insights on tax issues that matter you and the taxman
TRANSCRIPT
You and the Taxman Insights on tax issues that matter Issue 4, 2019
What you need to consider in setting up a robust tax corporate governance framework
How VCCs can go the extra mile
Malaysia Budget 2020: What’s in store
US tax considerations for foreign real estate investors
Second phase of peer reviews on BEPS Action 13 – Singapore’s report
Navigating the sea of change in transfer pricing
Planning ahead for the individual tax filing season
You and the Taxman
Tax watch
Soh Pui MingPartner and Head of Tax, Singapore Ernst & Young Solutions LLP
The second half of 2019 has continued to be eventful — lots of tax developments.
In an EY webcast held in February this year, more than half of 1,800 respondents said they expect to see more tax changes this year than in any of the past three years. Looking back now, the global tax changes that have unfolded over the past 11 months have certainly borne out this outlook.
The international tax community is seeing various developments in the OECD’s BEPS 2.0 project, with dramatic changes – including new nexus definitions, revised profit allocation rules and a global minimum tax – being discussed. Tax legislative changes are being implemented in various jurisdictions. Businesses are facing increased demands and pressure as they come to grips with complex tax reforms, challenges in digitalisation and the increased controversy risk.
Amid this changing global backdrop, Singapore’s tax landscape remains relatively stable. Even then, the country is not immune to change. Singapore needs
to continue to closely monitor global tax developments and actively take part in OECD discussions, so as to enable it to provide a conducive environment for businesses.
For tax professionals, putting uncertainties in the external landscape aside, there is a real opportunity for them to move the tax function from the backroom to the boardroom, and become strategic advisors to the business. As tax policy becomes more complex, tax matters will become part of an organisation-wide concern that requires strategic attention from the top. Tax professionals have a critical role to play in helping their organisations detect tax risks early and provide proactive decision-making support.
For tax professionals to provide this value-add, having insights on the most pressing tax issues is fundamental. In this issue, we bring you our analysis of the topical issues in the tax world today, whether in Singapore or globally, to help your organisation navigate business complexities with even greater confidence.
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Issue 4, 2019
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In this issue
04 What you need to consider in setting up a robust tax corporate governance framework What are the considerations for businesses as they design and implement a robust tax corporate governance framework?
08 How VCCs can go the extra mile How can the Variable Capital Company (VCC) framework be further enhanced to optimise the benefits for the funds industry?
12 Malaysia Budget 2020: What’s in store What are the key measures that Singapore companies should be aware of when they are planning their investments in Malaysia?
16 US tax considerations for foreign real estate investors Foreign investors venturing into US real estate should familiarise themselves with key aspects of the US tax system that could impact their return on investment.
20 Second phase of peer reviews on BEPS Action 13 – Singapore’s report The OECD released in September 2019 the compilation of outcomes of the second phase of peer reviews of the minimum standard on Action 13 of the BEPS project.
24 Navigating the sea of change in transfer pricing The Transfer Pricing and International Tax Survey 2019 found that degrees of change and transparency in global transfer pricing, already at high levels, are accelerating almost exponentially.
28 Planning ahead for the individual tax filing season With tax filing season a few months away, now is a good time to take stock of your tax position and optimise your after-tax income.
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What you need to consider in setting up a robust tax corporate governance frameworkCorporate taxpayers are increasingly adopting tax corporate governance (TCG) frameworks to manage and mitigate tax risks. Boards, too, are increasingly involved in tax risk management. Chai Wai Fook and Emily Marsden highlight some of the considerations for businesses as they design and implement a robust TCG framework.
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In this increasingly complex tax environment, corporate taxpayers are embracing the opportunity to formalise TCG within their organisations. This is a good thing as an effective TCG framework enables a
business to proactively manage its tax risks and mitigate the burden of using precious resources to deal with tax risk surprises.
The benefits of a TCG framework go beyond establishing a formal documentation of tax processes within an organisation or group. A robust TCG framework properly implemented eliminates reactive tax risk management, which is time-consuming and potentially costly. Organisations benefit from fewer tax errors and enhanced tax dispute management with a streamlined tax function. More importantly, it provides strategic advantages such as proactive identification of tax law changes that may impact the business and strengthens the connection between tax and business. Ultimately, it enhances the organisation’s reputation.
Understanding the TCG frameworkTCG can be defined as a set of formally documented policies, procedures and controls that enables a business to manage tax risks such as tax compliance risks or controversies. A TCG framework identifies significant tax matters, reports on these internally and allows these to be reviewed on a timely basis to mitigate the associated risks and avoid unexpected or unacceptable reputational damages or monetary exposures. In addition, it entails ongoing reviews of the underlying tax controls by an internal or external independent reviewer to test whether the TCG framework is operating as intended.
A TCG framework represents a fundamental shift in how tax risks are managed within an organisation or group. The board of directors is responsible for developing a tax strategy and overseeing significant tax risks, and the management’s role is to embed procedures that put the tax strategy into practice.
How then does a business go about planning, executing and implementing a robust TCG framework? We highlight key areas that companies should consider.
Engaging internal stakeholdersAs tax is regarded as a highly technical area, it is no surprise that the CFO and the in-house tax director are typically assumed to be the main stakeholders. However, the reality is that the internal stakeholders for implementing a TCG framework go beyond them. These include, for example, the board of directors (or board sub-committee), business units that may impact the tax risks of the organisation (such as the mergers and acquisitions department) and business units involved in tax controls testing (such as internal audit). These stakeholders will need to be consulted throughout the development of the TCG framework, hence they should be identified early.
It is important to get buy-in from the top and other stakeholders. Significantly, board approvals should be sought early given that their specific input is needed to develop the tax strategy and endorse the final TCG policies.
Designing the TCG frameworkBusinesses often have some form of existing TCG procedures that detail aspects such as tax compliance, tax risk management and reporting of material tax exposures to the management. These should be reviewed so that any relevant content can be included in a comprehensive TCG framework.
In this regard, the business can undertake a gap analysis exercise that compares its current-state TCG policies and procedures against best practices or government regulations on TCG instead of building a TCG framework from scratch.
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The business can also use a project roadmap that details how to plan, execute and implement the TCG framework. With a robust roadmap, companies are better placed to achieve a successful outcome and less likely to waste resources and management time.
Developing the content An important area is the technical and operational content that will be formally documented in the TCG policies. In developing this content, the business should consider if there are any local TCG laws or requirements that should be complied with.
It is also important for the business to think about what content needs to be included to align the TCG framework with the company’s broader corporate governance framework. Businesses with a regional or global footprint should check if there are any global TCG considerations and whether the local TCG polices align with the organisation’s global policies. They should also consider if there are any foreign in-country TCG requirements in other operating jurisdictions that should be considered in the development of the local policies.
Putting it into practiceThe implementation of the TCG framework after it has been finalised needs careful planning. Considerations include having internal communications and awareness sessions on the TCG framework, as well as briefing and training the board and staff on the contents of the TCG policies and procedures.
Storing and publishing the TCG documents on a centrally accessible location is also critical for ease of reference, updates and training of new staff.
The business should also consider how the TCG framework will be tested. These include periodic testing of the TCG framework documents, tax controls and tax processes to ensure that the framework is operating as intended and any deficiencies are addressed.
Thinking aheadTCG may not be the first thing on companies’ agendas when it comes to corporate governance, but it should occupy a prominent position, especially in today’s ever-changing compliance and regulatory landscape. Establishing a TCG framework provides the organisation or group with an opportunity to review and enhance their procedures and controls and minimise the risk of non-compliance.
The establishment of a robust TCG framework requires considered planning and the involvement of many internal stakeholders, including the board. It is therefore important to plan ahead, in order to develop a tailored and effective framework that suits your business.
Contact us
Emily Marsden Director, Tax ServicesErnst & Young LLP
Chai Wai Fook Partner, Tax ServicesErnst & Young Solutions LLP
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How VCCs can go the extra mile The launch of the Variable Capital Company (VCC) is widely expected to raise the game for Singapore’s fund management industry. How can the VCC framework be further enhanced to optimise the benefits for the funds industry? Louisa Yeo and Sima Shah explore.
