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You and the Taxman Insights on tax issues that matter Issue 1, 2015

Singapore releases revised transfer pricing guidelines

Suite of incentives to boost local hotel sector

What future holds for tax revenue collection

Helping SMEs take a bigger leap

Highlights of the 2015 Malaysian Budget

Life sciences: re-envisioning the tax function

Tax deductibility of interest

You and the Taxman

3 | You and the Taxman Issue 1, 2015

Issue # – Month Year

1You and the Taxman Issue 1, 2015 |

Just barely into the new year, the Inland Revenue Authority of Singapore (IRAS) released a set of revised transfer pricing guidelines, marking a new era in the evolution of transfer pricing in Singapore. The revised guidelines, released on 6 January 2015, comes nine years after transfer pricing guidelines were

length principle. The 2015 guidelines consolidates all previous IRAS circulars and guidelines related to transfer pricing and

taxpayers with regards to transfer pricing compliance.

The most striking feature of the 2015 revised guidelines is the requirement for taxpayers to maintain contemporaneous transfer pricing documentation. “Singapore releases revised transfer pricing guidelines” provides greater detail on what you need to know about the revised guidelines and how these developments will impact your reporting and compliance.

This year’s Budget announcement takes place on 23 February 2015. In a series of pre-Budget articles, we delve into some areas where Singapore’s tax regime can be enhanced. In addition, what does the future portend as Singapore celebrates her 50th anniversary?

“Suite of incentives to boost local hotel sector” examines what other tax incentives can be introduced

” discusses the tax and accounting issues container ship operators face as the enter into ship pooling alliances to save costs.

“What future holds for tax revenue collection” examines recent trends in Singapore’s collection of tax revenue and discusses where future sources of revenue might have to come from. The broad-based appeal of GST makes it a likely candidate.

Small and medium-sized enterprises (SMEs) play an important role in contributing to economic growth. Lending a helping hand to these enterprises is critical to take them to their next phase of growth. “Helping SMEs take a bigger leap” recommends policy-making centred around SMEs to improve the

In developments abroad, “Highlights of the 2015 Malaysian Budget” discusses key changes in ” dissects

Meanwhile, “ ” discusses how operational realignment is affecting the way life sciences companies are structuring

Lastly, “Tax deductibility of interest” covers the points of view of the the Board of Review, High Court and Court of Appeal on the question of the tax deductibility of interest on bonds in the case of BFC v Comptroller of Income Tax.

Have a good read.

Tax

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Mrs Chung-Sim Siew MoonPartner and Head of Tax Ernst & Young Solutions LLP


You and the Taxman

04 Singapore releases revised transfer pricing guidelines Revised transfer pricing guidelines issued in January

2015 provide greater clarity and transparency to taxpayers with detailed guidance on the requirement for taxpayers to maintain contemporaneous transfer pricing documentation.

09 Suite of incentives to boost local hotel sector Incentives by the Singapore Tourism Board and

the Government are important enablers to create a vibrant and thriving hotel sector, which is a key pillar of support to Singapore’s tourism industry.

12 Ship-pooling alliances offer container-ship operators

cost savings and economies of scale. However, they also need to be aware of tax and accounting considerations when entering into these arrangements.

14 Singapore continues to collect record tax revenue,

but the rate of growth has been declining. A future key source of additional tax revenue might have to come from GST.

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Issue 1, 2015



Managing editor: Chung-Sim Siew Moon

Editor: Russell Aubrey

Contributors: Aw Hwee Leng Helen Bok Chionh Huay Kheng Luis Coronado Daniel Dickinson Richard Fonte Goh Siow Hui Shekaran Krishnan Lim Gek Khim Latha Mathew Anil Kumar Puri Henry Syrett Sheryl Tan Tan Lee Khoon Teh Swee Thiam Editorial: Karen Lew

Design: Irene Lee

Email: [email protected]: www.ey.com/sg

For more information on the articles published in this issue, please contact:

The EditorYou and the TaxmanErnst & Young Solutions LLP

North Tower, Level 18Singapore 048583Tel: +65 6535 7777Fax: +65 6532 7662

Editor note: You and the Taxman is published exclusively for clients of Ernst & Young Solutions LLP. Although every care has

advice for clients’ particular circumstances. Readers are advised to contact Ernst & Young Solutions LLP for more details and any update on the topics discussed in any of our publications before taking action based on the advice and views expressed by

Ernst & Young Solutions LLP tax executive who handles your tax affairs.

MCI (P) 154/12/2014

Printed by Hock Cheong Printing Pte Ltd

16 Helping SMEs take a bigger leap Government support is critical

in creating an environment for small and medium-sized enterprises (SMEs) to thrive. An SME-based policy holds the key to catalyse the growth of SMEs.

Elsewhere outside Singapore

19 Highlights of the 2015 Malaysian Budget

The 2015 Malaysian Budget introduced several changes including the expanded scope of supplies not subject to GST, corporate tax incentives for selected industries and expenditure, increased statute of limitation for transfer pricing adjustments and increase in real property gains retention sum.

22 UK moves ahead with diverted

will result in increased compliance and will have implications on Singapore companies

In conversation with

25 Life sciences: re-envisioning the

Rapid growth and operational realignment is impacting the way life sciences companies think about their tax function operating

Lessons in case law

29 In the case of BFC v Comptroller of Income Tax, the question of whether discounts and redemption premiums on bonds was “interest” took centre stage in the Court of Appeal.

At a glance

34 This section lists the latest Inland Revenue Authority of Singapore

e-Tax guides, Monetary Authority of Singapore circulars and treaties signed


On 6 January 2015, the Inland Revenue Authority of Singapore (IRAS) released revised transfer pricing guidelines (2015 Singapore TP guidelines). The release

follows the issuance of a public consultation paper on 1 September 2014, which had generated much interest and response from Singapore taxpayers.

The release of the 2015 Singapore TP guidelines is

Singapore’s transfer pricing landscape since the IRAS

ago and the legislation of the arm’s length principle six years ago.

The release is in line with the IRAS’ increasing focus on transfer pricing. In the past year, we have observed a marked increase in transfer pricing queries and consultations from the IRAS across different types of transactions. In addition, there has been a build-up of transfer pricing expertise within the IRAS through the years, from structured training (including training by the Organisation for Economic Development and Co-operation (OECD)) and from transfer pricing consultation or audit cases.

Correspondingly, the IRAS has strengthened its transfer pricing manpower resources. Particularly for Advanced Pricing Arrangements (APA), the IRAS has expanded resources to meet increasing APA applications from taxpayers. With more than 50 APAs completed to date (including APA renewals), the IRAS is well-experienced in handling APA cases. At an international level, the IRAS is active in participating at OECD discussions and other forums that shape the direction of transfer pricing policies globally.

The increased emphasis placed by the IRAS on transfer

in the media have put transfer pricing in the spotlight globally. Major multinational companies have found themselves exposed and accused of using transfer

(BEPS). To address increasing government concern that multinational companies are reducing tax liabilities through BEPS activities, the OECD initiated an action

plan to tackle BEPS in July 2013 with a mandate from the G20. The action plan consists of 15 actions, four of which relate to transfer pricing. Of these four, the OECD released two transfer pricing deliverables on 16 September (Action 8 on transfer pricing for intangibles and Action 13 on transfer pricing documentation and Country-by-Country (CbC) reporting).

In this regard, the OECD has created an expectation that taxpayers will prepare appropriate transfer pricing documentation (TP documentation) to demonstrate transfer pricing compliance. Translating this to a country level, taxpayers would like to manage their compliance burden but also to have clarity on what is required so as to be considered compliant.

The 2015 Singapore TP guidelines is a 102-page document that consolidates all previous circulars and guidance provided by the IRAS relating to transfer pricing and provides further guidance on the IRAS’ position on additional transfer pricing matters, such as the passing of taxpayers’ self-initiated adjustments. Whilst the release of the document is not a direct reaction to the OECD’s releases, the guidance should be seen as a welcome

with respect to transfer pricing compliance.

Introduction of contemporaneous documentation requirements

The most striking aspect of the 2015 Singapore TP

contemporaneous TP documentation to be maintained by the taxpayer. In other words, taxpayers are required to prepare documentation to support transfer pricing positions and have this in place (at the latest) by the

reporting obligations. Some countries including China, require certain taxpayers to actually submit transfer

in countries like Indonesia and Vietnam, the rules require

to their annual income tax return, which includes various disclosures on the state of the company’s transfer pricing.

Singapore releases revised transfer pricing guidelinesLuis Coronado and Henry Syrett analyse the impact of revised transfer pricing guidelines on Singapore taxpayers



“The most striking aspect of the 2015 Singapore TP

that the IRAS requires contemporaneous TP documentation to be maintained by the taxpayer.“


Apart from cases in which the threshold values are not exceeded, TP documentation is also not required in the following four situations:• Where the taxpayer transacts with a

related party in Singapore and such local transactions (excluding related party loans) are subject to the same Singapore tax rates

• Where a domestic loan is provided between the taxpayer and a related party in Singapore and the lender is not in the business of borrowing and lending

• Where the taxpayer applies the safe harbour 5% cost mark-up for routine services

• Where the related party transactions are covered by an agreement under an APA with the IRAS (an annual compliance report is still required in the case of an APA)

Outside these threshold levels and specific situations, the IRAS expects taxpayers to evaluate and decide whether TP documentation is necessary for the purpose of complying with different TP documentation rules of other tax authorities.

Introduction of guidance around adjustments

In the 2015 Singapore TP guidelines, the IRAS has given guidance on categories of adjustments and when these should be considered by the taxpayer, including proposed treatment of taxable or allowed adjustments.

Adjustments may result from business reasons such as changing mix of product sales or significant over-or-underperformance of business segments. In addition, adjustments may also result from a taxpayer’s own review of past transfer pricing practices and finding gaps in pricing versus policy. The fact that IRAS has provided such guidance on adjustments may be interpreted as an invitation for taxpayers to get their past years pricing in order.

