The Finance Minister of Nigeria, Kemi Adeosun and the Minister of State for Trade and Investment of Singapore, Dr Koh Poh Koon, signed an Income and Capital Tax Treaty on August 2, 2017 for the avoidance of double taxation. According to the Finance Minister this treaty would help inter-state trade as well as economic and business activities by ensuring that nationals or enterprises of the two countries are not taxed twice on the income from profits derived from the other country.
On July 18, the governments of Singapore and Sri Lanka signed a statement on the opening of negotiations on a bilateral free trade agreement (FTA). The Free Trade Agreement (FTA) with Singapore would be beneficial to Sri Lanka because it would result in more opportunities with Sri Lanka.
With this free trade agreement, Sri Lanka will be able to substantially increase volume of exports in Singapore and at the same time it would welcome the industrialists in Singapore to set up their production facilities in Sri Lanka and make use of the resources they have.
Once concluded, the agreement would pave the way to lower barriers to trade and would create more confidence for the companies to commit the investment activity.
According to the draft Income Tax (Amendment) Bill 2017 (Draft Bill) proposed on 19 June 2017, section 34D of the Singapore Income Tax Act (SITA) would be expanded to provide clarification on the meaning of arm’s-length conditions. The proposed amendments provide for re-characterization of related -party transactions if it is found that arm’s-length parties would not have entered into similar arrangements. In addition, it is proposed that any amount of income that is increased under Section 34D be treated as accruing in, derived from or received in Singapore.
The requirement to prepare TPD will only apply to businesses with turnover exceeding S$10 million. This S$10 million turnover serves as an additional safe harbour to the existing thresholds.
The draft Bill specifically requires the documentation to be retained for 5 years.
On 22 June 2017, Singapore signed the Multilateral Competent Authority Agreement (MCAA) on the automatic exchange of Country-by-Country (CbC) reports. The signing took place at a ceremony held during the third meeting of the inclusive framework on BEPS on 21–22 June 2017
The Monetary Authority of Singapore revised the financial sector incentive (FSI) schemes for improving the financial intermediation and to increase the capabilities of financial services and banking activities in Singapore.
Within the framework of the FSI scheme, income of the FSI scheme holders gained from qualifying activities in Singapore was subject to income tax at concessional rates of 5%, 10% or 12% (depending on the premiums granted). But according to the latest revisions, the FSI schemes are simplified in order to eliminate currency, counterparty and investment instrument restrictions. The concession tax rate for certain FSI scheme holders will also increase from 12% to 13.5%. The amendments apply to new and renewal of the holding of the scheme, which were approved on or after 1 June 2017.
Singapore has signed the multilateral instrument on 7 June 2017, aiming to facilitate the implementation of tax related measures to Prevent Base Erosion and Profit Shifting (MLI).
Singapore intends for the Multilateral Instrument to apply to Double Taxation Agreements with treaty partners that are members of the Ad Hoc Group, and this would put the treaties to be in line with international standards and increase access to benefits such as certainty and efficient dispute resolution mechanisms. The agreed changes to each DTA will enter into force after the Multilateral Instrument has been ratified by Singapore and the treaty partner.
Singapore will work towards the ratification of the Multilateral Instrument at the earliest possible date. Clarification of the changes to each DTA will be provided to the taxpayer by the Inland Revenue Authority of Singapore website.
The Inland Revenue of Singapore has recently clarified its practice that allows service providers companies which provide “routine support services” to adopt the cost-plus mark-up method. The routine support services are such that service companies do not take risks or own assets and their expenses are usually operating costs. As part of the cost-plus mark-up method, the chargeable income is calculated on the basis of a 5% premium of the total expenditure without further adjustments.