singapore tax and fatca updates · wage credit scheme (wcs): overview the singapore government will...

IMAS Lunchtime Talk Series 2013


Singapore tax and FATCA updates

21 March 2013


Singapore tax and FATCA updates – what do they mean to you?► Budget 2013 updates

► Tax updates on the fund management industry

► FATCA – what next?



Budget 2013 updates

Presented by Amy Ang

Partner, Financial Services and Corporate Tax

21 March 2013


Monthly salary increase

Wage Credit Scheme (WCS): Overview

► The Singapore Government will co-fund 40% of wage increases for Singaporean employees earning up to a gross monthly wage of S$4,000. Wage increases that are given in 2013 to 2015 will be eligible for the WCS

200 200

200

200

200

200Co-funding ceiling of S$4,000 (monthly salary)

Monthly co-fundingby Government: 80 160 240

2013 2014 2015


WCS: Qualifying employees

► Singapore citizen► Earns a gross monthly wage of up to and including

S$4,000► Minimum increment to be supported is S$50► Was employed for at least three months in preceding year

with the same employer► On employer’s payroll for at least three months in

qualifying year► Qualifying monthly salary includes basic salary and

additional wages like overtime pay and bonuses, and excludes employer CPF contributions


WCS: Qualifying criteria

► Employer must have paid the employee CPF contributions for at least three months in the qualifying year. Owners of companies or businesses do not qualify as employees even if they make CPF contributions

► All employers will be automatically covered ► Government-related entities and entities not registered in

Singapore are excluded from receiving the Wage Credit► Public companies limited by guarantee, societies and

charities and institutions of a public character are eligible for WCS


WCS payout

► For wage increases given in 2013, eligible employers will receive the Wage Credit in Q2 2014

► Payment will be credited directly into the company’s GIRO bank account for income tax or through cheque

► Wage Credit is taxable► Wage Credit can be used to offset any outstanding tax

arrears of the employer before the remaining amount, if any, is paid out


Corporate income tax rate

Current► Corporate income tax rate: 17%

► Partial tax exemption on first S$300,000 of chargeable income:► 75% tax exemption for up to the first S$10,000 ► 50% tax exemption for up to the next S$290,000

Proposed► No reduction in corporate income tax rate► Partial tax exemption remains as before


Corporate income tax rate:Comparison to Hong Kong

►Hong Kong’s prevailing corporate tax rate: 16.5%►How does this compare to Singapore:

(a) 75% tax exemption for up to the first S$10,000 of chargeable income(b) 50% tax exemption of up to the next S$290,000 of chargeable income

Chargeable income

S$

Exempt income

S$

Income subject to tax

S$

Income at 17%S$

Effective tax rate

S$10,000 (7,500) 2,500 425

290,000 (145,000) 145,000 24,650

300,000 (152,500) 147,500 25,075 8.36%

4,900,000 - 4,900,000 833,000

5,200,000 (152,500) 5,047,500 858,075 16.5%

a

b


Corporate income tax rate

Points of view

► Effective tax rate can be further reduced by:► Full and/or partial tax exemption

► Various tax incentive schemes such as: ► FSI-FM which accords concessionary tax rate of

10%


Corporate income tax rebate

Current► No corporate income tax (CIT) rebate for year of

assessment (YA) 2012

Proposed► CIT rebate for YA2013 to YA2015► 30% of corporate income tax payable, capped at

S$30,000 per YA



How does it affect you

► Chargeable income of S$740,736 and above to reap the full benefit of the CIT rebate

► Further reduction of effective tax rate

Chargeable income Effective tax rate (after partial exemption)

Effective tax rate (after partial

exemption and CIT rebate)

S$300,000 8.36% 5.85%S$500,000 11.8% 8.3%

S$5,200,000 16.5% 15.9%



Clarifications from the IRAS► Given to all companies including► Registered business trusts► Companies that are not tax resident in Singapore; and ► Companies that receive income taxed at a

concessionary tax rate► No application required – automatic processing by IRAS

when assessing companies’ income tax returns► Not applicable to income of a non-resident company that

is subject to final withholding tax► Computed on the tax payable amount after deducting tax

set-offs (e.g., foreign tax credits)



► For companies with concessionary and normal income:

Illustrative example S$Chargeable income @ 10% concessionary tax rate 200,000Tax payable on above chargeable income 20,000Chargeable income @ 17% (after exempt amount) 400,000Tax payable on above chargeable income 68,000Total tax payable 88,000YA 2013 CIT rebate (30% of tax payable, capped at S$30,000)