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Over the years, Singapore has gained recognition and popularity amongst investors, as fund managers increasingly use the city-state as a platform to invest into various regions, particularly the Asia-Pacific. This growth has been boosted by the Singapore Resident Fund Tax Exemption Scheme introduced in 2006,
which positions the city as a viable fund domicile jurisdiction. Since then, together with the Enhanced Tier Fund Tax Exemption Scheme introduced in 2009, Singapore is viewed favourably in providing tax neutrality at the fund level.
Still, compared to other common fund jurisdictions such as the Cayman Islands, Luxembourg and Ireland, Singapore had fewer legal forms available for fund vehicles to adopt. To address this, in 2016, the Government announced the introduction of the Variable Capital Company (VCC) to further bolster Singapore’s growth as a fund management hub.
The legal, regulatory and tax framework of the VCC has been firmed up and the VCC is expected to be launched in early 2020. The Singapore asset management industry is eagerly waiting to incorporate this new entity within their fund structures.
VCCs look set to make Singapore an even more attractive fund management hub by providing fund managers with greater flexibility on the domiciliation of funds, whether open-ended or closed-ended. VCCs will also have a positive impact on the operational and tax efficiency of funds that are structured out of Singapore, especially since VCCs can repatriate and make redemptions directly out of capital and have access to Singapore’s tax treaty network. This will greatly benefit the growth of Singapore’s asset management industry as well as the supporting infrastructure, all of which should eventually contribute to overall job creation and the country’s economy.
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Whilst this is an exciting game changer for the fund management industry, what challenges lie ahead and what more can be done to finetune VCCs to optimise their benefits?
Potential challengesA key consideration when launching a fund is the investors’ familiarity with the fund domicile location. Whilst Singapore is popular amongst Asian investors, the use of the city-state as a master fund platform is less established with US-based investors and European investors, who typically invest via the Cayman Islands, Luxembourg or Ireland. To attract such investors, many Singapore fund managers currently incorporate feeder vehicles in the Cayman Islands.
In particular for US investors, such fund vehicles must have the ability to “check-the-box”, which is critical from a US tax perspective. VCCs can avail of the US check-the-box election, which puts them on an equal footing with some of the typical Cayman Islands fund vehicles. Nevertheless, it will take time for investors to change their mindset and move away from the traditional Cayman Islands fund structures.
In addition, the Cayman Islands is a favoured jurisdiction for hedge funds and open-ended funds due to the sheer simplicity of the fund framework and the ease of transferring and redeeming shares – freely and at no cost. In Singapore, however, the transfer of shares of VCCs are subject to stamp duty, which may make such funds shy away from using this new structure, especially given that the administrative burden to comply with the stamp duty requirements will fall on the investors.
For Singapore fund managers making investments through multiple Singapore companies operating as special purpose vehicles (SPVs), the VCC may prove to be cost-effective, given that multiple cells within the VCC can be set up for separate investments instead of using various SPVs. At present, however, it is not entirely clear how existing Singapore SPVs or funds can be converted into a VCC construct and whether there are any tax or stamp duty implications on the transfer of assets or shares in the event of such conversion. Shedding light on this area will provide greater clarity and certainty to fund managers and investors and further strengthen the VCC regulations. This could, in turn, encourage the take-up of the VCC structure.
Furthermore, whilst the VCC legislation clearly provides for the ring-fencing of assets and liabilities, there is limited precedent on how this could potentially apply in the international law context. Would other countries in which the investments are made also respect the ring-fencing of assets in each cell of the VCC?
Tapping a wider audienceThe Asia-Pacific has witnessed rapid expansion in family offices in recent years and this buoyant growth is expected to continue. A large number of family offices invests in multiple strategies either through a segregated portfolio company in the Cayman Islands or by setting up a separate Singapore SPV for each strategy if the main holding vehicle is based in Singapore. Single family offices are not required to be registered or licensed with the Monetary Authority of Singapore (MAS) and are therefore generally not registered or licensed.
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Given that current legislation requires that the VCC must generally be managed by a licensed or registered fund manager in Singapore, the VCC is hence ruled out for single family offices. This is unfortunate as the VCC would have been an ideal structure for a family office.
Similarly, many Singapore fund managers focusing only on real estate investments are not required to be registered or licensed with the MAS and prefer not to because of the additional compliance requirements that follow. Such real estate fund managers that are exempt from licensing typically set up a Singapore fund platform involving multiple tiers of Singapore SPVs to ring-fence each investment made. The VCC construct would also have worked very well for such real estate funds.
Relaxing the licensing requirement for VCC fund managers could therefore broaden the target audience for this framework significantly. Family offices and real estate funds are expected to continue to flourish in Singapore and they look set to take up a significant share of the market. Providing a level playing field for all sub-sectors in the asset management industry will help to promote the success of the VCC.
Sima Shah Senior Manager, Financial Services Tax EY Corporate Advisors Pte. Ltd.
Louisa Yeo Partner, Financial Services Tax Ernst & Young Solutions LLP
Singapore provides a compelling story for fund managers looking to establish themselves in the Asia-Pacific region, given its political and legal certainty, as well as the thriving services sector supporting the asset management industry. Further, passporting schemes such as the Asian Retail Fund Passport will certainly add to the country’s appeal if Singapore signs up for it.
No doubt the introduction of the VCC is very timely and will boost the fund management industry. Further tweaks made to the VCC framework will give the country a distinct advantage and enable the fund management industry to leapfrog from good to great!
“VCCs look set to make Singapore an even more attractive fund management hub by providing fund managers with greater flexibility on the domiciliation of funds, whether open-ended or closed-ended.
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Malaysia Budget 2020: What’s in storeMalaysia Budget 2020 sends a clear message that the country aims to be a preferred investment destination. Sharon Yong and Wong Hsin Yee discuss the Budget measures that Singapore companies should be aware of when they are planning their investments in Malaysia.
Tabled on 10 October 2019, Malaysia Budget 2020 marks the second Budget by the Pakatan Harapan government and contains a range of tax and non-tax measures aimed at
long-term sustainable growth.
Several targeted tax incentives were proposed, including notably:
• RM1b allocated per year for five years of customised incentive packages to attract Fortune 500 companies and global unicorns in the high technology, manufacturing, creative, and new economic sectors to Malaysia (such companies must invest at least RM5b in Malaysia)
• RM1b allocated per year for five years of customised incentive packages for Malaysian export-oriented businesses with the ability to grow and export their products and services globally
• For the electrical and electronics (E&E) sector:• Special five-year investment tax allowance for
existing businesses that have exhausted their reinvestment allowance claims, at 50% of the reinvested expenditure
• Income tax exemption for up to 10 years for E&E companies investing in selected knowledge-based services
The above incentives will be considered for applications received by the Malaysian Investment Development Authority (MIDA) between 1 January 2020 to 31 December 2021.
• Tax exemption for IP-generated income for a period of up to 10 years, based on the modified nexus approach. This will be considered for applications received by the MIDA between 1 January 2020 to 31 December 2022.
Finance Minister Lim Guan Eng announced the government’s commitment to expedite approvals for investments and improve the ease of doing business by reducing the number of steps required to register a business. It will also establish a “Special Channel” under InvestKL to attract investments from China. In tandem, various initiatives, including the National Fiberisation & Connectivity Plan, were also announced to encourage R&D activities, improve infrastructure and build a digital Malaysia.
The Asia-Pacific has been a key growth engine of the world in recent years and will remain so for the near future. The US-China trade dispute has prompted US multinational corporations (MNCs) to consider relocating operations outside of China, or to adopt a China plus one strategy. The above measures are targeted to provide opportunities for Malaysia to attract foreign direct investments (FDI).
