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Tax newsbites PwC Singapore Tax Services
Tax newsbites PwC Singapore Tax Services September 2014 Tax updates for the period 1 September 2014 to 30 September 2014 Tax updates Approved research and development (R&D) cost sharing arrangements The Economic Development Board (EDB) is giving companies which have been awarded writing down allowances for approved R&D cost sharing arrangements the option to continue claiming such allowances under section 19C of the Income Tax Act (ITA). The election must be made by 30 November 2014. Transfer Pricing Documentation The Inland Revenue Authority of Singapore (IRAS) issued proposed guidance on transfer pricing documentation, including the requirement to maintain contemporaneous documentation. Details are available at: http://www.iras.gov.sg/irashome/uploadedFiles/About_IRAS/Public_Consult ation/pconsult_IT_Transfer%20Pricing%20Documentation_2014-09-01.pdf Public consultation on proposed regulations relating to the US Foreign Account Tax Compliance Act (FATCA) The Ministry of Finance (MOF), Monetary Authority of Singapore (MAS) and IRAS have sought feedback on the following documents which are intended to help Singapore-based financial institutions comply with the FATCA: Draft Income Tax (International Tax Compliance Agreements) (United States of America) Regulations 2014, which sets out the due diligence and reporting obligations of Singapore-based financial institutions in relation to the FATCA IGA; Draft FATCA e-Tax Guide, "Compliance Requirements of the Singapore-US Intergovernmental Agreement on Foreign Account Tax Compliance Act ", which provides further explanation of those obligations. Details are available at: http://www.iras.gov.sg/irasHome/page03a.aspx?id=15867 IRAS’s survey on Publishing Advance Rulings On 8 September 2014, the IRAS published the results of the survey conducted in February/March 2014. In order to protect the confidentiality of taxpayers’ identities and business arrangements, the IRAS will not be publishing advance rulings, but will incorporate scenarios from certain advance rulings into the relevant e-Tax Guides. Details are available at: http://www.iras.gov.sg/irasHome/page03a.aspx?id=15366#Survey_on_Publi shing_of_Advance_Rulings Productivity and Innovation Credit (PIC) Circular On 19 September 2014, the IRAS issued the fourth edition of PIC circular. The circular has been amended to reflect the extension of the scheme for another three years, and to provide details of the PIC+ scheme meant for qualifying small and medium sized enterprises (SMEs). Other amendments include: Cash payout option - The qualifying period for determining if three local employee condition has been met is extended from one to three months with effect from the year of assessment (YA) 2016. Centralised hiring arrangements – individuals employed under this arrangement are recognised as employees for PIC claim with effect from YA 2014. Introduction of measures to curb abuse of the PIC scheme. Details are available at: http://www.iras.gov.sg/irashome/uploadedfiles/eTax_Guide/etaxguides_CIT_PIC_2014_09_19.pdf IT and Automation Equipment Qualifying for PIC (By Industry) IRAS has updated its website to include new examples of IT and automation equipment qualifying for PIC for the landscaping industry. Details are available at: http://www.iras.gov.sg/irasHome/page04.aspx?id=14372 Deduction for Statutory and Regulatory Expenses IRAS issued a circular entitled “Deduction for Statutory and Regulatory Expenses” on 12 September 2014. The circular explains the rationale and scope of tax deduction for qualifying statutory and regulatory expenses incurred from the basis period for YA 2014 onwards. It should be noted that the relevant statutory has yet to be legislated. Details are available at: http://www.iras.gov.sg/irashome/uploadedfiles/eTax_Guide/etaxguides_CIT_deduction%20statutory%20exp_2014_09_12.pd f 2 Tax Treatment of Directors’ Fees and Bonuses from Employment On 12 September 2014, the IRAS issued the second edition of the circular “Tax Treatment of Directors’ Fees and Bonus from Employment”. The circular has been amended to clarify that a company may claim