26,400.00

Net tax payable 61,600Effective tax rate 10.3%


Tax exemption for new start-up companies

Current► Tax exemption on first S$300,000 of chargeable income:► 100% tax exemption for up to the first S$100,000 ► 50% tax exemption for up to the next S$200,000

► Qualifying conditions include:► Incorporated in Singapore (including a company limited by

guarantee)► A tax resident in Singapore for that YA; and► Has no more than 20 shareholders throughout the basis

period for that YA where:► All of the shareholders are individuals beneficially and

directly holding the shares in their own names;► At least one shareholder is an individual beneficially and

directly holding at least 10% of the issued ordinary shares of the company


Tax exemption for new start-up companies

Proposed► Tax exemption rates remain as before► Qualifying conditions remain as before► Certain companies incorporated after

26 February 2013 are excluded from the scheme:► Property developer► Investment holding company

► Property developers and investment holding companies can still enjoy the partial tax exemption


Productivity and Innovation Credit (PIC)

► Announced in the 2011 Budget Statement► Available to all businesses from FY2010 to FY2014► Enhanced tax deductions or allowances for qualifying

expenditure incurred in the following six activities:

400% for first $400,000 per activity per FY

150% (for R&D) or 100% (for the rest) for the balance expenditure

* Need not be related to existing trade or business (for R&D done in Singapore)

Training of

employees

Registrationof

IP rights

Acquisition of

IP rights

Design activities

in Singapore

Automation through

technologyor software

R&D* donein

Singaporeor abroad


PIC overview

► Combined expenditure cap of S$800,000 for each of the qualifying activities for FY2010 and FY2011

► Combined expenditure cap of S$1,200,000 for each of the qualifying activities from FY2012 to FY2014

► Claim must be net of grants and subsidies provided by the government or any statutory board

► Tax deferral option available

► Cash conversion option available


PIC cash conversion option:In summary

YA 2011 and YA20 12

YA 2013, YA2014and YA2015

Maximum qualifying expenditure eligible for conversion

S$100,000 S$100,000

Minimum qualifying expenditure to be converted

S$400 S$400

Conversion rate 30% 60%Maximum cash payout per YA S$30,000 S$60,000Value of cash conversion in respect of qualifying deduction or allowance

7.5% 15%

Ability to combine expenditure cap

Yes No


PIC cash conversion option:Qualifying conditions

► One-time irrevocable option to convert deduction / allowance into cash in lieu of tax deduction if the following conditions are met:► Incurred qualifying expenditure is entitled to the PIC

scheme during the basis period for the qualifying YA;► Active business operations in Singapore; and► at least three local employees (Singapore citizens or

permanent residents with CPF contributions excluding sole proprietors, partners under contract for service and shareholders who are directors of the company)


Enhancement to PIC

Enhancement to PIC

automation

IP licensing

PIC Bonus

► Enhancement to the PIC scheme to include IP in-licensing

► Expansion to the scope of PIC automation equipment

► Introduction of PIC Bonus


Automation through technology or software:Overview of existing rules► Under the PIC

► A 400% capital allowance (CA) / deduction on the first S$400,000 of qualifying expenditure

► A 100% CA / deduction on the remaining qualifying expenditure

► Qualifying expenditure► Expenditure incurred on the acquisition / lease of prescribed

automation equipment

► Examples include:► Computers, mobile phone and other personal digital assistant ► IT software including office system software and software

used in connection with provision of any office automation service (e.g., ERP, CRM etc)


Expansion to the scope of PIC automation equipment

► Currently IRAS issues a prescribed list of automation equipment qualifying for PIC to provide tax certainty to businesses for their PIC claims. Automation equipment on the prescribed list automatically qualifies for PIC.

► Where the automation equipment is not on the prescribed list, taxpayers can apply, on a case-by-case basis, to the IRAS to seek approval to claim enhanced allowances / deductions under the PIC scheme.


PIC Bonus

► PIC Bonus is paid over and above existing PIC benefits

PIC

► Businesses that invest a minimum of S$5,000 per YA in PIC qualifying expenditure will receive a dollar-for-dollar matching cash bonus

► The bonus will be up to S$15,000 over three YAs from YA2013 to YA2015

$


PIC Bonus

► The PIC Bonus is applicable to sole-proprietorships, partnerships and companies that have:► Incurred at least S$5,000 in PIC qualifying expenditure during

the basis period for the YA in which a PIC Bonus is claimed;

► Active business operations in Singapore; and

► At least three local employees (Singapore citizens or permanent residents) with CPF contributions, excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company

► The PIC Bonus is not available to town councils, clubs and associations

► Businesses can claim the PIC Bonus together with their PIC cash payout applications or income tax returns