Four types of transfer pricing adjustments are provided in the 2015 Singapore TP Guidelines. The most common type of transfer pricing adjustments for taxpayers is generally a year-end adjustment made before closure of accounts. If taxpayers fulfill the IRAS conditions on proper transfer pricing documentation and analyses, the IRAS will tax upward adjustments and allow downward adjustments. Otherwise, upward adjustments will be taxable but downward adjustments will not be allowed.

The next types of adjustments are compensating adjustments and corresponding adjustments that relate to APA and Mutual Agreement Procedures (MAP) respectively. For these two types of adjustments, the IRAS will tax upward adjustments and allow downward adjustments based on the negotiated APA or MAP pricing outcome. For corresponding adjustments specifically, these will only be possible where there is a Double Taxation Agreement Treaty (DTA) in place and taxpayers have applied for the MAP provided in that tax treaty and such an application is accepted by the IRAS and

The IRAS does not require the taxpayer to submit the transfer pricing documentation with the tax returns. Instead the 2015 Singapore TP guidelines require that the documentation be submitted to the IRAS within 30 days upon request. TP documentation should be dated upon preparation. These are new requirements that suggest to taxpayers that they should ensure their TP documentation is prepared in advance and ready for submission.

As mentioned, TP guidelines have been in existence in Singapore since 2006. In

additional burden for taxpayers who have already prepared appropriate TP documentation. In addition, the 2015 Singapore TP guidelines prescribe certain cases in which taxpayers are exempted from TP documentation. These exceptions may reduce the administrative burden for taxpayers.

One of the exceptions is the introduction of thresholds, which should be applied based on each type or category of related party transactions on an annual basis. Taxpayers need to aggregate across both cross-border and domestic related party transactions when applying these thresholds. These thresholds are stated in the table below:

Category of related party transactionsThreshold (S$) per financial year

Purchase of goods from all related parties 15m

Sale of goods to all related parties 15m

Loans owed to all related parties 15m

Loans owed by all related parties 15m

All other categories of related party transactions. Examples:• Service income• Service payment• Royalty income• Royalty expense• Rental income• Rental expense

For the purpose of determining if the threshold is met, aggregation should be done for each type or category of related party transactions. For example, all service income received from related parties is to be aggregated.

1m per category of transactions



the foreign tax authority. In this regard, for jurisdictions where Singapore does not have a DTA, for example in the US and Hong Kong, no corresponding adjustments are possible.

The last type of adjustment, taxpayer self-initiated retrospective adjustments, is one of the distinguishing features of the Singapore approach and encourages taxpayers to be more proactive in their transfer pricing positions. Self-initiated retrospective adjustments refer to adjustments arising from taxpayers’ own review of their past transfer pricing practices. In this case, the IRAS will tax upward adjustments and allow downward adjustments. In the absence of contemporaneous TP documentation, upward adjustments will be taxable but downward adjustments will not be allowed.

Attribution of profits to permanent establishments

With regards to attribution of profits to permanent establishments (PEs), the IRAS’ position is that no further profits over and above what the Singapore business is receiving as arm’s length remuneration, should be attributed to a PE in the event a PE of a foreign company is found to exist in Singapore. The 2015 Singapore TP guidelines list a few conditions for this to be met:• The taxpayer receives an arm’s length

remuneration from its foreign related party that is commensurate with the functions performed, assets used and risks assumed by the taxpayer

• The remuneration paid by the foreign related party to the taxpayer is supported by adequate TP documentation to demonstrate compliance with the arm’s length principle

• The foreign related party does not perform any functions, used any assets or assumed any risks in Singapore, other than those arising from the activities carried out by the taxpayer

The IRAS’ clarification on PE is welcomed as it encourages taxpayers to include in their tax and transfer pricing strategies the mitigation of PE exposures taking in view the IRAS position on attributing profits to PE.

Comparison to OECD’s documentation guidance

As noted earlier, the release of the 2015 Singapore TP guidelines coincides with the OECD discussions surrounding the BEPS action plan. In fact, the 2006 Singapore TP guidelines already advocated a group and local file approach, which is similar to the latest guidance from the OECD. Since the 2015 Singapore TP guidelines have further advocated this approach, they are broadly aligned with the proposals put forth in the OECD Action 13 report.

Taxpayers are expected to present significant information pertaining to its global group on one level, and on the other level, some very specific information relating to the local entity’s operations. Where the 2006 guidelines were broader in terms of approaches to documentation, the 2015 Singapore TP guidelines are far more specific with regards to the type of information to the included in TP documentation. Specifically, unlike the 2006 Singapore TP guidelines, the 2015 Singapore TP guidelines require:• Group-wide information on “important

drivers of business profits” and group-wide analysis of contributions to value chain by each related party in the Group

• Explanation of any important changes to the Group business model such as restructuring, acquisition or divestiture

• Entity (Singapore) level information on management structure, local business model and business strategy, industry dynamics, description of all related party transactions and functional profile of entity for each related party transaction

In this regard, the format and content of the documentation under the 2015 Singapore TP guidelines may differ from what taxpayers currently have in place. Taxpayers will need to consider if existing documentation comply with the new regulations.

A notable omission in the 2015 TP Singapore guidelines compared to OECD is the need to prepare a CbC reporting template. By the OECD’s own admission, this is one of the most controversial aspects of the whole BEPS project and attracted more public comments than any other aspect of the plan.

The main controversy stems from the need for taxpayers to provide significant extra-territorial information to local tax authorities. Whilst the IRAS does require documentation to include certain extra-territorial information in its disclosures on group level information, it has stopped short of requiring taxpayers to prepare and provide a CbC reporting template similar to that proposed by the OECD. As the preparation of CbC reporting template may be an onerous process for taxpayers, its omission in the 2015 TP Singapore guidelines helps to reduce administrative burden for the taxpayers, particularly in the area of information and data collection.

Tax authorities may be waiting for the outcome of the OECD’s February 2015 meeting before introducing such requirements. This meeting has been proposed to conclude on the way to file and share the CbC reporting template, preserving the confidentiality of the document. Whilst the IRAS may not be introducing CbC requirements, we expect that many countries will implement the country by country report. Singapore businesses should still review their IT systems to see whether they can retrieve the data requested as they may still be required to prepare the template for submission overseas.


Luis Coronado Partner, Transfer [email protected]

Henry SyrettPartner, Transfer [email protected]

Contact us

Taxpayers should start to collect financial data on the quantum of related party transactions and consider whether these transactions exceed the thresholds provided and are not covered by other exceptions. For taxpayers with existing TP documentation, they should prepare a gap analysis on aspects of the existing TP documentation that need to be expanded and review other “internal” documents relating to intercompany transactions. In addition, taxpayers may wish to review their current year TP practices and results and consider whether periodic or year-end adjustments are necessary.

While the IRAS has stated that it would accept as contemporaneous documentation any documentation prepared no later than the tax return filing date, preparing documentation after a significant time lag from the close of the financial year may result in taxpayers reacting to any gaps and defending their transfer prices retrospectively. Rather, it is advisable for taxpayers to adopt a real-time approach to preparing documentation in order that related party transactions are supported by documentation prior to or at the time these transactions are undertaken.

The 2015 Singapore TP guidelines expanded on the original 2006 Singapore TP guidelines and addressed details that were not previously discussed. Overall, we welcome the release of the 2015 Singapore TP guidelines, which provide more clarity and transparency for taxpayers with its detailed guidance.

This article was written for publishing in the Bloomberg BNA issue of the Tax Management International Journal.

Consequences of incomplete documentation

A recurring theme in the 2015 Singapore TP guidelines is that if taxpayers do not have appropriate TP documentation in place, the IRAS may not be as supportive of the transfer pricing positions of the taxpayer. In the case of double taxation, the IRAS may not support the taxpayer’s request for MAP. Similarly for an APA, the IRAS may not accept the APA application if the taxpayers do not meet TP documentation requirements. Furthermore, should taxpayers make transfer pricing adjustments, the IRAS may not accept these adjustments in the absence of contemporaneous TP documentation.

In this regard, the 2015 Singapore TP Guidelines serve as a “wake-up” call from the IRAS to taxpayers informing them of the increasing global scrutiny on transfer pricing practices.

What is next?

The 2015 Singapore TP guidelines are seen as a consolidation and update of the 2006 Singapore TP guidelines and related circulars, and so have an immediate effect. Practically, the tax return filing deadline for the financial year (FY) 2013 has recently passed. Although not explicitly stated by the IRAS, the first year for which taxpayers should prepare TP documentation in line with the 2015 Singapore TP guidelines would logically be FY 2014. That said, for queries relating to previous FYs, the IRAS may still request taxpayers to provide TP documentation to support their pricing policies.



Singapore tourism has grown by leaps and bounds since the nation was formed 50 years ago. The number of visitors has swelled, from 90,000 in 1964 to 15.6m in 2013, said the

Singapore Tourism Board (STB).

The hotel industry, which is a key supporting pillar of

estimated to be S$1.6b, a rise of 9.1% from the same period the previous year.

Recognising the hotel industry’s contribution to tourism in Singapore, the STB offers assistance to the industry through various grants, tax incentives and resources.

Its grants include the Business Improvement Fund (BIF), the Tourism Technology Fund (TTF) and the Training Industry Professional in Tourism (TIP-iT).

These grants can help fund up to 50% of projects that are aimed at helping companies enhance their business models and processes, encourage technology innovation and adoption, upgrade employee skills, and develop talent and leadership.

Hotels enjoy several tax incentive schemes as well. These include the double tax deduction on expenses incurred for participating in certain local and overseas trade fairs, as well as the enhanced tax deduction under the Productivity and Innovation Credit (PIC) scheme for leasing or acquisition of information technology and automation equipment, and training of employees.

