SINGAPORE TAX

The Inland Revenue Authority of Singapore (IRAS) released its annual report for 2016-2017 on Friday 25 August, disclosing key information pertaining to taxation in Singapore. Here are some key tax statistics and facts for FY2016:  

• S$47 Billion in tax revenue was collected in FY2016/17.  

• 29% (S$13.6 billion) of the total tax revenue was collected through Corporate Income Tax (CIT).  

• 80% of companies and 90% of GST-registered businesses filed their tax returns punctually.  

• 1410 more companies received CIT rebates in YA2016 than in YA2015.  

• The cost per dollar of tax collected was 0.84 cents.  

• To date, Singapore has in force 84 comprehensive Avoidance of Double Taxation Agreements (DTAs).  

Source: Inland Revenue Authority of Singapore (IRAS)

CORPORATE TAX

With effect from Year of Assessment 2018, IRAS will be introducing a new Related Party Transactions (RPT) reporting requirement for companies. A new form (“RPT Form”) must be completed by companies if the value of RPT is in excess of S$15 million for the relevant Year of Assessment and submitted together with the Form C.  

How to determine the value of RPT?  

The value of RPT (as reported in the audited accounts) will be the aggregate of the following:  

1. All amounts of RPT as disclosed in the Income Statement, excluding compensation remunerated to key management personnel and dividends; and  

2. Year-end balances of loans and non-trade amounts owing to/from all related parties.  

What should be reported in the RPT Form?  

The values of these categories of RPT are to be reported:  

• Sales and purchases of goods • Services income and expenses • Royalty and licence fee income and expense • Interest income and expense • Other income and expense • Year-end balances of loans and non-trade amounts  

Taxpayers must also list the top 5 foreign related parties that they transact with (by value of sales or purchases respectively) and provide certain details of these related parties. 

For further information, please refer to IRAS’ website.  

Source: Inland Revenue Authority of Singapore  

CORPORATE TAX

The Inland Revenue Authority of Singapore (IRAS) has updated its website on “Taxable and Non-taxable Income” with the addition of new FAQs, clarifying when foreign-sourced offshore income is considered received in Singapore and subject to tax. IRAS has outlined in one of its updated FAQs, that the transmission of foreign-sourced offshore income by a company from its offshore bank account to the Central Depository Pte Ltd (CDP)'s bank account in Singapore for the payment of one-tier tax exempt dividends to its scripless shareholders, does not constitute income received in Singapore from outside Singapore, and therefore is not taxable. However, IRAS has highlighted that this non-taxation is subject to the condition that the one-tier tax exempt dividend is paid directly into the CDP's bank’s account and does not involve any physical remittance, transmission or bringing of funds into Singapore. The above update was made on 2 August 2017. For further information, pleas refer to IRAS' website. Source: Inland Revenue Authority of Singapore 

IRAS UPDATES

IRAS issued a new GST e-Tax Guide on “Customer Accounting for Prescribed Goods” (“GST e-Tax Guide) on 15 September 2017. In this guide, IRAS has indicated that customer accounting for certain prescribed goods will be implemented with effect from 1 January 2019. The purpose of introducing customer accounting is to prevent the loss of GST revenue under fraudulent schemes whereby the sellers abscond with the GST amounts that they have collected from customers but businesses further down the supply chain continue to claim the input tax. Normally, a supplier of taxable goods and services will account for the output tax. However, under customer accounting, the responsibility to account for the output tax on taxable supplies is shifted from the supplier to the customer. Customer accounting is only applicable to prescribed goods which are defined in the GST e-Tax Guide as mobile phones, memory cards and off-the-shelf software. Customer accounting shall apply on any local sale of prescribed goods made to a GST-registered customer if the value of the sale (excluding GST) exceeds $10,000 in a single invoice. The customer in this situation will account for the output GST chargeable on the purchase, on behalf of the supplier. The customer can claim the input tax on this purchase if the relevant conditions for claiming input tax are met. The supplier must state in the tax invoice issued to the customer, the amount of output tax due on the supply for which the customer is required to account for on the supplier’s behalf. The following are specifically excluded from customer accounting: A) A supply of goods made under the Gross Margin Scheme, B) A supply of goods made under the Approved Third Party Logistics Company Scheme or Approved Refiner and Consolidator Scheme to an approved/specified person, and C) A deemed taxable supply of goods arising from the transfer or disposal of goods for no consideration. The application of the GST e-Tax Guide is subject to the passing of the GST (Amendment) Bill 2017 by Parliament and the assent of the President. For more detailed information on the mechanics of customer accounting, please refer to the GST e-Tax Guide. Source: Inland Revenue Authority of Singapore 

Estimated Chargeable Income (ECI) For companies with a financial year-end of 30 June, the deadline for filing their ECI is 30 September.  

It is compulsory for companies with a turnover of more than $10 million in YA 2017 to file their ECI electronically. This is in conformity with the Government's direction to provide more cost effective delivery of public services, as well as the Smart Nation vision to harness technology to enhance productivity.  

Filing of ECI is waived if the ECI is nil and the revenue theshold is met. For companies with their financial year ending in or before June 2017, the revenue threshold is S$1 million. For companies with their financial year ending in or after July 2017, the revenue threshold is S$5 million. For example, a company with an annual revenue not exceeding S$5 million for its financial year from 1 January 2017 to 31 December 2017 (basis period for YA2018) need not file its ECI if its ECI for YA2018 is nil. 

Goods and Services Tax (GST) For companies whose GST accounting period is between 1 July and 30 September, the deadline for filing their GST returns is 31 October 2017. The due date for filing GST returns and making GST payments is one month after the end of the accounting period covered in the GST return.

A taxpayer who makes taxable supplies is required to register with the Comptroller of GST if at the end of any quarter, the total value of all its taxable supplies in Singapore for that quarter and the three quarters immediately preceding that quarter exceeds S$1 million, or if it is reasonable to believe that the total value of its taxable supplies will exceed S$1 million in the next 12 months. 

About Crowe Horwath First Trust  

Crowe Horwath First Trust (Crowe) is one of the leading accounting and advisory services firms in Singapore. Under its core purpose of being the firm of choice for growing businesses looking for high quality and personalized service, Crowe Horwath assists clients in achieving their goals through audit, tax, advisory and outsourcing services. Crowe serves clients worldwide as an independent member of Crowe Global, one of the largest global accounting networks in the world. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.  

Contact Information 

Crowe Horwath First Trust 8 Shenton Way #05-01 AXA Tower Singapore 068811 www.crowe.sg Tel +65 6221 0338 Fax +65 6221 1080 Business Registration No: 200506875N For general enquiries, email us at enquiry@crowe.sg

Disclaimer This newsletter has been prepared by Crowe Horwath First Trust Tax Pte Ltd as a service to clients and should be used as a general guide only. No reader should act solely upon any information contained in this bulletin. We recommend that professional advice be sought before taking action on specific issues and making significant business decisions. While every effort has been made to ensure the accuracy of the information contained herein, Crowe Horwath First Trust Tax Pte Ltd shall not be responsible whatsoever for any errors or omissions in it. 

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