PIC Bonus

► Where the 400% tax deductions / allowances are claimed in the income tax return:► Businesses can expect to receive the PIC Bonus within

three months from the date of receipt of the income tax return by the IRAS

► IRAS will start disbursing the PIC Bonus from October 2013

► Where the PIC cash payout is claimed:► IRAS will generally approve the cash payout claim within

three months from the date of receipt of the application► PIC for these cases will be disbursed from July 2013

► The PIC Bonus is taxable


Extending and enhancing the Financial Sector Incentive (FSI) scheme► FSI – ST 12%► FSI – FM► FSI – HQ

► FSI – BM► FSI – EM► FSI – CFS► FSI – DM

► FSI – IF

Expire on 31 December 2013

5%

► Financial Derivatives► OTC Commodity Derivatives► Exchange Traded Commodity

Derivatives►OTC and Exchange Traded

Commodity► Financial, OTC and Exchange

Traded Commodity Derivatives

10%


► Financial Derivatives► OTC Commodity Derivatives► Exchange Traded Commodity

Derivatives►OTC and Exchange Traded

Commodity► Financial, OTC and Exchange

Traded Commodity Derivatives

Extending and enhancing the Financial Sector Incentive (FSI) scheme► FSI – ST 12%► FSI – FM► FSI – HQ

► FSI – BM► FSI – EM► FSI – CFS► FSI – DM

► FSI – IF

Expire on 31 December 2013

5%

FSI-CM

FSI – DM

subsumed into FSI-ST

31 December 2018

10%


Extending and enhancing the Financial Sector Incentive (FSI) scheme

► FSI-ST► FSI-CM► FSI-CFS

► FSI-HQ► Interest payments on qualifying loans ► Automatic withholding tax (WHT) exemption

wef 25 February 2013

► MAS will release details by end June 2013

Range of incentivised activities and financial instruments will be broadened


Extending and refining the QDS and QDS + incentive schemes

► Interest income► Discount income► Prepayment fee► Redemption

premium► Break cost

Issuer HolderQDS

QDS +

FSI-ST Companies or bodies of person resident in Singapore

Non-resident

Resident individuals

12% 0%10% 0%

0% 0%0% 0%

IMAS Lunchtime Talk Series 2013Investors


Arranger

Qualifyingcriteria

Types of instrumentBonds, notes, CPs, CDs

Issue date on

or before

31 December 2013

► Substantially arranged by a Singapore FI; or

► Arranged by an FSI-BM company

At primary launch:

►At least four investors; or

►< 50% held or funded by related parties

► QDS

► If at least 50% of QDS / QDS+ held by related parties, that portion of income does not qualify for concessionary tax treatment



► QDS+ - QDS that are ► Debt securities (excluding SGS) with an original

maturity of at least ten years; or ► Islamic debt securities or sukuk



Proposed► QDS and QDS+ schemes extended from

31 December 2013 to 31 December 2018► Debt securities issued during 1 January 2014 to

31 December 2018 “substantially arranged in Singapore” rationalised



Debt securities issued 1 January 2014

to 31 December 2018“Qualifying programme”

► Programme wholly arranged by FSI-CM or FSI-ST

► New issuer: participation wholly arranged by FSI-CM or FSI-ST

Substantially arranged in Singapore

“Non-qualifying programme”

► > 50% issued in that tranche distributed by FSI-CM or FSI-ST

“Not under a programme”

► > 50% of lead managers are FSI-CM or FST-ST

► Other proxies : > 50% of revenue from arranging, distributing, attributable to FSI-CM or FSI-ST


Extending and enhancing the Financial Sector Incentive (FSI) scheme

► QDS+► “Standard early termination clauses” do not affect

status► Early termination due to taxation, default, redemption or

modification and amendment events► If redeemed prematurely, QDS+ benefits revoked

prospectively for outstanding debt securities► Embedded options which can be exercised within ten

years from debt of issuance ≠ QDS+► Effective from date of release of MAS circular before

end of June 2013


Expiry and withdrawal of certain tax schemes

► Further tax deduction scheme for expenses incurred on relocation or recruitment of overseas talent► Expires on 30 September 2013

► Tax incentive scheme for family-owned investment holding companies (FIHC)► Aligns tax exemption of income received directly by individuals and

that through a qualifying FIHC

► Expires on 31 March 2013


Personal income tax rate

No change to the current personal income tax rates► A more progressive personal income tax schedule took

effect from year of assessment (YA) 2012► Top marginal tax rate remains at 20%


Tax structure effective from YA2012

Chargeable income (S$) Tax rate (%) Tax payable (S$)