Across the region, competition for FDIs is fierce. Vietnam is already receiving a lot of interest and investment flows. Thailand recently announced a package of incentives, including a 50% tax cut, for companies looking to relocate their operations. Indonesia has introduced various tax incentives under its GR45/2019 in June 2019 for labour-intensive
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• Women@Work - RM500 monthly wage incentive for graduates and RM300 monthly hiring incentives for employers, for two years, for hiring women returning to work after a year or more away. Further, the income tax exemption for women returning to work after a career break is also extended to 2023.
• Locals@Work – RM350 or RM500 (depending on sector) monthly wage incentive for Malaysians and RM250 monthly hiring incentives for employers, for two years, for replacing foreign workers.
• Apprentice@Work – Additional monthly allowance of RM100 for trainees on apprenticeships, and double tax deduction on expenses incurred by companies participating in Skim Latihan Dual Nasional is extended to include academic fields other than engineering and technology.
Budget 2020 also includes several measures aimed at improving employment conditions in Malaysia:
• Minimum wage to be increased to RM1,200 per month in “major cities”, effective 2020 (the current national minimum wage is RM1,100 per month)
• Mandatory maternity leave to be increased from 60 days to 90 days, effective 2021
• Eligibility for overtime extended to those earning less than RM4,000 per month (previously the threshold was RM2,000 a month)
• Employment Provident Fund to cover contract workers
• Improved protection and procedures for handling sexual harassment complaints
• New rules prohibiting discrimination on the basis of religion, ethnicity and gender
Singapore businesses with operations in Malaysia should take note of the above measures, both in terms of potential opportunities as well as compliance requirements.
industries, training programmes, as well as R&D, and announced plans to gradually reduce the headline corporate income tax rate from 25% to 20%, starting from 2021. India has announced that new manufacturing companies that commence operations by 31 March 2023 will enjoy a 15% tax rate.
The new measures described above demonstrate the Malaysian government’s resolve to increase the country’s attractiveness to foreign investors whilst at the same time encourage its homegrown enterprises to scale up and internationalise in order to take advantage of the growth potential in the region.
It is therefore an opportune time now for Singapore businesses that are affected by the US-China trade dispute or looking to expand their operations to examine the various benefits on offer and consider investing in Malaysia. Given close proximity and similar cultures, Malaysia is often one of the first countries that come to mind for Singapore companies as they embark on their internationalisation journey. In view of Singapore’s high-cost structure, companies may consider having a “twin-tower” operation by locating labour-intensive functions in Malaysia and less labour-intensive ones in Singapore.
The Malaysian workforceBudget 2020 also introduced the Malaysians@Work initiative, aimed at encouraging the employment of certain segments of society:
• Graduates@Work – RM500 monthly wage incentive for graduates and RM300 monthly hiring incentives for employers, for two years, for hiring graduates employed for more than 12 months.
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Tax enforcementContrary to some pre-Budget expectations, no new taxes or increase in taxes has been proposed, save for a new top personal income tax rate from 28% to 30% for individuals with taxable income over RM2m, which affects only around 2,000 taxpayers. Furthermore, the Finance Minister clarified that the Goods and Services Tax (GST) will not be re-introduced. There is also no new “digital tax” announced, apart from the service tax on imported digital services, which was announced in Budget 2019 and effective 1 January 2020.
Instead, there will be a focus on rationalising the tax incentives regime, reducing tax leakage and improving compliance through more effective auditing. One key focus in expanding the tax base is the shadow economy in Malaysia, which is estimated to make up 21% of Malaysia’s gross domestic product (GDP). To this end, the Malaysian Inland Revenue Board (MIRB) will harness big data analytics to track and collect unpaid taxes in the shadow economy. In fact, the MIRB has already been using data analytics in its administration, particularly for identifying and selecting audit targets.
In Budget 2020, the Finance Minister also announced plans to introduce a Tax Identification Number (TIN) for all corporate bodies registered in Malaysia as well as Malaysians above 18 years of age, beginning January 2021. This will pave the way for better tax enforcement and compliance in future.
Following the Budget announcement, the MIRB confirmed that the Special Voluntary Disclosure Program (SVDP), which ended on 30 September 2019, will not be extended, despite hopes for an “SVDP 2.0”. Going forward, taxpayers can expect tax penalties ranging between 45% to 300%, depending on the nature of the offence. As such, increased penalties from stricter enforcement may also help to raise tax revenues.
The increasing use of technology by the Malaysian tax authorities to improve taxpayer services as well as to perform trend analysis and other data analytics to identify potential tax audit targets is in line with how tax administrations in other ASEAN countries are evolving. Singapore companies with Malaysian tax operations should take note of these initiatives and consider if they should do a health check of their systems and filings to ensure that they have sound compliance records and that they do not have financial ratios that could increase their risk of being picked up for tax audit.
With the slew of tax incentives and measures offered in the 2020 Budget, Malaysia remains one of the top investment jurisdictions that Singapore companies may consider as they look to expand overseas. As with all expansion moves, Singapore companies should also ensure that they extend good corporate governance to their investments in Malaysia.
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Wong Hsin YeePartner, International Tax and Transaction Services Ernst & Young Solutions LLP
Sharon YongPartner, International Tax and Transaction Services Ernst & Young Tax Consultants Sdn Bhd
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US tax considerations for foreign real estate investorsForeign investors venturing into US real estate should familiarise themselves with key aspects of the US tax system that could impact their return on investment. Chester Wee and Michael Xiang discuss.
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With the unemployment rate at a 50-year low of 3.5%, the US remains one of the most attractive developed countries for foreign inbound investments, including in real estate.
Tax may often not be the foremost consideration on the minds of foreign investors but it is important to note the implications, particularly when the US tax system, including that of income tax and estate and gift tax, is widely regarded as one of the most complex and requires careful navigation.
General rules of income taxIn general, foreign corporations or individuals who are non-residents are subject to US tax on their income in three ways, including: • Income that is effectively connected to a US trade or business (ECI)• US-sourced income that is fixed, determinable, annual or periodic (FDAP)• Capital gain from disposition of US real property interests (USRPI)
Rental incomeFDAP income generally includes US-sourced interest, dividends, rents and royalties, and generally does not include capital gains (with the exception of USRPI as mentioned above). The tax rate is 30%, unless reduced by an income tax treaty (absent between the US and Singapore). When foreign investors invest in a US rental property directly, absent of any tax election (to be discussed later), they can expect a 30% withholding tax on the gross rents. When investing in a US corporation, including real estate investment trusts (REITs), foreign investors can expect a 30% withholding tax on dividends.
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In general, ECI is income, at net basis, that is associated with a US trade or business. The US federal income tax rate on ECI is 21%, the same as taxable income earned by a US corporation. A state and local jurisdiction may levy its own income tax. Foreign taxpayers who are subject to tax on ECI should also be subject to branch profit tax (BPT) on deemed repatriations from the US. The BPT is 30%, the same as if the branch were incorporated into a US corporation and distributes a dividend to its foreign parent. An election is available under section 871(d) of the Internal Revenue Code to treat all income from that property as ECI, subjecting the net income (allowing rental expenses and depreciation as deductions) at 21% instead. This election is a powerful planning tool to achieve a higher return on investment.
Capital gainsGeneral rules for real estate investments
Under the US tax laws, capital gains are generally sourced to the sellers, exempting foreign investors from US tax upon dispositions of US properties. The most notable exception is USRPI, as provided under the Foreign Investment in Real Property Tax Act (FIRPTA). The FIRPTA treats capital gains from the disposition of USPRI as ECI, and therefore subject to US income tax. USRPI can be loosely defined as US real estate or shares in a US corporation that has been a US real property holding corporation (USRPHC) in a five-year testing period.
The collection of this tax is enforced through a withholding mechanism (known as FIRPTA withholding) where the buyer, when acquiring a USRPI, should always withhold 15% of the transaction price and remit it to the Internal Revenue Services (IRS) unless the seller certifies that: 1) it is a US tax resident or 2) the property being sold, in the case of corporate shares, is not a USRPI. The seller would calculate the actual gain and
tax due on its US tax return and apply the 15% FIRPTA withholding as a refundable credit.