However, the hotel industry continues to face challenges. In this highly labour-intensive industry, the slowing growth rate of the workforce in Singapore could mean a worsening of the current labour crunch that many hotels face.

Further, with more technologically savvy and discerning “millennial travellers”, hotels have to cater to new and distinctive travel preferences, such as a need for speed,

penchant for unique experiences.

mean hotels will have to innovate and reposition themselves to retain the former and appeal to the latter.

Meeting this challenge will require a multi-pronged approach. Hotel redesign, advocated by the STB and industry associations, is one of the ways to innovate. Hoteliers throughout the world are revisiting their business concepts and models, and rediscovering the

to enhance customer experience and deliver more

the physical layout of hotels and rolling out more technological innovations such as digital check-ins or smartphone-activated room keys.

Another strategy is to attract and develop “millennial talent” who will be able to understand the desires of fellow millennial travellers and develop products and services that will resonate with them.

Suite of incentives to boost local hotel sector

Tan Lee Khoon and Helen Bok explore how tax incentives can encourage the hotel sector to pursue innovation and further develop talent


Possible tax perks

While Singapore has existing grants and incentive schemes to support these initiatives, perhaps more can be done in this year’s Budget announcement

to embrace innovation and further develop talent.

The reintroduction of the Hotel Refurbishment Incentive for hotels, which was discontinued in 2003, could be of help. Currently, Singapore hoteliers face huge challenges when they carry out major renovation or refurbishment

costs incurred may not enjoy any tax-

If a revamp of the hotel layout is needed to introduce innovative concepts or make better use of technology, the Hotel

tuning, would help to defray the costs of such a makeover.

Here, allowing an enhanced tax depreciation claim of up to 150% of the renovation costs for approved projects would be welcomed.

The Government can also consider

scheme, which is currently administered by the Economic Development Board, where tax depreciation is granted on qualifying industrial buildings or structures.

The current LIA scheme is aimed at

and higher-value-added activities.

hotel industry in land-scarce Singapore, aimed at encouraging hotels to locate themselves in outlying areas (instead of prime locations) could be introduced.

This could also spur hotels to come up with innovative products or unique service experiences to attract clientele to stay at such locations.

There is also an opportunity to further develop local hotel brands to inject greater vibrancy to the sector and enable local brands to go abroad. The Government can support this through co-investment in ventures, grant funding or tax breaks to encourage the conceptualisation and development of local brands, with the condition that the intellectual property (IP) of such local brands must be registered in Singapore. This will also strengthen Singapore as an IP hub.

Expanding on existing schemes and incentives, the Government could perhaps consider allowing double tax deductions or PIC-enhanced tax deductions on the remaining project costs, which are not supported by the grants approved under the BIF, TTF and TIP-iT. From a manpower perspective, other than training and development support, the grant or tax incentive schemes could also be expanded to include recruitment assistance for hoteliers to attract millennial talent and enable the development of local talent.

Singapore’s tourism industry has enjoyed

decades. Taking it to the next level of sustainable growth will require a vibrant and thriving hotel sector.

To that end, incentives by the STB and Government are important enablers. Their continued support through various tax and non-tax initiatives, greater collaboration among the hotel industry and other tourism players, and innovation by all will be key to unlocking greater economic potential.

published in TODAY (Singapore) on 21 January 2015

Tan Lee Khoon Partner, Tax Services [email protected]

Helen Bok Partner, Tax Services [email protected]

Contact us


“While Singapore has existing grants and incentive schemes to support these initiatives, perhaps more can be done in this year’s Budget announcement

our hotels to embrace innovation and further develop talent.”


The seas are turning into a high-stakes battle for market share as container ship carriers enter into marriages of convenience to harness economies of scale. Over the past few years,

the world’s largest container lines have forged shipping alliances, sharing port facilities in key transportation hubs and pooling services in the world’s busiest trade routes.

In 2011, six of the world’s leading carriers formed the G6 alliance to provide faster transit times and greater port coverage in the Far East-to-Europe and Far East-to-Mediterranean routes. In 2014, the two-carrier 2M alliance was established after clearing regulatory hurdles. This alliance will pool together 185 ships on the

Meanwhile, the Ocean Three pact is pending regulatory approval. Formed by three of the world’s largest container shipping lines, the Ocean Three’s entry will heat up the battleground for major trade lanes between Asia, Europe and the US.

Overcapacity has plagued the container shipping industry in recent years. Amidst a slow global recovery, freight rates have remained depressed, despite a decrease in idle capacity. As a recovery is not expected until 2016, the immediate focus for carriers is cost containment rather than revenue generation. Participating in vessel sharing alliances has therefore become a crucial strategy to tide over the current challenging environment.

Entering into a ship-pooling alliance enables container-ship operators to achieve costs savings by better utilising ships and controlling costs per container shipped. Carriers are also able to offer more frequent services and serve more ports. Technology will be critical to improve processes and delivery.

Other niche carriers have also entered into ship pooling agreements to manage capacity and costs, albeit on a smaller scale. To some, this is survival.

One of the world’s busiest ports, Singapore has built on its advantageous geographical location as a vital node connecting East Asia with Europe, Africa, the Middle East and South Asia. It offers links to more than 600 ports in over 120 countries. Singapore’s maritime ecosystem comprises over 5,000 companies, employs over 170,000 people and contributes about 7% to the economy. More than 130,000 ships call at Singapore every year.

Singapore’s success as a choice port of call is not by accident. Over the years, the tax legislation has been

business needs to help anchor a vibrant maritime cluster. For example, the Singapore Maritime Sector Incentive (MSI) scheme offers tax concessions for companies involved in international shipping operations, maritime leasing and shipping support services.

Still, challenging conditions remain and carriers need

demanding customers. While ship pooling agreements

carriers also need to be aware of tax and accounting considerations.

Navigating taxes

A key tax consideration for parties that are entering ship pooling arrangements is whether a permanent establishment has been created in Singapore’s shores. For example, foreign shipping companies that wish to enter into ship pooling agreements managed by a pool entity or commercial manager in Singapore would have to consider if these agreements could create a taxable presence in Singapore.

Another issue is the taxation of income derived from ship pooling arrangements. How will the income be split among the parties and how will it be taxed? Will the income also qualify for tax exemption? While the tax exemption under the MSI covers a wide range of

accounting challenges

Shekaran Krishnan and Goh Siow Hui discuss the tax and accounting considerations container ship carriers face when entering into ship pooling alliances


“A key tax consideration for parties that are entering ship pooling arrangements is whether a permanent establishment has been created in Singapore’s shores.”

shipping operations, generally, it does

There have been minimal tax changes in Singapore’s maritime industry in

shipping sector.

As ship pooling arrangements become more common, Singapore’s tax legislation may need to evolve. As collaboration in

is welcomed to further anchor Singapore as a leading international maritime centre.

Besides tax considerations, new accounting standards are on the horizon for players in the shipping industry. The

lease accounting standard, which is now at an exposure draft stage and is likely to be formalised within the next two years.

Shekaran Krishnan Partner, Assurance shekaran.krishnan@ sg.ey.com

Goh Siow Hui Partner, Tax Services [email protected]

Contact us

This new standard will require companies to bring operating leases onto their balance sheet. Operating leases have traditionally been kept off the balance sheet and this new standard will have implications

Companies will need to renegotiate with their lenders and consider how the new standard will impact their income and balance sheet position.

Asset intensive companies such as ship owners may have to re-evaluate their lease and buy strategies. This standard may also result in tax implications in some jurisdictions. Ship carriers will need to navigate these new uncharted waters carefully.

published in The Business Times on 4 December 2014


Tintertwined with the state of the economy.

The argument goes that cash will continue to

to grow. Singapore’s tax revenue has already swelled to

we expect records to be busted each year?

Singapore’s economy grew 4.1% and 2.8% in 2013

growth currently stands at 2-4%.

The Inland Revenue Authority of Singapore (IRAS), the government’s main tax collection agent, collected S$41.6b in tax revenue in the most recent 2013/2014

decade ago. This accounted for about 73% of total government operating revenue, excluding interest income, investment income and capital receipts.

Let’s get a bigger picture of the state of our tax affairs. The total tax revenue, which includes other taxes not collected by the IRAS, has grown steadily each year,

S$37.7b in 2008/2009. This represents growth of

However, the annual growth rate in the total tax revenue

9% in 2012/2013. Interestingly, the annual growth rate in the taxes collected by the IRAS has also declined and

contribution of total tax revenue to total government operating revenue also dropped from 91.8% in the

Singapore has always aimed to have a broadbased tax system. The components of our tax revenue — corporate income tax, individual income tax and goods and services tax (GST) — have contributed the lion’s share of receipts, comprising about 62% to 65% of total tax revenue.

Property tax, stamp duty, betting taxes, customs and

remaining gaps.

The breakdown between the three main tax types has remained relatively constant. Corporate income tax, individual income tax and GST accounted for 28% to 31%, 14% to 17% and 17% to 20% of total tax revenue, respectively during the 2008/2009 to 2012/2013

In Hong Kong, the Internal Revenue Department (IRD) collected HK$243.5b (S$42b) in tax revenue (comprising mainly direct taxes and stamp duties) for the 2013/2014

tax, while salaries tax and stamp duty contributed around 23% and 17%, respectively.

Appeal of GST

Singapore, like other developed nations, is faced with the twin challenges of an ageing population and a declining birth rate. Moreover, the fate of her economy is closely linked with that of the global economy, which is generally experiencing a slower pace of growth.

Singapore may have ample reserves, but a rapidly ageing society could eat into those savings in coming years as more funds have to be spent on social programmes.

it does not spend beyond its means, where else can Singapore look to, to raise revenue for future needs?

Tweaking the corporate and personal taxes is a balancing act, taking into account the need to remain competitive for foreign direct investment and to retain and attract talent.

Could GST then be the most likely source of more tax revenue? The government has indicated in the last general election in 2011 that there should not be any GST hike, at least until the next nationwide poll.

