Corporate Tax 2010 - BMR Advisors

WongPartnership LLP
Singapore
blocked. For instance, input tax is not claimable on club
subscription fees, medical and accident insurance premiums and
medical expenses. Input tax on supplies used in making exempt
supplies is also generally not recoverable.
3.5 If so, is there a “safe harbour” by reference to which tax
relief is assured
Not applicable, see question 3.4 above.
Singapore
2.5 Are there any other transaction taxes
No, there are no other transaction taxes.
2.6 Are there any other indirect taxes of which we should be
aware
Customs duties are imposed on certain goods imported into
Singapore. Excise duties are imposed on certain goods whether
manufactured in Singapore or elsewhere. There are 4 broad
categories of dutiable goods: intoxicating liquors; tobacco products;
motor vehicles; and petroleum products.
3.6 Would any such “thin capitalisation” rules extend to debt
advanced by a third party but guaranteed by a parent
company
Not applicable, see question 3.5 above.
3.7 Are there any restrictions on tax relief for interest
payments by a local company to a non-resident in addition
to any thin capitalisation rules mentioned in questions
3.4-3.6 above
Not applicable, see above.
3 Cross-border Payments
3.1 Is any withholding tax imposed on dividends paid by a
locally resident company to a non-resident
Singapore does not impose any withholding tax on dividends paid
by a locally resident company to a non-resident.
3.2 Would there be any withholding tax on royalties paid by a
local company to a non-resident
Yes, there are withholding taxes on royalties paid by a local
company to a non-resident. The domestic rate of withholding tax is
10%/18%, depending on the type of royalty payments. For
instance, payments for the use of or the right to use scientific,
technical, industrial or commercial knowledge or information will
be subject to withholding tax at 10% while payments for the
rendering of assistance or service in connection with the application
or use of scientific, technical, industrial or commercial knowledge
or information will be subject to withholding tax at 18%. In relation
to non-resident persons other than individuals, the rate of 18% is
expected to be reduced to 17% with effect from year of assessment
2010. The rates may be reduced by double tax treaties, if
applicable.
3.3 Would there be any withholding tax on interest paid by a
local company to a non-resident
3.8 Does Singapore have transfer pricing rules
There is currently no legislation on transfer pricing in Singapore.
However, the Inland Revenue Authority of Singapore (“IRAS”) has
issued guidelines in 2006 on the application of the arm’s length
principle for transactions carried out between related parties. These
guidelines are largely based on those promulgated by the OECD on
transfer pricing. On 23 February 2009, the IRAS issued a
supplementary circular entitled “Transfer Pricing Guidelines for
Related Party Loans and Related Party Services” which sets out the
IRAS’s procedures in facilitating compliance with the 2006
guidelines in relation to loans entered into and services performed
between related parties. There are provisions in the Income Tax Act
which imply or refer to the concept or use of the arm’s length
principle. This principle is also found in Singapore’s
comprehensive tax treaties. There is currently a proposal, under
public consultation, to provide expressly for the arm’s length
principle in the Income Tax Act. If legislated, the Comptroller of
Income Tax may make adjustments to the profits of a taxpayer for
income tax purpose.
4 Tax on Business Operations: General
4.1 What is the headline rate of tax on corporate profits
The headline rate of tax on corporate profits is 17% with effect from
year of assessment 2010.
Yes, there are withholding taxes on interest paid by a local company
to a non-resident. Withholding tax of 15% applies to interest
deemed sourced in Singapore under section 12(6) of the Income Tax
Act. Certain types of interest payments, such as interest on
Approved Asian Dollar Bonds and discounts on qualifying debt
securities, may be exempt from withholding tax. As with the
payments for royalties, rates may be reduced by double tax treaties,
if applicable.
3.4 Would relief for interest so paid be restricted by reference
to “thin capitalisation” rules
There are no thin capitalisation rules in Singapore.
4.2 When is that tax generally payable
Companies are required to submit their tax returns by 30 November
of each year. The income chargeable to tax for each year of
assessment is based on the amount of income accrued in or derived
from Singapore or received in Singapore from outside Singapore in
the year preceding the year of assessment. Subsequent to the filing
of the tax returns, the notice of assessment will be issued by the
Comptroller of Income Tax. Tax on corporate profits is generally
payable within one month of the issuance of the notice of
assessment, regardless of whether or not any objection to the
assessment has been lodged. Instalment plans to pay the tax are
available.
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