It should be noted that the 15% FIRPTA withholding requirement would apply to – and is occasionally missed by – foreign investors acquiring USRPIs. The foreign buyer could be liable for 15% of the transaction price together with penalties and interest if this withholding obligation were not fulfilled.
Utilising a foreign SPVA common structure adopted by foreign investors is to use a foreign SPV to hold USRPI (a property or USRPHC). A transfer of the foreign SPV would not fall within the US income tax net. The structure effectively defers the gain recognition, resulting in improved return on investment and is often factored into the transaction negotiation. There is a bonus point where the foreign investor is an individual – as the USRPI is not held directly by the foreign individual, the shares of the foreign SPV is also not subject to US estate tax. This structure may not be desired if the buyer is a US tax resident, which would generally prefer to acquire the USRPI directly and not have to hold a foreign SPV.
Real estate investment trusts A common vehicle for passive investment in US real estate is REIT, which allows no income tax at the REIT level itself if certain conditions can be met. During the holding period, the REIT can designate dividends that it distributes as ordinary or capital gain dividends to the extent that it has earnings and profits or capital gains respectively. Ordinary dividends would be subject to 30% US withholding tax as FDAP income. Capital gain dividends, on the other hand, would fall under the FIRPTA regime, similar to the case where the REIT units are disposed of directly. The FIRPTA allows an exception to the rule when the REIT is domestically controlled (DREIT). Foreign investors can be exempt from US income tax on capital gains derived from a DREIT.
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The table above summarises the US tax implications for some of the common structures for US inbound real estate investments.
Every transaction has a tax consequence that is derived from the unique set of facts and circumstances from the participants’ profiles and the nature of the transaction. Investors contemplating investments in US real estate should fully consider the relevant US tax rules as they are some of the most complex in the world today. Still, there is a competitive advantage for investors if they structure their investments appropriately, resulting in an increase in return on investment.
Whilst this article focuses on income tax, it is important to also carefully consider the aspects of US estate and gift taxation to optimise the overall tax efficiency of the US investment for individual investors.
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Michael Xiang Senior Manager, US Tax Desk EY Corporate Advisors Pte. Ltd.
Chester Wee EY Asean International Corporate Tax Advisory Leader and Partner, International Tax and Transaction ServicesErnst & Young Solutions LLP
Vehicles to hold USRPI
Directly US corporation Foreign SPV REIT
Rent 30% WHT on gross rent, or 21% + state tax on net income if a sec 871(d) election is filed
21% + state tax on net income
Foreign SPV pays 30% WHT on gross rent, or 21% + state tax on net income if a sec 871(d) election is filed
REIT may be exemption on its income
Capital gain 21% + state tax 21% + state tax None, if disposing the SPV 21% + state tax, or none in the case of a DREIT
Other considerations
BPT may apply 30% on dividend distribution
A foreign SPV would not be a US-situs asset under US estate tax rules
Only applicable to minority passive investment
More about the US Tax DeskThe US Tax Desk based in Singapore assists clients on their US investments, acquisitions and expansions, including tax due diligence, structuring, optimisation, and securing US government credits and incentives. The co-author, Michael Xiang, is based in Singapore and is part of the EY Asia-Pacific US Tax Desk team.
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Second phase of peer reviews on BEPS Action 13 – Singapore’s reportTax jurisdictions are reviewed by their peers on implementation of the minimum standard on BEPS Action 13 and the outcomes of the second phase of the peer reviews were released in September 2019. Luis Coronado highlights the findings for Singapore.
On 3 September 2019, the Organisation for Economic Co-operation and Development (OECD) released the compilation of outcomes of the second phase of peer reviews1 (the compilation) of the minimum standard on Action 13 (Transfer Pricing Documentation and Country-by-Country (CbC) Reporting) of the Base Erosion and
Profit Shifting (BEPS) project. The terms of reference in the peer review document focus on three key aspects of CbC Reporting: the domestic legal and administrative framework; the exchange of information framework; and the confidentiality and appropriate use of CbC reports.
This compilation covers the peer review of 116 jurisdictions participating in the Inclusive Framework and generally reflects the status of implementation as of 31 March 2019.2 According to the compilation, over 80 jurisdictions have already introduced legislation to impose a filing obligation for CbC Reporting on multinational enterprise (MNE) groups, covering almost all MNE groups with consolidated group revenue equal to or exceeding €750m.
Where legislation is in place, the implementation of CbC Reporting has been found to be largely consistent with the Action 13 minimum standard. However, 41 jurisdictions have received a general recommendation to either put in place or finalise their domestic legal or administrative framework, and 17 jurisdictions received one or more recommendations to make improvements to specific areas of their framework. Each of the jurisdictions reviewed received its own individual report, which together make up the compilation.
1 http://www.oecd.org/tax/beps/country-by-country-reporting-compilation-of-peer-review-reports-phase-2-f9bf1157-en.htm.2 As at 19 December 2019, there are 137 jurisdictions participating in the Inclusive Framework
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information agreements that allow for the automatic exchange of CbC reports. This includes reviewing all aspects of exchange of information, including: • The exchange of information framework• The content of information exchanged• The completeness of exchanges• The timeliness of exchanges• The process for temporary suspension of exchange
or termination of the qualifying competent authority agreement (QCAA)
• Consultation with the other Competent Authority before determining systemic failure or significant non-compliance
• The format for information exchange• The method for transmission
According to the report, Singapore has 64 bilateral relationships activated under the CbC Multilateral Competent Authority Agreement (MCAA). It has also taken steps to put in place QCAAs with jurisdictions of the Inclusive Framework that meet the conditions of confidentiality, consistency and appropriate use.
In addition to what is indicated in the report, it should be noted that Singapore has established bilateral automatic exchange of information relationships, which will continue to increase from the 64 mentioned in the compilation. As of October 2019, the number of bilateral relationships activated under the MCAA has increased to 66, and this is expected to increase as more jurisdictions activate their exchange relationships.
Singapore has processes in place that ensure that each of the mandatory fields of information as required in the CbC template is present in the information exchanged. It has also established processes to ensure that CbC reports are exchanged with all tax jurisdictions listed in Table 1 of the CbC Reporting template, in accordance with the timelines in the relevant QCAAs.
Singapore was one of the 116 jurisdictions covered in the second phase of peer reviews. It was concluded that Singapore’s implementation of the Action 13 minimum standard meets all applicable terms of reference. The peer reviews cover three key aspects and the findings pertaining to Singapore for each aspect are set out below.
Part A: Domestic legal and administrative frameworkPart A of each jurisdiction’s report analyses whether the jurisdiction has put in place a domestic legal and administrative framework to ensure CbC Reporting by the required taxpayers to the tax administration. Where applicable, this part of the report also looks at whether the recommendations made in the first annual peer review have been addressed by the assessed jurisdiction or whether these recommendations remain because they have not yet been addressed.
Part A covers the following: the parent entity filing obligation; the scope and timing of the parent entity filing obligation; the limitation on the local filing obligation; the limitation on local filing in the case of surrogate filing; and the effective implementation.
According to the report, Singapore has put in place primary and secondary legislation to implement the BEPS Action 13 minimum standard. CbC Reporting guidance has also been published. It was found that there is no change to the conclusion relating to the domestic legal and administration framework for Singapore since the previous peer review. Singapore meets all the terms of reference with regard to the domestic legal and administrative framework.
Part B: The exchange of information frameworkPart B of the report addresses whether and to what extent jurisdictions have international exchange of
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In relation to Part B, it was concluded that Singapore has the necessary processes or written procedures and meets all the terms of reference regarding the exchange of information.