What future holds for tax revenue collection

Lim Gek Khim and Teh Swee Thiam analyse recent trends in tax revenue collection and discuss where future sources of tax revenue are likely to come from


“Singapore may have ample reserves, but a rapidly ageing society could eat into those savings in coming years as more funds have to be spent on social programmes.”

The appeal of the GST is that it is broad-based. If indeed a GST rate increase does come to pass, it would need to be paired with some form of assistance to make it more palatable. As in the past, this could take the form of an offset package for low-income families and rebates for small businesses.

Besides GST, could other forms of taxes such as property tax, stamp duty or “sin” taxes also help to make up for a reduced reliance on direct taxes? Individually, these taxes make up a small proportion of total tax revenue collection. Collectively, the amount collected from these taxes is no small sum.

amount of property tax, stamp duty and betting taxes was about S$10.5b, about 10% higher than the contribution from GST. The customs and excise taxes

was around the S$2b mark, a relatively

The property tax structure for residential properties has been tweaked several times

system more progressive. Based on Budget 2013’s projections, the net increase in property tax collected arising from this measure was estimated to be about S$53m — a modest increase of slightly over 1.2%. Also, given the cooling of the property market, stamp duty collection is unlikely to increase.

However, when one looks at 2007 when the GST rate was raised from 5% to 7%,

year jumped by about 55% — or an increase of S$2b in absolute dollar terms. Based on this, it seems the key source of additional tax revenue in the future would have to come from GST.

Ultimately, we need to spend within our means.

published in The Business Times on 21 January 2015

Lim Gek Khim Partner, Tax Services [email protected]

Teh Swee Thiam Director, Tax Services [email protected]

Contact us


Small and medium-sized enterprises (SMEs) are important job creators in the Singapore economy and their resilience is essential to sustainable economic growth.

The government has been driving a strong emphasis on the development of the SME sector. Singapore has the most SME-friendly government, according to the Global SME Performance Review for 2013/2014 conducted

(ACCA) and Institute of Management Accountants (IMA). The country has also been chairing the ASEAN SME Working Group since June 2014 and will lead fellow ASEAN members into the realisation of the ASEAN Economic Community for SMEs in 2015.

Despite the government’s focus on the SME sector, SMEs in Singapore continued to be challenged by manpower issues, increasing competition and high rental costs, according to the 2014 SME Development Survey. In fact, the SME1000 rankings published by DP Information Group in January showed that the top 1,000 small and medium-sized enterprises (SMEs) in Singapore have seen a year-on-year dip of 8.7% and 0.8% in combined sales,

To sustain growth and compete more effectively, SMEs need to restructure, revamp their business models and build up new capabilities. These include pursuing productivity improvements, strengthening technology, embracing innovation and expanding overseas.

However, many lack the resources, skills and funding to do so.

The Singapore government has made helping SMEs a priority in the past few Budgets with measures such as the Productivity and Innovation Credit Plus (PIC+) scheme, further tax deduction schemes and the angel investors scheme. SMEs also have various funding avenues such as government-backed cash grants and tax incentive schemes.

Apart from these, certain regulations are in place to alleviate the administrative burden on SMEs such as the audit exemption for exempt private companies and the

small companies. In 2014, an administrative concession was introduced to waive the requirement for companies

to meeting certain conditions.

compliance burdens, perhaps it’s time to place even more focus on SMEs from a policy point of view.

Towards SME-based policy-making

In 2008, the European Commission had launched the Small Business Act (SBA) for Europe, a move that recognised the importance of SME-based policy-making. The SBA is a series of guidance measures centred on 10 SME-friendly principles, including the “Think Small First” principle, which places SMEs at the forefront of policy-making and helps ensure that new regulations do not add to the burden faced by businesses.

Helping SMEs take a bigger leap

Goh Siow Hui and Sheryl Tan explore what more can be done to catalyse the growth of SMEs


“Government policies and support are critical in creating a more conducive ecosystem that catalyses the growth of SMEs.”


Goh Siow Hui Partner, Tax Services [email protected]

Sheryl Tan Senior Manager, Tax Services [email protected]

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The “Think Small First” principle encompasses good practices such as systematically consulting SMEs on new proposals, for example, introducing a mandatory consultation period on proposed major legislation and maintaining a “small companies database” to gather feedback from SMEs.

There is also the application of a compulsory “SME Test” to check whether new European Union (EU) policies and laws will have an impact on small businesses.

policies and whether mitigating measures

reporting and exemptions could be applied to SMEs.

It also subscribes to the “only once” principle, where information provided to one administration is not asked again by another administration, so as to reduce the paperwork for businesses.

The SBA in Europe offers many salient points that Singapore could consider in implementing a structured framework to guide its policy-making, taking into account the welfare and unique circumstances of SMEs.

Reducing administrative burden on SMEs is always welcomed. For example, the revised transfer pricing guidelines issued by the Inland Revenue Authority of Singapore (IRAS) on 6 January 2015 have set thresholds such that companies including SMEs, which fall below these thresholds, do not have to prepare contemporaneous transfer pricing documentation.

However, more can be done on other fronts. Schemes such as the PIC still entail a substantial amount of administrative work to support even the smallest of claims. While the intention to help SMEs is good,

lean resources.

businesses if the supporting documentation required for such schemes could be based on a materiality threshold. This would also speed up the overall administrative process and encourage genuine claimants to take advantage of the PIC scheme without fear of administrative burden.

Likewise, a different threshold could be applied to the application for tax incentives. Tax incentives such as the Pioneer Incentive as well as the Development and Expansion Incentive have been designed to attract multinationals to invest into Singapore. The quantitative criteria that companies are benchmarked against could put these incentives out of the reach of SMEs. Relaxing the criteria based on a lower threshold would enable more SMEs

Alternatively, the government could establish separate tax incentives

that is more aligned with the performance of SMEs. Moving away from strict quantitative criteria to more qualitative criteria, such as the potential or ability to expand globally, would be more meaningful for SMEs.

For SMEs with the ambition to venture abroad, the government could consider

subsidies for certain qualifying expenses for internationalisation, in addition to the existing tax measures like further tax deduction scheme for business development trips and trade fairs. This would more directly address the cash

Clearly, government policies and support are critical in creating a more conducive ecosystem that catalyses the growth of SMEs. A concerted shift to SME-based policy-making — looking at issues and solutions through a different lens and with a different mindset — will make a fundamental impact.

This article was contributed to The Business Times



On 10 October 2014, Malaysia’s Prime Minister and Finance Minister delivered the 2015 Budget (Budget) Speech. Some of the key items announced in the Budget that may

be of interest to companies with, or intending to have, investments or operations in Malaysia are discussed below. It should also be noted that the proposed reduction in the top Malaysian corporate income tax rate from 25% to 24% with effect from the year of

2014 Budget, was reiterated in the 2015 Budget and has since been entered into law.

Expanded scope of supplies not subject to GST

In the run up to the Budget, there were high expectations of additional announcements with respect to the much-discussed goods and services tax (GST). GST will be introduced to replace the current sales and services tax systems. It is intended to broaden Malaysia’s tax base and reduce the reliance on petroleum revenue. Though the introduction of GST has been discussed in Malaysia for some time, it was subject to much debate and the

2015 in the 2014 Budget. GST will be introduced at the standard rate of 6%.

almost a third of the items in the basket of goods used to compute the consumer price index (CPI) will be zero-rated for GST purposes. In the 2015 Budget, the Government announced an expansion to the list of goods and services that are not subject to 6% GST. These included certain food items such as fruits, bread and noodles, essential pharmaceutical products and selected

reading materials, which have been zero-rated, and retail

Gas (LPG) to end consumers and targeted groups, which will be given special relief. With the GST registration deadline of 31 December 2014 having expired and with the implementation date looming, the pressure is on companies with operations in Malaysia to ensure that their systems and internal processes or controls are GST-ready.

Corporate tax incentives for selected industries and expenditure

In a bid to strengthen economic growth and attract foreign investors, the following incentives were announced:

• Enhanced capital allowances of 200% (subject to expenditure caps) on automation expenditure incurred within the period from 2015 to 2017 by qualifying manufacturing companies engaging in high labor intensive industries (such as rubber products, plastics, woods, furniture and textiles), and within the period 2015 to 2020 by companies in other industries in the manufacturing sector.

• companies undertaking management, maintenance and upgrading of industrial estates in less developed areas,

activities undertaken in other areas.

• Introduction of customised incentives for Principal Hubs to encourage more multinational companies to establish global operational centers in Malaysia. The details of the incentives are expected to be announced shortly, in early 2015.

Highlights of the 2015 Malaysian Budget

Anil Kumar Puri and Aw Hwee Leng discuss some of the tax changes announced in the 2015 Malaysian Budget


Anil Kumar Puri Partner, International Tax Services, EY Malaysia [email protected]

Aw Hwee Leng Director, International Tax Services [email protected]

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• incentives for companies providing private healthcare facilities services

extended to applications received from 1 January 2015 to 31 December 2017 and an additional condition imposed is that at least 5% of the qualifying company’s total patients to whom the private healthcare facilities services are

healthcare travelers. This incentive applies to new and existing companies engaged in expansion, modernisation and refurbishment of private healthcare facilities and provides tax exemption on income equivalent to an investment tax allowance of 100% of qualifying capital expenditure incurred for a period of

Of the above incentives, perhaps the ones that most Singapore companies would be able to relate to would be the enhanced capital allowances on automation equipment and the introduction of incentives for Principal Hubs. The former would be similar to the enhanced capital allowances claim on IT and automation equipment expenditure under the Productivity and Innovation Credit (PIC) scheme in Singapore, except that under the PIC scheme, the claim is not restricted to companies in the manufacturing sector and the thresholds for claim are different. With respect to the incentives for Principal Hubs, no further details were released in the Budget and it remains to be seen how the incentives would compare to the tax incentives offered under Singapore’s Headquarters Programme.

