Q1 March Newsletter - bdo singapore

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 March
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.