Part C: Confidentiality and appropriate usePart C of the report assesses whether jurisdictions have existing measures to ensure that CbC reports are kept confidential and are used appropriately. With respect to confidentiality, jurisdictions should, amongst other things:• Have mechanisms for international exchange of
information that ensure any information received shall be treated as confidential
• Have in place and enforce legal protections of the confidentiality of the information contained in CbC reports that are received by way of local filing
• Have effective penalties for unauthorised disclosures or unauthorised use of confidential information
• In general, ensure confidentiality in practice
With respect to appropriate use, the peer review process includes an assessment of whether jurisdictions have mechanisms in place to ensure that CbC reports that are received can only be used to assess high-level transfer pricing risks and other BEPS-related risks, and for economic and statistical analysis where appropriate. These mechanisms should ensure that the CbC reports cannot be used as a substitute for a detailed transfer pricing analysis or on their own as conclusive evidence regarding the appropriateness of transfer prices or to make adjustments to the income of any taxpayer on the basis of an allocation formula.
According to the compilation, there was no information or peer input received for Singapore suggesting any issues with appropriate use. Hence, with regard to Part C, it was concluded that Singapore meets all the terms of reference relating to the appropriate use of CbC reports.
ConclusionIt was concluded that Singapore’s implementation of the Action 13 minimum standard meets all applicable terms of reference. Exchange relationships should be monitored to ensure that these continue to meet the applicable terms.
Further, the compilation confirms that significant progress has been made in the implementation of CbC Reporting requirements around the world and there is increased sharing of tax and financial data amongst tax authorities as a result. Taxpayers should therefore expect that information provided to one tax authority by filing a CbC report will be shared with other relevant jurisdictions.
The future deployment of OECD risk assessment tools, together with the existing use of CbC Reporting data analytics by many tax authorities, underscores the need for MNEs to be confident that their data governance approach is sufficient to meet both current and future demands.
Companies should also take note that there will be a public consultation in early 2020 on the CbC Reporting minimum standard. They may want to participate in this consultation and provide feedback based on their experiences with CbC Reporting.
Contact us
Luis Coronado EY Asia-Pacific Transfer Pricing Leader and PartnerErnst & Young Solutions LLP
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In conversation with
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Navigating the sea of change in transfer pricingThe Transfer Pricing and International Tax Survey 2019 found that degrees of change and transparency in global transfer pricing, already at high levels, are accelerating almost exponentially. We speak with Luis Coronado (LC) on what the implications are for businesses.
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In terms of specific forms of tax risk, the top three factors for Asia-Pacific businesses are: information being made public and reputational risk; stricter enforcement; and information-sharing amongst tax authorities.
EY: With these profound changes ahead, how should businesses respond? LC: Clearly, businesses cannot afford to sit idle. Those with complex or highly digital business models with significant intellectual property need to get engaged and ensure that they review and carry out calculations on the options presented. They should make it a point to comment on the reports and drafts from the OECD when these are made available — that is, they must provide feedback and become actively involved.
At the very least, companies need to begin modelling how new concepts and rules might affect their business arrangements and tax results. Businesses may not have complete information as of now, but they have enough to evaluate what they would need to do under amount A versus amount B versus amount C of the Unified Approach under Pillar One.
EY: How can companies better manage growing tax risks through their transfer pricing documentation efforts? LC: Expanding documentation efforts is key. Companies doing business across borders should recognise that contemporaneous documentation of a well-conceptualised and consistent across-the-globe transfer pricing structure is essential to reducing tax risks.
By having their documents ready, companies can respond more rapidly and competently. This signals to the authorities that you have put in your time on looking at the issues and have used a consistent framework.
EY: What is the general sentiment on the international tax environment, based on the findings of the Transfer Pricing and International Tax Survey 2019? LC: Eight out of 10 executives (79%) surveyed described today’s international tax environment as “uncertain”, with 40% indicating it is very much or extremely so.
Companies are already experiencing considerable changes in areas such as increased transparency within BEPS. But now, the OECD is advancing the discussion further. New proposals seek to update tax policies for the digital age, exploring ideas for reallocating profits by new yet undetermined means, such as on a revenue basis.
There are also new proposals to reduce the advantages gained by locating in low-tax jurisdictions through the creation of a global minimum tax — following the lead of the US, whose Tax Cuts and Job Act (TCJA) introduced this concept within international taxation.
Overall, this is a fluid global transfer pricing tax environment, where many traditional principles are being re-evaluated, and companies need to become more engaged with the changes.
EY: What does the survey reveal about the key factors driving transfer pricing policies?LC: We found that tax risk – namely, its avoidance and mitigation – is by far the most critical issue driving the transfer pricing strategies of respondents. Of particular note is that more respondents in Asia-Pacific (74%) rated tax risk management as the most important factor influencing their transfer pricing policies, compared to their counterparts in Europe (68%) and US (56%).
In conversation with
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Tax officials, seeing such a speedy, confident and well-documented response, are more likely to accept a company’s circumstances and explanations and therefore would be less likely to enact adjustments or pursue any deeper dives.
That said, we found from the survey that only one-third of executives said their companies stand ready with fully compliant transfer pricing documentation in every country in which they operate. More commonly, businesses tend to focus on ensuring that their transfer pricing practices are well-documented in those countries viewed as having higher tax risk. The remaining say they do not proactively document their transfer pricing practices, but instead adapt a master file as necessary or develop documentation only upon audit request.
Whilst having such a risk-focused approach is understandable in many cases, companies should now take steps to ensure that they have their documentation “ready to go” across a much wider swathe of their global footprint, considering that tax risk is increasing almost across the board.
EY: Any other strategies that businesses should consider in responding to the changes in global transfer pricing?LC: At present, most companies use text documents and spreadsheets as their primary tools for transfer pricing documentation. Only about a quarter of businesses have more integrated technologies at their
disposal. This survey finding suggests that technology presents another opportunity for improving transfer pricing policy and execution. Tax departments will find it worthwhile to embrace new technologies and work on digitalising their core businesses and support functions.
Businesses also need to take a close look at their tax department’s resources and obtain more help, if necessary. One way to address any resource gap is to pursue greater outsourcing or co-sourcing. The survey found that about half of all companies, regardless of geography, outsource significant portions of their transfer pricing documentation activities to external service providers.
Contact us
Luis Coronado EY Asia-Pacific Transfer Pricing Leader and PartnerErnst & Young Solutions LLP
About the Transfer Pricing and International Tax Survey report 2019
Since 1995, EY has taken the pulse of global transfer pricing every few years by collecting and analysing details on attitudes and experiences across a wide spectrum of taxpayers.
For 2019, over 700 responses from senior tax and transfer pricing executives representing the Americas, Europe and Asia-Pacific were collected. The survey was conducted between March 2019 and June 2019.
Explore the survey report by scanning the QR code below:
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You and the Taxman
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Planning ahead for the individual tax filing season With tax filing season a few months away, now is a good time to take stock of your tax position and optimise your after-tax income. Kerrie Chang and Alison McNicholas examine the key points to note.
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The deadline for filing the annual individual income tax return in Singapore for income earned in calendar year 2019 is 15 April 2020 (or 18 April 2020 if filing electronically). Whilst the tax filing season is still a few months away, it is a good time to start evaluating your tax position. In particular, the self-employed, those looking
to claim investment-based tax reliefs and dual-income households may benefit from taking a proactive approach to their tax filings.
Tax reliefs A number of deductions or reliefs are automatically included by the IRAS when calculating an individual’s taxable income. These include deductions for qualifying donations, NS-man Relief, CPF Relief and the Supplementary Retirement Scheme (SRS) Relief, amongst others. The information on other recurring tax reliefs, such as child relief or spouse relief, is carried forward from prior years’ assessments.
It is still prudent to check the tax return prior to submission to ensure that all eligible reliefs are accurately reflected. This is particularly so in cases where the circumstances have changed, such as the arrival of a newborn, which will not be auto-included in the assessment. Individuals should also review the qualifying criteria to claim the respective reliefs to ensure that they still meet the requirements.