Increased statute of limitation for transfer pricing adjustments

Transfer pricing has been an area of much scrutiny in recent times. In the Base

plan initiated by the Organisation for Economic Co-operation and Development (OECD), 4 out of the 15 Action Plans

These are: transfer pricing for intangibles, transfer pricing for risks and capital, transfer pricing for other high-risk transactions and re-examining transfer pricing documentation. In Singapore, the Inland Revenue Authority of Singapore has issued various transfer pricing guidelines since February 2006 and has also recently on 6 January 2015 released revised transfer pricing guidelines consolidating all previous circulars and guidance and including a requirement for taxpayers to prepare contemporaneous transfer pricing documentation.

In Malaysia, a transfer pricing section was introduced into the tax legislation effective from 1 January 2009, with transfer pricing rules and guidelines issued in 2012. To allow the Inland Revenue Board additional time to conduct transfer pricing audits and raise additional assessments for transfer pricing adjustments, the Budget proposed to extend the statute of limitations from

transfer pricing matters. This proposal was gazetted on 30 December 2014.

Increase in real property gains tax (RPGT) retention sum

Similar to Singapore, Malaysia does not impose a broad-based capital gains tax. However, gains derived from disposal of real properties located in Malaysia and shares in controlled companies with substantial real property interests in Malaysia (referred to as “real property company” shares) are subject to RPGT. Previously, the purchaser would have had to withhold 2% of the total value of the consideration (assuming the consideration was wholly in the form of money). The amount withheld must be paid to the Director General within 60 days from the date of the disposal.

The RPGT rates were increased effective from 1 January 2014 as announced in the 2014 Budget. In the 2015 Budget, the Government proposed to increase the maximum tax to be withheld by an acquirer of real property in Malaysia from 2% to 3% of the total value of consideration. This change has been gazetted and is effective from 1 January 2015. It will have an immediate cash


“With the GST registration deadline of 31 December 2014 having expired and with the implementation date looming, the pressure is on companies with operations in Malaysia to ensure that their systems and internal processes or controls are GST-ready.”



A key UK tax development is an anti-avoidance

to be in-force from 1 April 2015. This is related to the OECD’s initiative against base erosion and

The DPT is intended to apply to large multinational enterprises (MNEs) with business activities in the UK who enter into what are seen as “contrived” arrangements to

is very broad in places and is likely to give rise to considerable uncertainty in the short term. In addition the new legislation is technically complex and lengthy.

The DPT proposals represent a new approach to a problem the OECD has been grappling with by way of BEPS Action 7 and Actions 8-10. The penal DPT tax rate of 25% (as opposed to the standard corporate tax rate of 25%) is intended to encourage MNEs to adopt alternative business models, and the charging and compliance provisions encourage greater transparency around global value chains.

The UK authorities view this as part of their two- pronged strategy of being “open for business” but “tough on avoidance.”

The cutting of the UK corporation tax main rate to 20%, and the introduction of a territorial tax regime, is seen by the UK authorities as being a good deal for MNEs relative to other major economies. If MNEs are then viewed as

in the UK at 20%, then rules like the DPT will be applied.

The DPT has two categories:• Avoidance of a UK taxable presence

or

• Involvement of entities or transactions lacking economic substance

As mentioned the DPT is technically complex, and we have included an outline of the new legislation in the box.

Here we highlight the important messages you need to be aware of.

Impact on your operations

Whilst the DPT has been widely reported as targeting the digital sector, it seems to apply to a wide range of transactions across all industry sectors.

If you are a Singapore company in any sector which

a UK market entry, then you should consider the DPT provisions in detail.

Traditionally, an analysis may have been undertaken to assess whether or not operations in the UK might constitute a taxable PE, either by way of domestic law or application of a double tax treaty.

Such an analysis is still required, however where multinationals can be reasonably assumed to have taken steps to avoid a taxable PE in the UK, then the DPT may bite in any event. This can include situations where a Singaporean MNE forms a UK “operating”, “distribution” or “service” company to perform support activities in the UK under contract.

Where a Singapore group has a UK operating company that makes tax deductible payments to non-UK resident related parties, consideration must be given to the second category of DPT. This may include payments such as the following, but excludes interest payments:

• Licence payments for physical assets

• Licence/royalty payments for the use of intellectual property

• Cost-sharing arrangements

• Payments for services provided by group service providers

• Payments for captive insurance/group reinsurance

UK moves ahead with

impact Singapore groups operating in the UK


“However where multinationals can be reasonably assumed to have taken steps to avoid a taxable PE in the UK, then the DPT may bite in any event.”

The second category of DPT can similarly apply where your UK associated company transfers income offshore from the UK, for example (but not limited to) the “factoring” of accounts receivable.

The rate of tax being paid on income received in Singapore (or elsewhere) would need to be considered, as well as the tax base upon which such tax is paid. The main corporate tax rate in Singapore is in excess of 80% of the UK corporation tax rate which may be helpful — however, if payments are then made to another

from a reduced rate of corporate tax, or additional reliefs, then the DPT may still bite. If a third territory is involved then the position there must be analysed as well.

Finally, Singapore groups should monitor the international reaction to the DPT. It remains to be seen how the OECD reacts as part of their BEPS Action Plan, and it may be the case that other countries seek to unilaterally apply a DPT.

Compliance and exclusions

There are exclusions from both categories for small and medium-sized enterprises.

the total UK sales revenue of the company together with any connected companies is less than GBP 10m in a 12-month accounting period, then the DPT should not apply.

The assessment and collection procedure is based on a duty of the company (UK or non-UK) to notify the UK authorities within three months of the end of an accounting period in which it is reasonable to assume that DPT might arise. There is a tax-geared penalty for failure to do so.

must then issue a preliminary notice,

based upon a best judgment estimate of the DPT chargeable. There is then a short period for representations before a charging notice is issued, and DPT must

be paid within 30 days of that charging notice. DPT payment cannot be postponed even if the amount payable is challenged during the 12 month challenge window, and underpaid DPT can be recovered from related companies if not paid by the company with the DPT liability.

These compliance provisions re-enforce the aim of the DPT which is to encourage corporate groups to be open and transparent with their global supply chains.

Daniel Dickinson Director, International Tax Services Inter Area Desks, UK Tax Desk daniel.dickinson@ sg.ey.com

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Technical outline of DPT

As mentioned The DPT has two categories:

• Avoidance of a UK taxable presence

or

• Involvement of entities or transactions lacking economic substance

Amongst other conditions, both categories require the existence of “an effective tax

economic substance”.

Whether there is an “effective tax mismatch outcome” is determined by reference to the concept of “provision” made between connected parties. This is consistent with the UK’s transfer pricing provisions.

There are detailed provisions within the DPT legislation setting out what

means. However, where such is known to exist, the UK transfer pricing rules should likely already apply in much the same way as the DPT, and so this is not covered in detail below.

Avoidance of a UK taxable presence

This applies where there is a “foreign company” and a person (the “avoided PE”) carrying on activity in the UK in connection with the supply of goods or services by the foreign company to customers in the UK.

If the following conditions are also met, then the DPT can apply:

• It is “reasonable to assume” that the activity of the avoided PE or the foreign company (or both) is designed to ensure that the foreign company is not carrying on a trade in the UK through a PE

• It is “reasonable to assume” that either or both of the following conditions are met:

• The tax avoidance condition, and/or

• The mismatch condition

• There are arrangements in place which lack economic substance

The “tax avoidance condition” is met if arrangements are put in place with one of the “main purposes” of avoiding a charge to corporation tax in the UK.

The “mismatch condition” requires there to be an “effective tax mismatch outcome”. Here this requires a provision imposed between the foreign company and another person (“A”) which results in:

• An increase in deduction, or reduction in income, of the foreign company taken into account for a “relevant tax” (non-UK tax, UK corporation tax or UK income tax)

• The amount of the resulting reduction in the foreign company’s liability to relevant tax exceeding any increase in A’s total liability to relevant tax

• A’s increase in total liability to relevant tax is less than or equal to 80% of the reduction in the foreign company’s liability to relevant tax

Involvement of entities or transactions lacking economic substance

This second rule applies to provisions made between a UK resident company (“C”) and a connected person (“P”).

Where the “provision” results in both of the following, then the DPT can apply:

• An effective tax mismatch outcome

•

Here an effective tax mismatch outcome results in:

• An increase in deduction or reduction in income of C taken into account for a relevant tax

• The amount of the resulting reduction in the C’s liability to relevant tax exceeding any increase in P’s total liability to relevant tax

• Company P’s increase in total liability to relevant tax is less than or equal to 80% of the reduction in C’s liability to relevant tax


In conversation with

Life sciences companies are continuing to expand operations

in prior years. Tell us a bit about what’s underlying this trend.

For several years the life sciences industry has been experiencing an unprecedented level of transactional

transformational transactions, including M&A deals, spinoffs and internal reorganisations and consolidations. These transactions, designed to deliver improved shareholder returns, were often focused on transforming the product portfolio, including a refocusing on core or leading businesses, replacing revenues lost from products

pipelines. Other transactions were more focused on driving commercial growth through increased sales capabilities, reducing the high cost of R&D, or achieving productivity savings through site consolidations and

Although these transactions often impacted the entire global organisation, they were generally focused on the more established or developed markets in Europe and North America. That was then.

What we’re seeing now and in more recent years is a continued shift towards emerging growth markets and

increasing steadily since 2011, with pharmaceutical deals increasing the most among all life sciences sub-sectors.

compared to 427 for the full year 2013.

In addition, given rapidly increasing populations and a shift in disease patterns toward lifestyle diseases, there’s a

with the availability of lucrative tax incentives, educated and skilled workforces, and lower cost structures, it’s no surprise that considerable components of many companies’ sales, R&D and manufacturing operations

Singapore included.

