Q1 March Newsletter - bdo singapore

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Continued...... Taxpayers who have availed themselves of the above concession will also enjoy the tax exemption granted under the liberalized FSIE Scheme by remitting their foreign-sourced income to Singapore during the 1-year exemption period. However, if they wish to continue availing themselves of the concession after 21 January 2010, they will have to continue to track their remittance of funds according to income or capital sources. Application In order to be eligible for the foreign-sourced income exemption, the specified tax payers are required to make a declaration in their income tax return and provide the following information in a Form to be made available on the IRAS’ website: • Nature & amount of income • Date of receipt in Singapore • Country; • Name of payer • Use of remitted income Supporting documents do not need to be submitted to the CIT until CIT asks for the documents for verification. It is anticipated that the liberalization of FSIE Scheme would allow the expeditious remittance of foreignsourced income to Singapore during the one-year window period to meet the financing needs of business in Singapore. For example, businesses may consider to remit the foreign-sourced interest income which may have accrued offshore over many years. However, issues highlighted below may have to be considered by the taxpayer prior to remitting the funds into Singapore; • The tax payer would need to track and demonstrate in certain instances that the income was earned or accrued prior to 21 January 2009. This could create additional administrative difficulties for the taxpayer. • It is possible that interest, royalties etc could attract a withholding tax when being remitted into Singapore. Since the income would be exempt in Singapore, it would not be possible to claim any tax credits. Rather than adopting a temporary liberalization, the Government should consider adoption of a full territorial basis of taxation as in Hong Kong which would then make Article contributed by: Michelle Seat Senior Manager Tax Advisory Services DID: 68289182 michelleseat@<strong>bdo</strong>.com.sg
Age of Contractual Capacity With the gazette of the Civil Law (Amendment) Act 2008, the age of contractual capacity in Singapore has been lowered from 21 years to 18 years with effect from 1 <strong>March</strong> 2009. This means that a contract if entered into by a minor who has attained the age of 18 years shall now have effect as if he were of full age. Following the amendment, the minimum age for a person to act as a director of a company or a manager of a limited liability partnership has also been lowered from 21 years to 18 years. In view of this, a minor of 18 years old and above may register a business and may also form companies or limited liability partnerships. However, the amendment shall not have any effect on the minor as if he were of full age under the following circumstances:- 1. entering into any contract for the sale, purchase, mortgage, assignment or settlement of any land, other than a contract for a lease of land not exceeding 3 years; 2. entering into any contract for a lease of land for more than 3 years; 3. entering into any contract whereby the minor’s beneficial interest under a trust is sold or otherwise transferred to another person, or pledged as a collateral for any purpose; 4. entering into any contract for the settlement of any legal proceedings or action in respect of which the minor is, pursuant to any written law, considered to be a person under disability on account of his age; 5. entering into any contract for the settlement of any claim from which any such legal proceedings or action may arise whereby the minor is, pursuant to any written law, considered to be a person under disability on account of his age; 6. enabling a trustee to pay money or deliver property to a minor who has attained the age of 18 years otherwise than in accordance with the terms of the trust; or 7. entering into any contract to extinguish or vary the terms of a trust. Article contributed by: Sin Chee Mei Senior Manager, Corporate Alliance Pte Ltd DID: 68289136 cheemei@corporatealliance.com.sg IRAS Voluntary Disclosure Program (VDP) IRAS has come up with the Voluntary Disclosure Program (VDP) to encourage taxpayers to voluntarily rectify errors in their tax computations and returns which were made without willful intent to evade tax. The VDP is applicable to both income tax (including withholding tax) and Goods and Services Tax (GST). Qualifying Conditions There are certain conditions that have to be made in order for IRAS to consider an application under the VDP: i) A voluntary disclose is to be timely, accurate, complete and self-initiated by the taxpayer i.e. made before queries made by IRAS, made before commencement of audit or investigation or if the case is already under query, audit or investigation, must not be under the immediate scope of the query, audit or investigation; ii) Taxpayers must demonstrate full co-operation with IRAS to correct mistakes made; iii) There must be willingness on the taxpayers’ part to make arrangements with IRAS to pay additional taxes raised and / or penalties imposed, if any; Reduced Penalty IRAS will be willing to waive or reduce penalties for cases which meet the qualifying conditions as follows: i) Waiver of penalty for voluntary disclosures within grace period of 1 year from the statutory filing date; and ii) 5% per annum for voluntary disclosures after grace period. However, please note that the waiver or reduction of penalties are only available once to taxpayers as they are expected to put in good and sufficient controls to prevent recurrence or similar errors or omissions. The penalties in those cases could go up to 200% of the tax undercharged for income tax and GST issues and 20% of the tax unpaid for withholding tax issues. The Next Step We see this positive move by IRAS as a move towards the right direction in being more taxpayer friendly although this appears to be a precursor towards a more active tax audit and investigation program. We expect more taxpayers to embark on due diligence reviews on their financial accounting records to look at the following areas which are usually prone to review by the tax authorities: i) transfer pricing; ii) corporate tax compliance; iii) withholding tax compliance; and iv) GST compliance.
Page 1 and 2: MICA (P151/11/2004) MICA (P151/11/2
Page 3 and 4: Finding Overseas Partners - Know Th
Page 5 and 6: Continued...... Are you ready for F
Page 7: Temporary Liberalization of Income
Page 11 and 12: 3P Organisational Performance Semin

Q1 March Newsletter - bdo singapore

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