Saving for the futureTax-deductible voluntary contributions to the CPF Special or Retirement Account are available up to a relief cap of S$14,000 (i.e., S$7,000 for the individual taxpayer and S$7,000 for family members). Relief for contributions to the SRS is available up to a cap of S$15,300 for Singapore citizens and Singapore Permanent Residents, or S$35,700 for foreigners.
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These investment-linked tax reliefs aim to encourage individuals to accrue funds in government-approved funds for the purpose of saving. Whilst the CPF top-up is mainly related to the individual or their family member’s retirement or Medisave funds, the SRS is more flexible in terms of what the funds can be used for and when they can be withdrawn.
Whilst it may still be beneficial for a household to contribute to the SRS or top up CPF as investments for the future, it may not be efficient from a tax perspective if the individual has already reached the relief cap, due to the S$80,000-cap on the total personal tax reliefs claimable in a year. In this case, individuals may consider investing via other means that could allow more flexibility or greater returns.1
Individuals who are planning to claim investment-based reliefs, including the CPF Cash Top-Up Relief, SRS Relief and Life Insurance Relief, should be aware that contribution or payment of premiums must be made before 31 December 2019.
Maximising after-tax income Some proactive planning can help to maximise the benefits of the reliefs, particularly for dual-income households. Working mothers of a Singaporean child or children, who claim Working Mother's Child Relief (WMCR) and possibly other reliefs available only to female taxpayers, such as the Grandparent Caregiver Relief (GCR) and Foreign Maid Levy Relief in addition to the claim for relief for compulsory CPF contributions, may reach the personal income tax relief cap of $80,000 or reduce her marginal tax rate to zero or significantly lower than that of her husband.
The family can then review the allocation of available reliefs and rebates that can be shared between the husband and wife in order to maximise their overall after-tax income. In this case, it would be more beneficial from a household perspective for the male taxpayer to claim the remaining shared reliefs available. These include the Qualifying Child Relief and the Parenthood Tax Rebate, if available to the household.
1 All financial decisions should be carefully considered and advice should be sought where necessary.
Similarly, even if the household does not have Singaporean children and does not qualify for a number of the above reliefs, if the husband is a higher income earner than the wife, the benefit of claiming a relief against the total taxable income may be greater for him. For example, if the husband’s top marginal tax rate is 22%, the S$4,000 child relief would equate to tax savings of S$880, whereas if the wife is paying tax at, say, a marginal rate of 11.5%, the tax savings for the same relief claimed would be S$460.
As illustrated above, some proactive planning for tax filing and relief claims can reduce the overall tax payable for the household and help to put the family in a better financial position.
Self-employed individualsSelf-employed individuals must consolidate their yearly earnings and any expenses incurred to generate their earnings. It can be challenging to differentiate between personal expenses and business expenses, especially if the individual works from home or utilises personal assets, such as a car or home internet connection to conduct business. Hence, it is important to maintain detailed records throughout the year.
Self-employed individuals or those earning a side income through part-time freelance work should familiarise themselves with what constitute deductible expenses and what would be considered personal in nature. It is important to note that expenses that are capital in nature (e.g., fixed assets) are not deductible business expenses, though depreciation of qualifying fixed assets may be claimed as a capital allowance. Identifying qualifying deductions correctly can help to reduce the total tax payable and improve your overall financial position.
Personal expenses that cannot be claimed as deductions against trade income include the cost of travelling to and from home; premiums for insurance life policies taken on by the sole proprietor or partner; food, household and entertainment expenses for personal use; and medical expenses incurred on the sole proprietor or partner.
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Claiming deductions against personal taxable incomeIndividuals with tenanted properties can also claim deductions for expenses incurred. The Inland Revenue Authority of Singapore (IRAS) gives individuals the option to file a simplified deduction claim for rental expenses incurred from tenanted residential properties, where the deductible expenses are deemed to be 15% of the gross rental income. Mortgage interest on the loan to purchase the property can also be claimed as an additional deductible expense. This aims to reduce the burden of record-keeping on the property owner, as the owner is required to only keep records of the mortgage interest paid under this simplified claim.
Having said that, the IRAS will not allow the 15% deemed expense as a deduction if the owner has not incurred any deductible expenses over and above the mortgage interest in generating the rental income, or if the tenanted property is not a residential property. As such, it may be worth maintaining expense records throughout the year to determine whether the actual allowable expense deductions exceed the simplified expenses claim.
Whilst the IRAS does not require individuals to submit supporting documents along with their tax return submissions, the law requires that proper records and accounts be retained for five years.
Filing and paying your taxes with easeEmployers with seven or more employees are required to remit their employees’ employment income electronically through the Auto Inclusion Scheme (AIS) by 1 March 2020. In such cases, employees need not
report the employment income in their personal tax forms. That said, individuals who receive other sources of income, such as trade income or rental income, must still file a tax return to report this taxable non-employment income.
The auto-included information, income and reliefs and deductions can be viewed in the Income, Deductions and Reliefs Statement (IDRS) section of myTax Portal for individuals to confirm the accuracy of the details.
Individuals with a filing requirement or relief claims that differ from previous years can complete their tax return online any time between 1 March to 18 April 2020 by logging on to myTax Portal using their SingPass or IRAS Unique Account (IUA).
In financial year 2018/19, individual income tax accounted for 22% of the total tax collection of S$52.4 billion by the IRAS. This makes individual income tax the second highest source of tax revenue, behind corporate tax collections2. Individual income tax is clearly a key contributor to revenue and the IRAS is increasingly vigilant in ensuring that accurate information is filed and taxes are collected efficiently.
That said, the IRAS provides numerous reliefs and deductions to assist taxpayers with their tax burden. Individual taxpayers should stay informed, identify all sources of income, keep track of their expenses, and review their tax position regularly. This will help ensure that their tax return submission is accurate and that allowable deductions or reliefs are offset against their taxable income efficiently to allow them to maintain an optimal financial position.
Contact us
Alison McNicholas Manager, People Advisory Services EY Corporate Advisors Pte. Ltd.