For many life sciences companies emerging markets have now become a key driver for increasing sales — with double digit year over year growth during the past two years — emerging markets currently account for greater than 20% of the total business for many companies, and are expected to account for more than 30% of global sales by 2018.

focus for many life licenses companies, with a number of companies scrambling to play catch up in order to remain competitive and set the stage for future growth. Meaning,

global operations, both from a business or operational

reporting and taxes.

Life sciences: re-envisioning the tax function operating

Richard Fonte discusses how rapid growth and operational realignment is impacting the way life sciences


What do you see as some of the key tax implications resulting from this rapid growth and expansion into

Well, there are the obvious items that are frequently discussed in the tax literature and at conferences, which won’t be a surprise to anyone reading this article. For example, securing and maintaining incentives; increased audit scrutiny as a result of more complex supply chain and transfer pricing arrangements; heightened focus with respect to transfer pricing analysis and documentation resulting from an increase in the volume and size of intercompany transactions and evolving transfer pricing rules; increased tax

these are areas that have and continue

implications, which hasn’t received a lot of coverage, is that many companies are

reporting and tax purposes, or at the very least acknowledging that they will be in the near future. What that’s translating into is an increasing level of focus and attention by headquarters

transformation projects and as stand-alone initiatives.

While some companies are evaluating “clean sheet” redesigns, most are looking to simply enhance or optimise their current model. While approaches may vary, the areas of focus are often consistent, including for example, ways to better manage tax risk and the

implications for noncompliance; cost

improved control processes in general, including with respect to data quality

and access; tax provision preparation and accuracy; improved transparency, communications and the access headquarters has to local data and information; effectiveness of local country planning, controversy management and direct or indirect tax compliance; and of course, decisions around target operating model (e.g., in-house vs. outsource).

While it’s easy enough to rattle off a list of common considerations, what’s often not apparent on its face is the extraordinary level of complexity involved, the systems implications, and the number of factors that must be considered in connection with developing an effective model.

Tell us more about why these initiatives can be so complicated and involved?

There’s no one reason, it’s a combination of factors. Think about the various stakeholders involved, or who at the very least will want to have input. You’ll obviously have tax involved, but depending on the size of the company and the way in which it’s tax function is organised, you may have multiple stakeholders within tax- for example, planning, compliance,

information technology, the C-Suite and likely the audit committee and the external auditors for public companies. And don’t forget, many of these stakeholders may exist at the headquarters, regional and local levels. As we all know, it can be very hard to get large groups of people representing different functions with varying objectives to agree on a common design or approach. So the coordination and project management aspects alone can be very challenging.

Then there’s systems and IT. Many of

systems implications and will require IT support. For example, consolidating data sources and enabling access to required data, tax sensitising ERP and other source system data to facilitate more timely and accurate provision and return preparation,

moving from Excel-based calculations and “work-around” spreadsheets to more structured and standardised tools. And of course, there’s the issue of tax resources and the tax function operating model that’s right for each company. This is the area that I see presenting often unanticipated challenges and can be one of the toughest to deal with, principally because there’s no “right” answer, there’s a lot of judgement and subjectivity involved, and everyone will likely have a different point of view.

Let’s talk more about this tax

why can it be so challenging to get right?

Many companies, and most life sciences, are taking a hard look at expenses and really challenging the way they do business. They’re looking to cut costs

(which ironically, is one of the factors driving the recent expansion of these

historical constructs as to what corporate and regional/local tax functions look like are under extreme pressure. In a number of instances, and often in conjunction

initiative, companies have elected to completely outsource their regional or local tax functions. So there can be quite a bit of debate and internal wrangling as to whether to support and fund an in-house regional/local tax function at all.

But looking past that, assuming the company is not moving to a complete

challenges with respect to designing

determining how to resource it. For example, some companies may choose

through a regional/centralised tax centre

personnel, say in Singapore, China or Hong Kong (i.e., a more traditional command and control type model).


“it’s important for

tax executives to be actively engaged in any initiative involving a

of the tax function operating model.”

Others may establish multiple tax centres of excellence or clusters in material jurisdictions, each having responsibility for

Hybrids of these two models are also popular and will likely be considered.

And while some companies may still choose to operate without any tax

all, I see this model becoming less popular given increasing complexity, tax risk, and

for many companies. So even the basic operating model can present challenges, and that’s just the beginning.

Even after the basic operating framework has been established, a multitude of other design considerations will need to be addressed. For example, the levels and skillsets of the tax professionals; reporting lines and responsibilities within

common/shared tax function supporting all divisions or lines of business or multiple functions; what work to perform in-house versus with external providers; etc.

And as you continue to progress through and get deeper into the design phase,

given to getting the right processes and infrastructure in place to enable effective execution, including standardised processes, systems and data. As we

many countries with disparate rules and requirements, this is not a “one state” or single union type of environment, so these considerations can be compounded multi-fold making this much more challenging to get right.

And too often times these steps are overlooked or not given the level of

importance and attention they require. What good is tax planning or negotiating

can’t be sustained because of an inability to properly journalise or document transactions, produce requisite and accurate data, etc.?

What are you seeing and what thoughts can you share based on your own experiences?

As I mentioned previously, there’s no right answer or one best approach. The best model will take into account each company’s unique set of facts. I am, however, seeing some emerging themes and have my own thoughts as to what I see working best. Unless a company has decided to completely outsource its tax function, companies that are reassessing


Richard Fonte

Leader — Global Accounts [email protected]

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their models appear to be leaning in favour of having tax professionals

regional headquarter location, centres of excellence, within major markets, or some combination of the above.

In addition, there seems to be a growing movement at larger companies towards employing an executive-level tax professional with responsibility for the region. In my view, if you’re going to operate an in-house tax function it’s best to have trained tax professionals serving in those roles; and for larger companies, having an executive-level professional with regional responsibility is often the best answer when it comes to driving tax savings, managing risk,

Many companies are also moving towards or seriously evaluating regional tax centres of excellence or hubs as a means for providing greater support to regional headquarters and more effectively/

responsibilities within sub-regions. I believe these models can work very well, and especially so, when appropriate consideration has been given during

lines, responsibilities, and what activities are best performed in-house versus in conjunction with an external provider.

And then there’s technology. Given the

and the increasing importance being placed on transparency, data access, controls and real-time information, many companies are turning to technology and technology-enabled tax services to help them get it all done and manage their risk.

best practices or recommendations?

Every company’s approach will be different, as will the level of involvement

be invited to have in the process. Given the complexities involved, the multitude of available approaches, and the often highly subjective nature of the outcomes,

or tax executives to be actively engaged in any initiative involving a redesign

operating model.

As I mentioned, there’s no one right answer, but not every answer is right or makes sense. There are a lot of traps for the unwary and there are “better” ways to do certain things. So don’t go it alone, get assistance, and talk to colleagues who have been through the process and to

what works and what doesn’t.

Finally, actively explore ways in which technology enablers can help to reduce costs, mitigate risk, and enable

to work together more effectively. In addition to provision, compliance and project management software solutions, many companies with more mature tax processes are also now beginning to explore the use of data analytic tools as a means for driving greater value from the tax function, and further increasing quality and mitigating risk. The use of these tools represents the next evolution in the process, and I believe we’ll see them become very popular in the near future.


Lessons in case law

In BFC v Comptroller of Income Tax [2014] SGCA39, the Court of Appeal held that discount and redemption premium on bonds issued by BFC were capital expenditure not qualifying for a tax deduction.

The question of whether discounts and redemption premiums on the bonds was “interest” under section 14(1)(a) took centre stage in the Court of Appeal.

In delivering its decision, the relationship between section 14(1), section 14(1)(a) and section 15(1)(c) of the Income Tax Act (Cap 134, 2001 Rev Ed) (“ITA”) was addressed by the Court of Appeal.

As the case concerned the years of assessment 2001 and 2002, it is important to note that the discussion on section 14(1)(a) in this case was based on the old provision prior to the amendment of the subsection in 2008.

Tax deductibility of interest

Latha Mathew and Chionh Huay Kheng discuss the issue of the tax deductibility of interest incurred in the borrowing of money in the case of BFC v CIT

“14(1) For the purpose of ascertaining the income of any person for any period from any source chargeable with tax under this Act (referred to in this Part as the income), there shall be deducted all outgoings and expenses wholly and exclusively incurred during that period by that person in the production of the income, including —

(a) …any sum payable by way of interest upon any money borrowed by that person where the Comptroller is satisfied that the interest was payable on capital employed in acquiring the income;…”

“15(1) Notwithstanding the provisions of this Act, for the purpose of ascertaining the income of any person, no deduction shall be allowed in respect of —

(a) … (b) … (c) any capital withdrawn or any sum employed or intended to be employed as capital…”

Facts of the caseBFC owned and operated a hotel in Singapore (the Hotel).

In 1995 and 1996, BFC issued two sets of bonds (referred to as “the 1995 bonds” and “the 1996 bonds” respectively, and collectively as “the bonds”).

The 1995 bonds were issued at a discount and redeemed upon maturity in 2000 at a redemption premium. Until redemption, BFC had to pay interest at a fixed rate per annum on the principal amount. The 1996 bonds were similarly issued at a discount but upon maturity in 2001, no redemption premium was payable. Until redemption, BFC had to pay interest at a fixed rate per annum on the principal amount.

A part of the 1995 bonds was used to finance the renovation of the Hotel. The second part of the 1995 bonds and all of the 1996 bonds were used to refinance BFC’s existing loans. The third part of the 1995 bonds was used for day-to-day operations of BFC’s business.

In assessing BFC’s chargeable income, the Comptroller of Income Tax (CIT) allowed a tax deduction for the interest paid on the portion of the 1995 bonds that was specifically used to finance the renovation of the Hotel, being interest incurred on capital employed in acquiring income. The balance of the interest paid on the 1995 bonds and the interest paid on the 1996 bonds was regarded as relating to a mixed pool of funds and subject to an interest adjustment formula known as the Total Assets Method (TAM). The interest attributed to income-


producing assets under the TAM was allowed a tax deduction. The discounts and redemption premium were wholly disallowed.