deduction for director’s fees and employees’ bonuses only when its liability to pay such fees and bonuses has arisen. It also provides that companies need not submit the documents/ information to IRAS until requested. Details are available at: http://www.iras.gov.sg/irashome/uploadedfiles/eTax_Guide/etaxguide_IIT_Tax%20Treatment_of_Director_Fees_and_Bonuses_fro m_Employment_2014-09-12.pdf International Agreements: India-Singapore: PwC Singapore and PwC India have jointly submitted a paper to the governments of Singapore and India to renegotiate the India-Singapore tax treaty. The joint submission proposes including a clause to allow for corresponding adjustment in one state should a transfer pricing adjustment be made by its treaty partner in accordance with the arm’s length principle. Overseas updates: China: The State Administration of Taxation issued Shui Zong Han [2014] 317, requiring the tax bureaus to examine the payments of dividends paid to non-residents in the period between 2012 and 2013. Hong Kong: On 11 September 2014, the Court of Appeal handed down its judgment in Church Body of the Hong Kong Sheng Kung Hui & Hong Kong Sheng Kung Hui Foundation v CIR, which dealt with whether profits derived by the taxpayers from the sale of property are trading profits. A key issue considered was whether there was a change of intention from holding the land for investment purposes to trading. Details are available at: http://www.pwchk.com/home/eng/hktax_news_sep2014_11.html International: On 16 September 2014, the OECD issued seven BEPS reports on the digital economy, hybrid mismatches, treaty abuse, country-by-country reporting and transfer pricing documentation, intangibles, harmful tax practices, multi-lateral instruments. Details are available at: http://www.pwc.com/en_GX/gx/tax/newsletters/tax-policybulletin/assets/pwc-oecds-agreed-recommendation-beps-2014deliverables.pdf 3 Contacts If you would like to discuss any of the issues raised, please get in touch with your usual PwC contact or any of the individuals listed here: Name Email Telephone [email protected] +65 6236 3688 Sunil Agarwal [email protected] +65 6236 3798 Nicole Fung [email protected] +65 6236 3618 Abhijit Ghosh [email protected] +65 6236 3888 Mahip Gupta [email protected] +65 6236 3642 Lennon Lee [email protected] +65 6236 3728 Florence Loh [email protected] +65 6236 3368 Elaine Ng [email protected] +65 6236 3627 Shantini Ramachandra [email protected] +65 6236 3823 Alan Ross [email protected] +65 6236 7578 Ajay Sanganeria [email protected] +65 6236 3703 Tan Boon Foo [email protected] +65 6236 3632 Tan Ching Ne [email protected] +65 6236 3608 Tan Tay Lek [email protected] +65 6236 3768 Teo Wee Hwee [email protected] +65 6236 7618 Anuj Kagalwala [email protected] +65 6236 3822 Liam Collins [email protected] +65 6236 7248 Goh Chiew Mei [email protected] +65 6236 7222 Paul Lau [email protected] +65 6236 3733 Carrie Lim [email protected] +65 6236 3650 Lim Maan Huey [email protected] +65 6236 3702 Tan Hui Cheng [email protected] +65 6236 7557 Louisa Yeo [email protected] +65 6236 3759 Yip Yoke Har [email protected] +65 6236 3938 Andy Baik [email protected] +65 6236 7208 Chai Sui Fun [email protected] +65 6236 3758 Paul Cornelius [email protected] +65 6236 3718 Lim Hwee Seng [email protected] +65 6236 3118 Brad Slattery [email protected] +65 6236 7308 Falgun Thakkar [email protected] +65 6236 7254 Sarah Wong [email protected] +65 6236 3057 Tax Leader Chris Woo Corporate Tax Advisory Services Financial Services Global Structuring Indirect Tax (Goods and Services Tax) Koh Soo How [email protected] +65 6236 3600 James Clemence [email protected] +65 6236 3948 Margaret Duong [email protected] +65 6236 3958 Girish Vikas Naik [email protected] +65 6236 3915 Ooi Geok Eng [email protected] +65 6236 7205 International Assignment Services Worldtrade Management Services (Customs and International Trade) Frank Debets [email protected] +65 6236 7302 This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2014 PricewaterhouseCoopers Services LLP. All rights reserved. “PricewaterhouseCoopers” and "PwC" refer to PricewaterhouseCoopers Services LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.