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Tax newsbites March 2014 PwC Singapore
Tax newsbites PwC Singapore Tax Services March 2014 Tax updates from November 2013 to February 2014 Tax updates The Minister for Finance presented the 2014 Budget in Parliament on 21 February 2014. Please refer to our Budget Commentary for an overview of the proposed tax changes and their implications at http://www.pwc.com/en_SG/sg/budgetcommentary/assets/bc2014.pdf New objection and appeal procedures for companies The deadline for filing an objection (for assessments issued on or after 1 January 2014) is extended to two months from the date of the assessment. In addition, certain procedural matters relating to dispute resolution were introduced. Productivity and Innovation Credit scheme The Inland Revenue Authority of Singapore (IRAS) have stated that website development costs do not qualify for Productivity and Innovation Credit (PIC) in its revised FAQs. In addition, they have introduced a new template for businesses making PIC cash payout applications in respect of Information Technology (IT) and automation equipment acquired under hire-purchase agreements. Research & development The IRAS have issued various clarifications relating to the treatment for research & development (R&D) expenditure: Projects that are considered R&D by other government agencies may not necessarily qualify for R&D tax deduction. More details at http://www.iras.gov.sg/irasHome/page04.aspx?id=614#Research_&_developme nt_expenses The IRAS may consult a panel of experts (comprising academics and industry experts) on whether a project qualifies as R&D. The R&D claim form has been revised to include an additional part 3, where taxpayers claiming R&D would have to provide project details. The IRAS have clarified that where management service fee (paid to a non-resident) is merely a reimbursement of costs or constitutes costs allocated under a cost-pooling arrangement, such payments will not be subjected to withholding tax. The IRAS have clarified the tax treatment of virtual currencies (e.g. Bitcoins). Legislation updates Income Tax The Income Tax (Amendment) Act was gazetted on 28 November 2013. The changes mainly relate to the Budget 2013 proposals and changes to the exchange of information (EOI) regime. Subsidiary legislation relating the following has been issued: Income derived by approved qualifying companies from carrying on prescribed qualifying structured commodity financing activities. Application of the safe harbour rule for qualifying equity investment disposals, amendments to renovation and refurbishment expenditure, PIC and M&A allowance in the case of a qualifying amalgamation Clarification on the definition of a "bank" for Islamic financing arrangements. Goods and Services Tax The Goods and Services Tax (Amendment) Act 2013 was gazetted on 17 December 2013 and took effect from 1 January 2014. A summary of the changes proposed in the Amendment Bill is available in our November 2013 issue of Tax newsbites at http://www.pwc.com/sg/en/tax-newsbites/index.jhtml . Subsidiary legislation was gazetted to provide for changes to the Approved Contract Manufacturer and Trader Scheme, the Approved Refiner and Consolidator Scheme and the Tourist Refund Scheme. Stamp duties The Stamp Duties (Relief from Stamp Duty upon Transfer of Assets between Associated Permitted Entities) Rules 2014 were issued on 16 January 2014. Among other things, the Rules provide for stamp duty relief for transfers of certain assets between associated entities (including limited liability partnerships). Furthermore, the application for relief should be made within the following timelines for instruments that are executed on or after 16 January 2014: where the application for relief is made after the execution of the instrument, such application must be submitted within 14 days after the execution for instruments that are executed in Singapore and 30 days for those that are executed outside Singapore. where the application for relief is made before the execution of the instrument, the instrument must be executed within four months after the IRAS have indicated that it may qualify for relief. Singapore tax cases Gains derived by an insurer In Comptroller of Income Tax v BBO [2014] SGCA 10, the Court of Appeal decided in favour of the taxpayer (and upheld the decisions of the High Court and the Income Tax Board of Review), concluding that gains derived by an insurer from the disposal of certain shares held within its insurance funds are capital in nature. More details at http://www.pwc.com/en_SG/sg/financial-services-taxbulletin/assets/fstaxbul201402.pdf Double Taxation Agreement On 1 May 2014, an Exchange of Notes in relation to the EOI Article in the treaty with Austria will enter into force. On 21 February 2014, Singapore signed a treaty with Laos. The treaty is pending ratification and has not yet entered into force. On 6 February 2014, the revised treaty with Poland entered into force. 2 On 15 January 2014, the Singapore-Morocco treaty entered into force and soon after it took effect, negotiations for a Protocol to amend the treaty began. Free Trade Agreements Singapore and Turkey have expressed their intentions to negotiate and sign a free trade agreement. Partnership and Cooperation Agreement On 17 February 2014, the signing of the Partnership and Cooperation Agreement between European Union and Republic of Singapore was proposed and it will include provisions on cooperation in the area of tax. Overseas updates China: The Chinese Tax Authority has introduced a new Tax Resident Enterprise (TRE) concept to impose tax on offshore indirect equity transfer. More details at http://www.pwccn.com/home/eng/chinatax_news_dec2013_30.html Hong Kong: The Hong Kong Tax Authority has issued EOI practice notes which provide guidelines for EOI requests from treaty partners and explains the safeguards that are available to taxpayers. India: The Indian government has suspended its treaty benefits with Cyprus as they have not been providing tax information requested by the Indian tax authorities. Japan: The Japanese government has approved a large package of fiscal 2014 tax revisions which included a major reform of their international taxation system. The reform is expected to align Japan's domestic laws with the rules in tax treaties, to mitigate the risk of double taxation as well as double non-taxation. Malaysia: The Malaysian Tax Authority has released a public ruling to clarify the withholding tax treatment for special classes of income. Vietnam: The Vietnamese Tax Authority has revised a circular providing guidance on the interpretation of Vietnam’s treaties. The changes include certain enhancements to the beneficial ownership and anti-avoidance provisions and they outline the factors to be considered to fulfil the substance-over-form test. OECD: The Organisation of Economic Cooperation and Development (OECD) released the Common Reporting Standard (CRS), which seeks to establish a new global standard for automatic exchange of financial account information between Governments. More details at http://www.pwc.com/en_US/us/taxaccounting-services/newsletters/global-information-reportingwithholding/assets/pwc-oecd-publishes-common-reporting-standarddocuments.pdf . the discussion draft on transfer pricing documentation and country-bycountry reporting. More details at http://www.pwc.com/en_US/us/taxservices/publications/insights/assets/pwc-oecd-discussion-draft-tpdocumentation-cbc-reporting.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 Corporate Tax Advisory Services Alan Ross [email protected] +65 6236 7578 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 Ho Mui Peng [email protected] +65 6236 3838 Lennon Lee [email protected] +65 6236 3728 Elaine Ng [email protected] +65 6236 3627 Shantini Ramachandra [email protected] +65 6236 3823 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 Paul Lau [email protected] +65 6236 3733 Carrie Lim [email protected] +65 6236 3650 Lim Maan Huey [email protected] +65 6236 3702 David Sandison [email protected] +65 6236 3675 Tan Hui Cheng [email protected] +65 6236 7557 Yip Yoke Har [email protected] +65 6236 3938 Liam Collins [email protected] +65 6236 7248 Chris Woo [email protected] +65 6236 3688 Andy Baik [email protected] +65 6236 7208 Andrew Butcher [email protected] +65 6236 3623 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 Financial Services Global Structuring Indirect Tax (Goods and Services Tax) Koh Soo How [email protected] +65 6236 3600 International Assignment Services 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 Worldtrade Management Services (Customs and International Trade) Frank Debets [email protected] +65 6236 7302 Gregory Nichols [email protected] +65 6236 7333 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.