On the first 20,000 0 0

On the next 10,000 2 200

On the first 30,000 200

On the next 10,000 3.5 350

On the first 40,000 550

On the next 40,000 7 2,800

On the first 80,000 3,350

On the next 40,000 11.5 4,600

On the first 120,000 7,950

On the next 40,000 15 6,000

On the first 160,000 13,950

On the next 40,000 17 6,800

On the first 200,000 20,750

On the next 120,000 18 21,600

On the first 320,000 42,350

In excess of 320,000 20


Personal income tax rebate

One-off personal income tax rebate to be granted to all resident taxpayers for YA 2013

Rebate Criteria

30% Aged less than 60 years old as at 31 December 2012

50% Aged 60 and above as at 31 December 2012

Cap S$1,500 per taxpayer


Singapore vs Hong Kong (YA 2013)

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

50 100 150 200 250 300 350 400 450 500 550

Effe

ctiv

e ta

x ra

te

Income level (S$ '000)

Singapore Hong Kong (2012/2013 tax rates)

S$520,000

S$82,000

Notes :

1. Assumes a married man 50 years of age and below, with two children. Wife has no income and sole source of income is from his employment

2. Hong Kong calculations are based on 2012/2013 tax rates, with 75% tax rebate capped at HK$10,000.

3. Singapore calculations are based on YA 2013 tax rates, with 30% tax rebate capped at S$1,500.

4. Exchange rate used: S$1 : HK$6.2159

Comparative Analysis (2012/2013 Hong Kong vs Singapore YA2013 tax rates)


Simplifying the taxation of accommodation benefits

► Proposed changes with effect from YA 2015► Taxable value of accommodation provided by employer to

employee, including service apartment*:

* Not located within a hotel building

CurrentThe lower of 10% of employment income or the annual value of premises, less rent paid by employeeIf furnished, taxable value of furniture and fittings is based on a prescribed list

ProposedAnnual value of premises, less rent paid by employee

If furnished, taxable value is based on a percentage of annual value


Illustration: proposed changes to taxable benefit of accommodation

Current tax treatment on housing accommodation

(S$)

SalaryBonusFurniture & fittingsHousing benefit

180,00030,0001,200

21,120

Assessable income 232,320

Less: personal reliefsEarned incomeSpouseChildren

(1,000)(2,000)(8,000)

Chargeable income 221,320

Tax 24,588

Difference in tax to be paid

Proposed changes to taxable benefit on

housing accommodation (S$)

180,00030,0003,250

65,000

278,250

(1,000)(2,000)(8,000)

267,250

32,855

8,267


Illustration: proposed changes to taxable benefit of accommodationAssumptions: 1. Taxpayer is married with two dependent children. Wife has no

income.2. Salary is S$15,000 per month. Bonus is equivalent to two

months salary. 3. House rental is S$8,000 per month. Annual value of property is

S$65,000. 4. Taxable benefit of furniture and fittings amount to S$1,200 per

annum under current treatment. For the taxable value under the proposed treatment, we have assumed the furniture and fittings based on 5% of the annual value of the housing.

5. No other reliefs/deductions apply. 6. Based on current individual tax rates without tax rebate.


Simplifying the taxation of accommodation benefits

Taxable value of hotel accommodation provided by employer to employee, including service apartment located within a hotel building:

► Further details to be released by IRAS by October 2013

Current ProposedS$250 per month each for self and spouse, including varying rates for children + 2% of base salary relating to the period of hotel stay

Actual cost of the hotel stay incurred


Impact

Higher tax costs► Employers who bear the tax liabilities of employees► Employees who bear their own taxes


Employee equity-based remuneration schemes

Tax incentive schemes

Tax deferral scheme

Tax exemption schemes for employees –Equity Remuneration Incentive Scheme (ERIS)

Qualified Employee

Equity-Based Remuneration

scheme (QEEBR)

ERIS (Start-ups)

ERIS (SMEs)

ERIS (All

Corporations)


ERIS: Brief background

ERIS(Start-ups)

►Employees of qualifying start-up companies enjoy tax exemption on 75% of taxable stock gains, up to S$10m over 10 years

►Effective 16 February 2008 for five years

►Subject to qualifying conditions

ERIS (SMEs)

►Employees of qualifying SMEs enjoy tax exemption on 50% of taxable stock gains, up to S$10m over 10 years

►First introduced on 1 June 2000


ERIS (All Corporations)►Employees of

qualifying companies enjoy tax exemption on the first S$2,000 of taxable stock gains plus 25% of the remaining gains, up to S$1m over 10 years