BFC sought to claim a tax deduction for the discount and redemption premium on the 1995 bonds and the discount on the 1996 bonds in the same manner as that allowed for interest paid on the bonds.

The CIT disallowed the deduction claimed on the discount and premium on two grounds:(i) The discounts and redemption

premium were not “interest” and hence were not deductible under section 14(1)(a) of the ITA

(ii) The discounts and redemption premium were not outgoings and expenses wholly and exclusively incurred in the production of BFC’s income and hence were not deductible under section 14(1) of the ITA

BFC appealed to the Income Tax Board of Review in 2011.

Board of Review decision

The Board of Review upheld the decision of the CIT.

Discount and redemption premium on bonds could not qualify for tax deduction under section 14(1)(a) as “interest”. Section 10(1)(d) of the ITA uses the words “interest” and “discount” distinctively; thus, there has to be an intended difference between “interest” and “discount” in the legislation. Similarly, “interest” under section 14(1)(a) cannot be interpreted to include “premium”; such an interpretation would run contrary to the need for a separate regulation [Income Tax (Deductible Borrowing Costs) Regulation 2008] (“the 2008 regulation”), in which “premium payable upon maturity of debt securities” is included.

Discounts on the face value of the bonds could also not constitute outgoings and expenses under section 14(1) as there was no payment out by BFC who received the proceeds from the bond issuance less the discounts.

Based on the Board’s findings that the proceeds from the bond issue was used for refurbishment and in a mixed pool of funds, the discount and redemption premium was also disallowed under section 14(1) and section 15(1)(c) being capital expenditure.

BFC appealed against the decision of the Board of Review.

High Court decision

The High Court agreed with the Board of Review’s observation that the use of “interest” and “discount” simultaneously in section 10(1)(d) of the ITA must indicate that the two terms do not mean the same thing in the legislation. To be “interest”, a payment must be consideration paid by the borrower for the use of the lender’s money which bears the fundamental feature of accrual with time. Discount and redemption premium on the bonds were on the other hand one-off obligations that

did not accrue with time; hence, they are not “interest” deductible under section 14(1)(a) of the ITA.

On the question of whether discounts and premiums were “outgoings and expenses” for the purpose of section 14(1), the High Court took a different view from the Board of Review and considered these to be actual outgoings incurred by BFC. The High Court held that there could be outgoings and/or expenses even where there was no actual disbursement of money, provided there was a clear non-contingent legal liability or commitment to disburse the sum in question at some future time. This view was later affirmed by the Court of Appeal.

Adopting the principles in T Ltd and IA, on the facts, the High Court found no linkage between the bonds and any specific project or transaction that was clearly revenue in nature. Hence, the discount and premium were capital in nature and were disallowed from a tax deduction under section 15(1)(c) of the ITA.

T Ltd v Comptroller of Income Tax [2006] 2SLR® 618 (T Ltd) and Comptroller of Income Tax v IA [2006] 4SLR® 161 (IA) recapped

In T Ltd, the issue was whether interest which the taxpayer had paid on a loan was capital expenditure or revenue expenditure. As interest was “derivative in nature” and owed its existence to a loan, whether the interest was capital expenditure or revenue expenditure depended on the purpose for which the loan was employed.

In IA, the issue was whether certain borrowing costs incurred by the taxpayer, was capital or revenue expenditure. The principle in T Ltd’s case was endorsed.

Thus, taken together, all borrowing costs, of which interest is one, owe their existence to the loan and thus are derivative in nature. Therefore, the question of whether they are capital or revenue expenditure is to be determined by whether the loan is capital or revenue in nature.

BFC appealed against the decision of the High Court.


“The Court of Appeal accepted that it is a matter of substance and not form whether a payment is or is not “interest” for section 14(1)(a) purposes.”


Court of Appeal decision

All borrowing costs on the bonds which are capital in nature, including interest, are capital expenditure under section 15(1)(c)

The classification of the discount and redemption premium incurred on the bonds between capital and revenue expenditures would be based on whether the bonds themselves were capital or revenue in nature. This in turn would depend on the purpose for which the bonds were issued. The purpose of the bonds was found in the High Court to be capital in nature without any sufficient linkage to any main transaction that is revenue in nature. This was conceded by BFC itself. Thus, on the authority of T Ltd and IA, it would follow that the discounts and redemption premium on the bonds were accordingly capital expenditure, and hence not deductible under section 15(1)(c).

Relationship between section 14(1), 14(1)(a) and 15(1)(c) explained

Interest and any borrowing costs incurred on a loan taken to acquire a capital asset are capital expenditures. The fact that the capital asset is employed in acquiring income does not make the interest and borrowing costs revenue expenditures. They would still remain as capital expenditure that would ordinarily fall within the ambit of section 15(1)(c), i.e., not deductible for tax.

Section 14(1)(a) specifically carves out an exception to section 15(1)(c) with regard to interest on capital employed in acquiring income. That is, the effect of section 14(1)(a) is to accord a tax deduction to interest on capital employed in acquiring income even though it is a capital expenditure. The exception in section 14(1)(a) applies only specifically to interest and does not apply to other types of borrowing costs. [Note this is in the context of the old section 14(1)(a) prior to the amendment in 2008.]Section 14(1), on the other hand, does not contain any similar expression. Thus, section 14(1) would be subject to the prohibition on deduction of capital expenditure set out in section 15(1)(c).

It would follow from this relationship that in order for discounts and premiums on the two bonds to be deductible under the ITA, they had to fall within the word “interest” under section 14(1)(a).

So, were the discounts and redemption premium “interest” for purposes of section 14(1)(a)?

BFC’s main contention is that “interest” for section 14(1)(a) purpose should be given a broad interpretation as “compensation for the use of money” and should encompass any consideration flowing from the borrower to the lender as how a commercial man would see it. This contention was rejected by the Court of Appeal.

The Court of Appeal held that a less liberal interpretation of “interest” was more appropriate for two reasons. Firstly, the body of section 14(1) is already a general deduction formula that is broad and there is no further justification to adopt an expansive approach in interpreting the subsections under section 14(1). Secondly, the word “interest” can also be found in other sections in the ITA and should be consistently construed. If “interest” and “discounts” are used as separate terms in the legislation instead of simply having the former being defined to include the latter, the two terms must necessarily mean different things.

The Court of Appeal agreed with the definition of “interest” in the High Court case of Chng Gim Huat v Public Prosecutor [2000] 2 SLR(R) 360. The concept of “interest” embodied in that case is that “interest” is what the borrower pays the lender to compensate him for the notional loss from not having the money in his hands to earn more money for as long as the money remains unpaid. Therefore, for section 14(1)(a) purposes, to be “interest”, the amount of the payment should depend on the length or duration of the loan. As the discounts and redemption premiums were one-off costs, the amount of which did not depend on the duration of the bonds, they were not “interest” for the purpose of section 14(1)(a), and hence remain non-deductible under section 15(1)(c).


“14(1) For the purpose of ascertaining the income of any person for any period from any source chargeable with tax under this Act (referred to in this Part as the income), there shall be deducted all outgoings and expenses wholly and exclusively incurred during that period by that person in the production of the income, including —

(a) except as provided in this section — (i) any sum payable by way of interest; and (ii) any sum payable in lieu of interest or for the reduction thereof, as may

be prescribed by regulations (including the restriction of the deduction of the sum in respect of money borrowed before the basis period relating to the year of assessment 2008),

upon any money borrowed by that person where the Comptroller is satisfied that the interest was payable on capital employed in acquiring the income;…”

Latha Mathew Partner, Tax Services [email protected]

Chionh Huay KhengAssociate Director, Tax Services huay.kheng.chionh@ sg.ey.com

Contact us

If a taxpayer incurs borrowing costs on a loan and wishes to establish a position that a loan is revenue such that theborrowing costs incurred on that loan are revenue expenditure under section 14(1), he must first establish sufficient linkage or relationship between that loan and a main transaction that is revenue in nature. The onus is on the taxpayer to prove the linkage for a revenue deduction claim under section 14(1).

If such a sufficient linkage or relationship is not established, it must be presumed that the loan is capital in nature, and accordingly, the interest and other borrowing costs on that loan would constitute capital expenditures under section 15(1)(c). To the extent that the expenditures in question fall within interest or sum payable in lieu of interest or for the reduction thereof (as prescribed by the regulations) on

capital employed in acquiring income, a deduction would be allowed under the section 14(1)(a) exception.

A couple of points made by the Court of Appeal are also worth noting in this case.

The Court of Appeal accepted that it is a matter of substance and not form whether a payment is or is not “interest” for section 14(1)(a) purposes. Hence, it is possible that a payment that is called a “discount” or a “redemption premium” may fall within the scope of “interest” as used in section 14(1)(a).

In addressing the legal concept of “interest”, the Court of Appeal made it clear that it is not a requirement that interest must be paid on a periodic basis in order to be treated as such. There is no particular periodic interval at which interest must be made, and it can even take the form of a single lump sum.

Lessons learnt

Section 14(1) is subject to the prohibition on deduction of capital expenditure under section 15(1)(c) whereas section 14(1)(a) is an exception to section 15(1)(c). Section 14(1)(a) allows a deduction on interest incurred on capital employed in acquiring income which would otherwise have been prohibited by section 15(1)(c). The exception in section 14(1)(a) as discussed in this case however applies only specifically to interest and does not apply to other types of borrowing costs prior to the amendment to the ITA in 2008.

Section 14(1)(a) has since been amended to expand the scope of the exception to section 15(1)(c) to include other payments in lieu of interest or for the reduction thereof.

