Corporate Tax 2010 - BMR Advisors

WongPartnership LLP
Singapore
4.3 What is the tax base for that tax (profits pursuant to
commercial accounts subject to adjustments; other tax
base)
The tax base is premised upon the accounts of the company, which
is usually audited. The accounting profit of the company is adjusted
for income which may or may not be taxable. Adjustments are also
made for expenses which may be deductible based on accounting
rules but not deductible based on Singapore income tax rules.
Subject to certain conditions, part of the adjusted profit may be
exempt from income tax.
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
Singapore does not have a capital gains tax. However, where gains
are regarded as arising from a trade or business, they are taxable
under the normal income tax rules.
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
Not applicable, see question 5.1 above.
Singapore
See response to question 4.3.
4.5 Are there any tax grouping rules Do these allow for relief
in Singapore for losses of overseas subsidiaries
Yes, there are tax grouping rules. For companies to form part of the
same group, they must be incorporated in Singapore. As such,
losses of overseas subsidiaries will not qualify. Under the group
relief system, a member company of a group is allowed to transfer
its current year unabsorbed capital allowances, business losses, as
well as unabsorbed donations (all of which would be deductible
from trading profit) to another company within the same group.
The purpose behind this system is to reduce the overall tax burden
on the companies within the same group. In addition, to qualify, at
least 75% of the total number of issued ordinary shares in the
company must be beneficially held, directly or indirectly by the
other; or at least 75% of the total number of issued ordinary shares
in each of the two companies must be beneficially held, directly or
indirectly, by a third Singapore company. Both the transferor and
claimant companies must be members of the same group on the last
day of the basis period for that particular year of assessment and
maintain the shareholding of at least 75% throughout the basis
period for that year of assessment.
5.3 Is there a participation exemption
Not applicable, see above.
5.4 Is there any special relief for reinvestment
Not applicable, see above.
6 Branch or Subsidiary
6.1 What taxes (e.g. capital duty) would be imposed upon the
formation of a subsidiary
There are no taxes imposed upon the formation of a subsidiary.
6.2 Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company
There are no significant taxes or fees that will be incurred as a result
of the difference in status.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
The tax rate imposed is not dependent upon whether or not the
profits are distributed or retained.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Property tax is levied at 4% of the assessed Annual Value (which is
the gross rental value) of an owner-occupied residential property
and at 10% on other properties.
6.3 How would the taxable profits of a local branch be
determined
The taxable profits of a local branch will be determined based on
the activities to which such profits can be attributed. These taxable
profits are calculated from the branch’s accounts, subject to
adjustments based on tax rules (see response to question 4.3).
Under Singapore income tax law, a branch is classified as a
permanent establishment.
6.4 Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)
There is no branch profits tax in Singapore.
4.8 Are there any local taxes not dealt with in answers to
other questions
No, there are no local taxes that have not been dealt with in the
previous questions.
ICLG TO: CORPORATE TAX 2010
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6.5 Would a branch benefit from tax treaty provisions, or some
of them
No. Tax treaties apply only to taxable entities which are regarded
as residents in the contracting states concerned. A Singapore
branch of a non-resident company will generally be considered as a
non-resident entity and regarded as a permanent establishment of
that entity. The provisions governing a permanent establishment
would then apply.
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