Kerrie Chang Partner, People Advisory ServicesMobility - TaxErnst & Young Solutions LLP
[email protected] 2 https://www.iras.gov.sg/irashome/Annual-Reports/Corporate-Information-and-Highlights/Our-Revenue-Collection/
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Income tax
6 November 2019 Income tax: income tax treatment arising from adoption of FRS 109 – financial instruments (second edition)
21 October 2019 Income tax treatment of hybrid instruments (second edition)
21 October 2019 Income tax treatment of real estate investment trusts and approved sub-trusts (fifth edition)
IRAS e-Tax guides issued or revised from 1 August 2019 to 30 November 2019
Goods and Services Tax (GST)
27 November 2019 GST: guide on hand-carried exports scheme (third edition)
27 November 2019 GST: guide on exports (sixth edition)
21 November 2019 GST: guide for e-commerce
19 November 2019 GST: digital payment tokens
13 November 2019 GST: advance ruling system (sixth edition)
11 November 2019 GST: web-hosting services and server co-location services (second edition)
8 November 2019 GST: guide on exemption of investment precious metals (IPM) (twelfth edition)
1 November 2019 GST: customer accounting for prescribed goods (fourth edition)
30 October 2019 GST: approved contract manufacturer and trader (ACMT) scheme (second edition)
30 October 2019 GST guide for the aerospace industry (fifth edition)
30 October 2019 GST: guide on approved import GST suspension scheme (second edition)
29 October 2019 GST: assisted compliance assurance programme (ACAP) (tenth edition)
29 October 2019 GST: renewal of assisted compliance assurance programme (ACAP) status (second edition)
25 October 2019 GST: approved marine customer scheme (AMCS) (second edition)
25 October 2019 GST guide for the biomedical industry (fourth edition)
25 October 2019 GST guide for the marine industry (second edition)
22 October 2019 GST: approved third party logistics company scheme (fourth edition)
22 October 2019 GST guide for the logistics service industry (second edition)
22 October 2019 GST: general guide on group registration (third edition)
22 October 2019 GST: guide on imports (fifth edition)
22 October 2019 GST: import GST deferment scheme (sixth edition)
22 October 2019 GST: major exporter scheme (tenth edition)
21 October 2019 GST: approved refiner and consolidator scheme (ARCS) (seventh edition)
18 October 2019 Claiming of GST on re-import of value-added goods (third edition)
18 October 2019 GST: guide on reimbursement and disbursement of expenses (third edition)
18 October 2019 GST: zero-rating of tools or machine used in manufacturing of goods for export to overseas customer (second edition)
What’s new
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Monetary Authority of Singapore (MAS) circulars issued from 1 August 2019 to 30 November 2019
29 October 2019 GST remission on expenses for prescribed funds managed by prescribed fund managers in Singapore
Agreements for Avoidance of Double Taxation (DTAs) signed or ratified from 1 August 2019 to 30 November 2019
DTAs signed27 August 2019 Singapore – Turkmenistan
16 August 2019 Singapore – Ukraine (Protocol)
Goods and Services Tax (GST)
11 October 2019 GST: clarification on “directly in connection with” and “directly benefit” (fourth edition)
11 October 2019 GST guide on specialised warehouse scheme (third edition)
11 October 2019 GST: guidelines on determining the belonging status of supplier and customer (second edition)
1 October 2019 GST: guide for charities and non-profit organisations (fourth edition)
30 September 2019 GST: guide for advertising industry (second edition)
24 September 2019 GST guide on attribution of input tax (fifth edition)
24 September 2019 GST: guide on exemption of investment precious metals (IPM) (eleventh edition)
24 September 2019 GST: partial exemption and input tax recovery (fifth edition)
24 September 2019 GST: assisted self-help kit (ASK) annual review guide (ninth edition)
23 September 2019 GST: exhibition, convention and ancillary services (second edition)
23 September 2019 GST: guide for the insurance industry (fifth edition)
23 September 2019 GST: concession for REITs and qualifying registered business trusts listed in Singapore (fifth edition)
18 September 2019 GST: guide for property developer (fourth edition)
18 September 2019 GST: guide for property owners and property holding companies (fifth edition)
13 September 2019 GST: for retailers participating in tourist refund scheme (refund claims made on or after 4 April 2019)
13 September 2019 GST: the electronic tourist refund scheme (eTRS) (refund claims made on or after 4 April 2019)
12 September 2019 GST: guide on non-business receipts – business tests and the effect of non-business receipts on input tax claims
11 September 2019 GST: time of supply rules (second edition)
2 September 2019 GST: transfer of business as a going concern and other excluded transactions (fourth edition)
30 August 2019 GST: guide on exemption of investment precious metals (IPM) (tenth edition)
26 August 2019 GST: taxing imported services by way of an overseas vendor registration regime (second edition)
22 August 2019 GST: taxing imported services by way of reverse charge (second edition)
16 August 2019 GST: customer accounting for prescribed goods (third edition)
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Our tax professionals in Singapore provide you with deep technical knowledge, both globally and locally, combined with practical, commercial and industry experience. We draw on our global insights and perspectives to build proactive, truly integrated direct and indirect tax strategies that help you build sustainable growth, in Singapore and wherever else you are in the world.
Tax services in Singaporelocal compliance and accounting experience, giving you the access, visibility and control you want. In one country or many, you can benefit from an integrated, consistent, flexible quality service with tax compliance, statutory accounts preparation and tax accounting calculation support. This can enhance your compliance function whilst improving efficiencies across your financial supply chain.
Tax Accounting and Risk Advisory Services To help you meet the challenges of today’s complex business environment, including demands for more transparency and greater tax department effectiveness, we provide assistance in three key areas:
• Tax accounting: under IFRS and local GAAP• Tax function performance: improving
organisational strategy, processes, and data and systems effectiveness
• Tax risk: identifying, prioritising, monitoring and remediating risk
Our talented people, consistent global methodologies and tools, and unwavering commitment to quality service can help you build strong compliance and reporting foundations, sustainable organisational strategies and effective risk management protocols to help your business succeed.
Corporate Services EY Corporate Services team supports your business in the following areas: entity formation and company secretarial matters, the preparation of management and statutory financial statements, monthly book-keeping and payroll outsourcing. We work with all stakeholders to help you meet deadlines and comply with statutory requirements.
Company secretarial: We help our clients and their officers comply with the Singapore Companies Act requirements principally and other relevant regulations from a company secretarial perspective. In addition to compliance matters, we are often involved in corporate structuring work such as share capital reduction and share buy-back initiatives.
Accounting: From day-to-day to complex transactions, our accounting professionals assist to facilitate that the transactions are recorded accurately, timely and in accordance with applicable accounting standards. We are also familiar with all aspects of the accounting function like management reporting, debtors/ creditors control and XBRL conversion.
Payroll: We provide broad payroll outsourcing services. We assist to facilitate that your employee payrolls are computed in accordance with the Singapore Employment Act and with the Ministry of Manpower regulations.
We have experience working with individuals and companies of all sizes across many aspects of the tax life cycle — planning, provision, compliance and controversy.
Business Tax Advisory Services EY Business Tax Advisory services combines technical skills with practical, commercial and industry knowledge to give you advice tailored to your business needs. Our tax professionals bring you their deep understanding of tax issues.
We can help you reduce inefficiencies, mitigate risk and make the most of opportunities, building sustainable tax strategies that can help your business succeed.
Tax Technology and Transformation ServicesThe EY Tax Technology and Transformation (TTT) services connect the 1,000+ professionals focused on helping organisations meet their tax operating and compliance challenges whilst redefining their tax function for the digital age, whether full-scale transformation or strategic incremental improvements. TTT brings together a new breed of tax professionals, seasoned in technology and innovation, along with operational and transformation strategy. The TTT team will help accelerate your ability to deliver on a tax function that is cost-effective whilst it keeps pace with escalating trends toward business globalisation, digital tax administration/regulation, transparency and technology.
Global Compliance and ReportingEY Global Compliance and Reporting (GCR) can help you meet your reporting requirements wherever you do business. GCR comprises the key elements of a company’s finance and tax processes used to prepare statutory financial and tax filings in countries around the world. These include:
• Business tax compliance services• Tax accounting and risk advisory services• Corporate services (which comprise company
secretarial and accounting support)• Payroll services
Business Tax Compliance Services Compliance and reporting make huge demands on tax and finance functions today. So how do you reduce risk and inefficiencies and improve value cost-effectively? Our market-leading approach combines a standard global compliance process and tools with extensive
Business Tax ServicesTax Policy and Controversy Services EY’s global tax policy network has extensive experience helping develop policy initiatives, both as external advisors to governments and companies and as advisors inside government. Our dedicated tax policy professionals and business modelers can help address your specific business environment and improve the chance of a successful outcome.
Our global tax controversy network will help you address your global tax controversy, enforcement and disclosure needs. In addition, support for pre-filing controversy management can help you properly and consistently file returns and prepare relevant backup documentation. Our professionals leverage the network’s collective knowledge of how tax authorities operate and increasingly work together to help resolve controversy and pre-filing controversy issues.
Quantitative Services EY’s Quantitative Services network offers a scalable set of services to assist clients with analysing tax opportunities, typically related to large data sets, systematically and efficiently. This helps clients identify multi-country tax regulations and the benefits that can be attained. Our services can include assistance with:
• Accounting methods and inventory — advising on the application of tax rules and regulations related to income and expense recognition
• Research incentives — identifying tax incentives associated with a company’s qualifying research investments
• Flow through — tax planning and advice related to partnerships, joint ventures and other tax flow-through legal entities
• Capital assets and incentives — our technological capabilities help streamline fixed asset analysis and identify tax deductions
These approaches can help clients improve cash flow, plan for cash tax and effective tax rates in upcoming years, and create refund opportunities. Our process improvements can help streamline tax compliance.