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At a glance

22 January 2015 Research and development tax measures (fourth edition)

6 January 2015 Transfer pricing guidelines (second edition)

30 October 2014 Research and development tax measures (third edition)

10 October 2014 Income tax treatment of a trust registered under the Business Trusts Act

10 October 2014 Income tax: liberalised treatment of expenses incurred in Singapore to derive foreign income

8 October 2014 Income tax treatment of trusts

8 October 2014Tax Act

8 October 2014 Tax treatment under section 11(2) of the Income Tax Act and qualifying conditions for company limited by guarantee to be subject to section 11(2)

19 September 2014 Productivity and innovation credit (fourth edition)

12 September 2014

12 September 2014 Deduction for statutory and regulatory expenses

12 September 2014 Tax treatment of director’s fees and bonuses from employment (second edition)

3 September 2014 Income tax: concession for enterprise development - deduction of certain expenses incurred before business revenue is earned (second edition)

29 August 2014 Pioneer incentive: tax treatment of gains and losses from a separate trade (second edition)

29 August 2014 Pioneer incentive: capital allowances upon expiry of tax relief period (second edition)

22 August 2014 Research and development tax measures (second edition)

18 August 2014 Income tax: tax deduction for borrowing costs other than interest expenses (second edition)

29 July 2014 Determination of the date of commencement of business

30 May 2014trusts and qualifying offshore infrastructure project/asset (second edition)

26 May 2014 Carry-back relief system (second edition)

26 May 2014 Change to assess the income of a husband and wife as separate individuals

19 May 2014 Income tax treatment of hybrid instruments

16 May 2014 Income tax & stamp duty: mergers and acquisitions scheme (second edition)

16 May 2014 Pharmaceutical manufacturing industry: tax treatment of research & development and intellectual property — related expenditures (second edition)

24 March 2014 Writing-down allowance on payment for indefeasible right of use

1 March 2014 Income tax treatment of limited liability partnerships (LLPs) (second edition)

1 March 2014 Income tax treatment of limited partnerships (LPs)

34

| 35

19 December 2014 GST: self-accounting of GST by listed REITS and their SPVs for property purchases (second edition)

10 December 2014 GST: major exporter scheme (second edition)

10 December 2014 GST guide for the biomedical industry (second edition)

10 December 2014 GST: approved contract manufacturer and trader (ACMT) scheme (tenth edition)

10 December 2014 Claiming of GST on re-import of value-added goods

10 December 2014

10 December 2014 GST: import GST deferment scheme (second edition)

24 November 2014 GST: assisted self-help kit (ASK) annual review guide (second edition)

14 November 2014 GST guide on the electronic tourist refund scheme (eTRS) (third edition)

14 November 2014 GST: guide for advertising industry

14 November 2014 GST guide for retailers participating in tourist refund scheme (third edition)

14 November 2014 GST guide for visitors on tourist refund scheme (third edition)

14 November 2014 GST: guide for the insurance industry (second edition)

13 October 2014 GST: guide for the banking industry (third edition)

8 October 2014 GST: do I need to register?

8 October 2014 GST: general guide for businesses

31 July 2014 GST guide for the hotel industry

31 July 2014 GST: how do I prepare my GST return?

30 July 2014 GST guide on the electronic tourist refund scheme (eTRS) (second edition)

30 July 2014 GST guide for retailers participating in tourist refund scheme (second edition)

30 July 2014 GST guide for visitors on tourist refund scheme (second edition)

25 July 2014 GST: assisted compliance assurance programme (ACAP) (sixth edition)

16 June 2014

9 June 2014 GST: GST and the gold jewellery industry (Chinese version)

9 June 2014 GST: GST and the gold jewellery industry (English version)

30 May 2014 GST: guide on attribution of input tax

1 April 2014 GST: guide for the fund management industry

31 March 2014 GST guide for e-commerce

31 March 2014 GST guide for retailers participating in tourist refund scheme

31 March 2014 GST guide for the aerospace industry

You and the Taxman


At a glance

36

2 September 2014 Property tax: guide for hotel owners and operators

2 September 2014

2 September 2014 Guide on shopping centre assessment

2 September 2014 Property tax treatment of en-bloc sales sites

2 September 2014 Investor’s guide to property tax

2 September 2014 Property tax: treatment of contributions to management fund and sinking fund

2 September 2014 Property tax assessment on common property

Stamp duty

16 May 2014 Income tax & stamp duty: mergers and acquisitions scheme (second edition)

21 February 2014 Budget 2014: streamlining the stamp duty rate structure

31 March 2014 GST guide for the biomedical industry

31 March 2014 GST guide for visitors on tourist refund scheme

31 March 2014 GST guide on the electronic tourist refund scheme (eTRS)

31 March 2014 GST guide on purchase of land for residential development

31 March 2014 GST: assisted compliance assurance programme (ACAP)

31 March 2014 GST: assisted self-help kit (ASK) annual review guide

31 March 2014

31 March 2014 GST: guide for retailers

31 March 2014 GST: guide for the insurance industry

31 March 2014 GST: import GST deferment scheme

31 March 2014 GST: major exporter scheme

31 March 2014 GST guide on specialised warehouse scheme and zero-rating of supplies

31 March 2014 GST: guide on the use of business premises by third party for free

21 March 2014 GST: advance ruling system

17 February 2014

28 January 2014 GST: general guide for businesses (second edition)


37You and the Taxman Issue 1, 2015 | | 37

19 December 2014 GST remission on expenses for prescribed funds managed by prescribed fund managers in Singapore

5 August 2014 Tax incentive scheme for captive insurers

30 May 2014 Changes to the designated unit trust scheme

30 May 2014 Changes to the fund management tax incentive schemes

30 May 2014 Income tax treatment of Basel III additional tier 1 (“AT 1”) instruments

30 May 2014 Tax incentive schemes for trusts

6 May 2014

31 March 2014 GST remission on expenses for prescribed funds managed by prescribed fund managers in Singapore

DTAs signed

15 January 2015 Singapore — Uruguay

15 January 2015 Singapore — France (revised DTA)

31 October 2014 Singapore — United Arab Emirates (Second Protocol)

26 August 2014 Singapore — Rwanda

9 July 2014 Singapore — Seychelles

3 April 2014 Singapore — Sri Lanka

21 February 2014 Singapore — Lao People’s Democratic Republic

12 September 2014 Singapore — Kazakhstan (Protocol)

12 September 2014 Singapore — Czech Republic (Protocol)

25 July 2014 Singapore — Liechtenstein

25 April 2014 Singapore — Barbados

6 February 2014 Singapore — Austria (exchange of diplomatic notes)

6 February 2014 Singapore — Poland (revised DTA)

15 January 2014 Singapore — Morocco


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environment and improve the chance of a successful outcome.

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We can also advise you on the tax

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Our dedicated International Tax professionals assist our clients with their cross-border tax structuring, planning, reporting and risk management. We can help you build proactive and integrated global tax strategies that address the tax risks of today’s business and achieve sustainable growth.

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Here’s how we can help you:

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Tax leadership

40

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I | 41

Singapore Budget 2015 proposals. Our programme also covers important tax developments such as the impact of Singapore’s revised transfer pricing guidelines. Join us to understand and appreciate how the Budget measures will affect you and your business. The seminar also offers you the opportunity to keep abreast of changing tax laws

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Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A).

Ernst & Young Solutions LLP reserves the right to cancel the seminar or amend the agenda, schedule, venue and speaker(s) due to circumstances beyond our control. We regret that we cannot give fee refunds, but changes in the personnel attending can be accommodated.

Seminar highlights • Learn about the implications of the Budget proposals on your

business, understand the issues that may arise and discover planning opportunities

• Obtain an economic analysis of the budget from guest speaker Dr Tan Khee Giap

• • Discover practical lessons and insights in claiming the Productivity

and Innovation Credit (PIC) • Develop an understanding of the revised Singapore transfer pricing

documentation requirements and what changes you need to adopt to meet these requirements

• Keep abreast of updates in the progress of the OECD’s Action Plan

to take to meet more stringent local and international tax rules• Learn why you need to adopt a global approach in tax accounting

Seminar feesClients, alumni and S$250 SIATP members Others S$300

*Fees include lunch, refreshments and GST. Attendees will receive a copy of our Singapore Budget 2015 Synopsis.

A discount of 10% applies for organisations registering three or more participants for the seminar.

Register online at www.ey.com/sg/budget

Closing date Tuesday, 3 March 2015 or earlier (once fully booked)

Enquiries Cherie SY Chan +65 6309 8297 [email protected]

Visit www.ey.com/sg/budget for more insights on Budget 2015A soft copy of our Singapore Budget 2015 Synopsis will be available online from 25 February 2015

Address for paymentErnst & Young Solutions LLPFinance department

North Tower, Level 18Singapore 048583Tel: +65 6535 7777Fax: +65 6532 7662

*Please send your payment only after you have

SpeakersPartners and Directors from EY Singapore’s Tax practice

Guest speakerDr Tan Khee Giap Co-Director, Asia Competitiveness Institute (ACI) Associate Professor of Public Policy Lee Kuan Yew School of Public Policy National University of Singapore Chairman, Singapore National Committee for

Who should attend

Tax thought leadership

Ernst & Young Solutions LLP’s Tax practice aims to give you insights on the tax issues that matter in today’s fast-changing business

read You and the Taxman.

Past issues of You and the Taxman can be downloaded from http://www.ey.com/SG/en/Services/Tax/Library---You-and-the-taxman

You and the Taxman Issue 4, 2014

You and the Taxman Insights on tax issues that matter Issue 3, 2013

The battle against BEPS

The impact on Singapore of the OECD’s new tax roadmap

Permanent establishments: now you see them, now you don’t

Up in the air: taxing the cloud

Reining in withholding tax risks

Indirect share transfers in Asia cast under the spotlight

Managing above the line: how customs planning can save costs










About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© 2015 Ernst & Young Solutions LLP. All Rights Reserved.

APAC No. 12000385ED None

Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A).

In line with EY’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

www.ey.com/sg/tax

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