MANAGING PARTNER'S MESSAGE - bdo singapore

BDO CONNECT 5INTERNATIONALSNIPPETSNew member firm in AlbaniaBDO, the world’s fifth largestaccountancy network, is pleased toannounce the admission of a newmember firm in Albania, effective 18February 2011.BDO Albania was inaugurated inOctober 2010 and obtained itsaudit license on 15 February 2011.BDO Croatia is taking the lead indeveloping the firm in its initialstages and the new firm has beenestablished with the cooperation oflocal firm PBM Ltd.The new firm’s service offering willinclude auditing of private and publicsector organisations, tax advisory,risk assessment and internal auditservices, as well as InformationSystems audit and consulting andservices to foreign investors.BDO Germany acquires AWTHorwath in MunichWe are pleased to announce thesuccessful merger of BDO AGwith AWT Horwath GmbH, aMunich-based accounting firm withapproximately 125 employees anda current fee income of €14 millionp.a. The transaction, with retroactiveeffect as of 1 January 2011, willcontribute to further strengtheningBDO’s position - especially in thesouthern part of Germany.to the debt funding. Israel, has alsopublished its stance on businessrestructurings and has instructed itstax officers to actively pursue casesinvolving business restructurings.With countries around the globe andespecially in Asia stepping up effortson the business restructuring exercisesundertaken by MNEs, Singapore hasalso played its part. Though there areno dedicated transfer pricing regulationson business restructuring, in practice,Singapore follows the OECD transferpricing guidelines. Principles discussedin these 2010 Guidelines will be appliedfor business restructurings affectingSingapore. Also, a new provision ontransfer pricing was introduced in theSingapore Income Tax Act vide Budget2010. The new section empowers thetax authorities to adjust the pricingbetween two related parties to anarm’s length price if necessary. Further,Singapore’s transfer pricing guidelinesrequire that from 1 January 2011, allcross border related partly loans need toreflect arm’s length prices.What do all these changes mean for ataxpayer? The recent developmentsin transfer pricing arena have broughtwith it a fresh set of challenges andgood practices. Challenges are forcompanies undertaking the transferpricing exercise for first time and goodpractices for companies reviewingtheir transfer pricing. With specialfocus on business restructurings,companies should actively supporttheir restructuring exercises throughextensive documentation. Taxadvantage should not be the onlycriteria for a business restructuringbut should be one of the factors alongwith commercial rationale like changesin demand, setting up a regionalstructure, etc.Based on our experience, some of thetriggers that companies should keep inmind for Revenue authorities probingwould be:● Decrease in overall revenue for theSingapore company● Significant changes in the gross andoperating margins● Reduction in the overall cash flow● Change of ownership of intangibleassets● Reduction in the number ofemployees for the Singaporecompany● Change in the functions performedby Singapore companyWe foresee a fair amount of activity onthe transfer pricing front going forwardwith companies undertaking businessrestructuring to streamline theiroperations from the financial crisis.So, taxpayers are advised to buildup its arsenal against any scrutiny byRevenue authorities should taxpayersundertake business restructurings.BDO Spain at recruitment fairsBDO Spain recently took partin the employment fairs of twoleading institutions in Madrid, theUniversidad Autónoma de Madridand the Instituto de EstudiosBursátiles, with a view to introducingrecent graduates to BDO andgiving them an idea of the careeropportunities that would be availableto them as employees of the firm.