Private Client Services EY’s Private Client Services offers tax-related domestic and cross-border planning and compliance assistance to business-connected individuals and their associated entities. In addition, in today’s global environment, cross-border services can help meet the ever-growing needs of internationally positioned clients. Our dedicated resources in major markets around the world serve individual clients needing a wide range of tax services, including tax compliance, tax planning and tax advice relating to their business interests, investments and other financial-related assets.
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Financial Services TaxEY Financial Services Tax team is dedicated to providing value to our clients in the financial services industry who are facing a constantly evolving tax landscape. Whether you are in Banking and Capital Markets, Wealth and Asset Management, or the Insurance sector, we will be able to assist you in issues including managing your direct and indirect tax obligations and tax risks, navigating the complex tax rules across jurisdictions, pursuing tax incentives or concessions, dealing with transfer pricing issues, handling tax authority queries, assessing your tax provisions, and analysing your uncertain tax positions.
We can also advise you on the tax implications of new financial products or transactions, and assist in applying for Revenue rulings where applicable. We can advise on the structuring of your new businesses and new funds, or on the review of such structures in an internal reorganisation or in the event of mergers or acquisitions, from the tax perspective.
Indirect Tax ServicesGlobal TradeIn today’s global economy, moving goods across borders can be complex and costly. More than ever before, effective management of customs and international trade issues is crucial to maintaining a competitive advantage.
EY’s customs and international trade professionals can help you manage costs and reduce the risk of penalties and significant supply chain disruption. Our core offerings include strategic planning to manage customs and excise duties, trade compliance reviews for imports and exports, internal controls and process improvement, and participation in customs supply chain security programs.
We develop proactive, pragmatic and integrated strategies that can help you address the challenges of doing business in today’s global environment and help your business succeed.
GST ServicesIndirect taxes affect the supply chain and the financial system. They can have significant impacts on cash flow, absolute costs and risk exposures. The dedicated indirect tax professionals combines technical knowledge with industry understanding and access to technologically advanced tools and methodologies. We identify risk areas and sustainable planning opportunities for indirect taxes throughout the tax life cycle, helping you meet your compliance obligations and your business goals around the world. We can provide you with effective processes to help improve day-to-day reporting, reduce attribution errors and costs, and make certain indirect taxes are handled correctly in transactions. Our highly integrated teams across the globe will give you the perspective and support you need to manage indirect taxes effectively.
International Tax and Transaction ServicesInternational Corporate Tax Advisory Services Executives are constantly looking to align their global tax position with their overall business strategy. We can help you manage your tax responsibilities by leveraging the global EY network of dedicated international tax professionals — working together to help you manage global tax risks, meet cross-border reporting obligations and deal with transfer pricing issues.
EY’s multidisciplinary teams can help you assess your strategies, assisting with international tax issues, from forward planning through reporting, to maintaining effective relationships with the tax authorities. We can help you build proactive and integrated global tax strategies that address the tax risks of today’s businesses and achieve sustainable growth.
Transfer Pricing Our Transfer Pricing professionals help you build, manage, document, review and defend your transfer pricing policies and processes — aligning them with your business strategy.
Here’s how we can help you:
• Strategy and policy development• Governance optimisation and decision making
process to help:• Reduce impact of year-end adjustments• Monitor transfer pricing footprint• Coordinate across organisation
• Global or regional assistance to support transitions to new documentation requirements
• Controversy risk assessment, remediation or mitigation as a result of documentation requirements
• Global transfer pricing controversy and risk management
Transaction Tax Advisory Services Every transaction has tax implications, whether it’s an acquisition, disposal, refinancing, restructuring or initial public offering. Understanding these implications can mitigate transaction risk, enhance opportunity and provide crucial negotiation insights. Transaction Tax Services comprises a worldwide network of professional advisors who can help you navigate the tax implications of your transaction. We mobilise wherever needed, assembling personalised, highly integrated teams across the globe, to work with you throughout the transaction life cycle, from initial due diligence through post-deal implementation. And we can suggest structuring alternatives to balance investor sensitivities, promote exit readiness and raise opportunities for improved returns.
Global Tax Desk The market leading EY Global Tax Desk network — a co-located team of highly experienced professionals from multiple countries — is located strategically in major business centers so that our desks can respond to your challenges immediately and cost-effectively, avoiding time zone barriers and the high price of international travel.
The desks work as a team — tackling the same problem from all sides — thoughtfully identifying considerations with your cross-border transaction. We work with you to help you manage global operational changes and transactions, capitalisation and repatriation issues, transfer pricing and your supply chain — from forward planning, through reporting, to maintaining effective relationships with tax authorities.
Operating Model Effectiveness The multi-disciplinary EY Operating Model Effectiveness teams work with you on operating model design, business restructuring, systems implications, transfer pricing, direct and indirect tax, customs, human resources, finance and accounting. We can help you build and develop the structure that makes sense for your business, improve your processes and manage the cost of trade.
People Advisory ServicesAs the world continues to be impacted by globalisation, demographics, technology, innovation and regulation, organisations are under pressure to adapt quickly and build agile people cultures that respond to these disruptive forces. EY People Advisory Services believes a better working world is helping our clients harness their people agenda — the right people, with the right capabilities, in the right place, for the right cost, doing the right things.
We work globally and collaborate to bring you professional teams to address complex issues relating to organisation transformation, end-to-end employee lifecycles, effective talent deployment and mobility, gaining value from evolving and virtual workforces, and the changing role of HR in support of business strategy. Our EY professionals ask better questions and work with clients to create holistic, innovative answers that deliver quality results.
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If you would like to know more about our services or the issues discussed, please contact the Singapore Tax Partners, Associate Partners and Directors below.
Tax leadership in Singapore
Head of TaxSoh Pui Ming+65 6309 [email protected]
Business Tax ServicesChoo Eng Chuan+65 6309 [email protected]
Goh Siow Hui+65 6309 [email protected]
Tax Policy and ControversyChung-Sim Siew Moon+65 6309 [email protected]
Business Incentives AdvisoryTan Bin Eng+65 6309 [email protected]
Johanes Candra+65 6309 [email protected]
Private Client ServicesKoh Chin Chin+65 6718 [email protected]
Global Compliance and ReportingChai Wai Fook+65 6309 [email protected]
Chia Seng Chye+65 6309 [email protected]
Ivy Ng+65 6309 [email protected]
Helen Bok+65 6309 [email protected]
Teh Swee Thiam+65 6309 [email protected]
Toh Ai Tee+65 6309 [email protected]
Toh Shuhui+65 6309 [email protected]
Chionh Huay Kheng+65 6309 [email protected]
Grace Ng+65 6309 [email protected]
Lim Joo Hiang+65 6309 [email protected]
Ang Sau Tze+65 6309 [email protected]
Cedric Tan +65 6309 [email protected]
Sandee Saw+65 6309 [email protected]
Corporate ServicesDavid Ong+65 6309 [email protected]
Olivia Yeoh +65 6340 [email protected]
Financial Services OrganisationAmy Ang+65 6309 [email protected]
Stephen Bruce+65 6309 [email protected]
Desmond Teo+65 6309 [email protected]
Louisa Yeo+65 6309 [email protected]
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Moong Jee See+65 6718 [email protected]
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Indirect Tax
GST ServicesYeo Kai Eng+65 6309 [email protected]
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Liza Drew+65 6340 [email protected]
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3737
Industry sectors
Real Estate Lim Gek Khim+65 6309 [email protected]
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ShippingGoh Siow Hui+65 6309 [email protected]
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China Overseas Investment NetworkTan Ching Khee+65 6309 [email protected]
InsuranceAmy Ang+65 6309 [email protected]
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Talent and RewardSamir Bedi+65 6309 [email protected]
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India Tax DeskGagan Malik +65 6309 [email protected]
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Operating Model EffectivenessEdvard Rinck+65 6309 [email protected]
Nick Muhlemann+65 6309 [email protected]
Paul Griffiths+65 6309 [email protected]
Braedon Clark+65 6505 2453 [email protected]
Tax, Technology and TransformationAbad Dahbache+65 6718 [email protected]
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37
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