime Sector Incentive (MSI): The proposed amendment to the definition of ‘international shipping enterprise’ should specify the minimal stake (i.e. the shareholding requirement) that the Singapore resident company should hold in the SPV in order to qualify as an international shipping enterprise.
Amend the provisions relating to implementation of Foreign Account Tax Compliance Act (FATCA): Ambit of subsection (2) of the draft section 105PA is very wide (i.e. the duty to provide information prevails over any duty of secrecy “whether imposed by written law, rule of law, any contract or any rule of professional conduct”) and could potentially cover common law legal professional privilege.

Amongst the suggestions rejected were:

Extension and refinement of the Mergers & Acquisitions (M&A) scheme: Unlike the other paragraphs under section 37L(4A), the proposed paragraph (d) does not specify a period of acquisition within which the acquisition of ordinary shares in a target company (by the acquiring company or an acquiring subsidiary) will qualify for tax deductions under the M&A scheme.

MOF’s response: The purpose of the insertion of paragraph (d) is to specify that any acquisitions made by an acquiring company (or its acquiring subsidiaries) can qualify for the M&A scheme, so long as the acquisitions are made within the same basis period when the acquiring company (and its acquiring subsidiaries) own more than 50% of the total number of ordinary shares in the target company. As companies have different basis periods, it is not meaningful to specify a date in paragraph (d).

Enhancement of the Double Tax Deduction (DTD) for Internationalisation scheme: The definition of “overseas establishment” requires a direct association between the Singapore firm or company, and the overseas establishment (e.g. subsidiary). This may be too restrictive, and the definition should be amended to include other entities that are not subsidiaries of the Singapore firm or company.

MOF’s response: Current definition already allows for an overseas entity that is not a subsidiary of the Singapore firm or company to qualify for the DTD scheme. There is no requirement for the overseas entity to be a subsidiary of the Singapore firm or company. The overseas establishment must be approved by IE Singapore.

Extension and enhancement of the Maritime Sector Incentive (MSI): Proposed new definition of “finance leasing” seems to suggest that there is a finance leasing of a container as long as there is a substantial transfer of obsolescence, risks, or rewards incidental to ownership of the container. Suggest replacing the word “or” with “and” in the definition of finance lease, to make clear that there is a finance leasing only if there is a substantial transfer of obsolescence, risks and reward.

MOF’s response: The definition of finance leasing is aligned with that used in other sections of the Act (e.g. sections 10D, 13S, 43Y and 43ZA). MOF will also review the definition of finance leasing when the new Financial Reporting Standard on leases is released by the Accounting Standards Council.

For further details, please refer to the MOF’s website.

Source: IRAS, MOF

Stamp Duties (Shipping Investment Enterprise) (Remission) (Amendment) Rules 2015 deemed to have come into operation on 24 February 2015 [S 524/2015]

On September 17, 2015 By taxsgIn e-Gazette, Legislative Updates

15 September 2015

The Stamp Duties (Shipping Investment Enterprise) (Remission) (Amendment) Rules 2015 were first published in the Government Gazette, Electronic Edition, on 31 August 2015.

Rule 3 (Remission of Duty) of the Stamp Duties (Shipping Investment Enterprise) (Remission) Rules 2014 (G.N. No. S 99/2014) is amended by deleting the words “1st March 2011 to 31st May 2016” and substituting the words “1 March 2011 to 31 May 2021”.