►First introduced on 1 April 2001



ERIS: Proposed changes

ERIS(Start-ups)

►Expired on 15 February 2013 – will not be renewed

►Employee stock plans that previously qualified under this scheme will continue to enjoy tax exemption on gains derived on / before 31 December 2023

ERIS (SMEs) and

ERIS (All Corporations)►No prior expiry date

►Will now expire on 1 January 2014

►Employee stock plans that qualify under this scheme on / before 31 December 2013 will continue to enjoy tax exemption on gains derived on / before 31 December 2023


Employee equity-based remuneration schemes

► Qualified (EEBR)► Sole scheme remaining► Tax deferral scheme, i.e., not an exemption scheme► Application by the taxpayer to IRAS to defer payment

on tax on share gains up to five years► Deferral is subject to interest charge at prime rate


Property tax changes

Current► Property tax rate is 10% on Annual Value► As a concession, lower rates apply for owner-occupied

residential properties

Annual value (AV) Property tax ratesFirst S$6,000 0%Next S$59,000 4%AV above S$65,000 6%



► Proposed rates for owner-occupied residential properties:Annual value (AV) Rates from

1 January 2014Rates from

1 January 2015First S$8,000 0% 0%Next S$47,000 4% 4%Next S$5,000 5% 6%Next S$10,000 6% 6%Next S$15,000 7% 8%Next S$15,000 9% 10%Next S$15,000 11% 12%Next S$15,000 13% 14%AV above S$130,000 15% 16%



► Proposed rates for non-owner-occupied residential properties:

► Property tax rate for land and non-residential properties remains at 10%

► More details to be released by June 2013

Annual value (AV) Rates from 1 January 2014

Rates from 1 January 2015

First S$30,000 10% 10%Next S$15,000 11% 12%Next S$15,000 13% 14%Next S$15,000 15% 16%Next S$15,000 17% 18%AV above S$90,000 19% 20%



Current► Refund concessions available for certain vacant

properties

► Residential properties undergoing demolition and reconstruction► Rate of 10% applies► Can apply to be taxed at owner-occupied rates

► Vacant land undergoing new development► Rate of 10% applies during period of development



Proposed► With effect from 1 January 2014► Refund concessions on vacant properties will be removed► Vacant properties despite reasonable efforts to find a tenant► Residential properties undergoing repairs or building works

for owner-occupation*► Vacant land undergoing residential development*

* For properties intended for owner-occupation, owner may apply to IRAS for owner-occupied residential property tax rates► Rates to apply up to two years► Property must be owner-occupied for at least one year



► No change to:► Property tax on residential property undergoing

demolition and reconstruction► Vacant land undergoing new development

► Further details to be released by IRAS by June 2013


Foreign worker policies

Work pass eligibility criteria► Tightening of S Pass qualification criteria► Increase of minimum qualifying monthly salary from

S$2,000 to S$2,200 from 1 July 2013► Tiered salary system based on age and qualifications

► Eligibility requirements for Employment Pass (EP) will be further tightened


Foreign worker policies

► New EP framework to ensure firms give fair consideration to Singaporeans in their hiring practice► Ministry of Manpower will release more details and will

consult


Recent Singapore tax treaties

Signed but not in force In force

► Portugal (Protocol)► Turkey (Protocol)

► Bermuda (tax information exchange agreement)

► Bahrain (Protocol)► Canada (Protocol)► Estonia (Protocol)

Addition of Exchange of information Article



Signed but not in force In force

► Guernsey► Isle of Man► Jersey► Poland

(enhanced agreement)

► Italy (Additional Protocol)

► Switzerland (revised)► United Kingdom

(Second Protocol)► Vietnam

(Second Protocol)

Comprehensive tax treaties



Highlights1. DTAs with low tax jurisdictions (Guernsey, Isle of Man

and Jersey)► Dividends not subject to withholding tax (WHT)► Interest WHT @ 12%► Royalties WHT @ 8%

2. Includes internationally agreed Standard for Exchange of Information (39 to date)

3. Trustee deemed to be beneficial owner of the income for the purposes of the Articles on dividend, interest and royalties ( Guernsey, Poland and UK)



Highlights4. Article on Dividends includes REIT distributions which is subject to 15% WHT (UK)5. Cessation of tax sparing provision (Italy)6. Increase in threshold period for permanent

establishment (PE) (Italy, Poland and Switzerland)7. 5 years sunset clause for service PE (UK)8. Most favoured nation clause for interest WHT (Vietnam)9. Remittance clause not applicable to income exempted

from Singapore tax (Poland and Switzerland)


Where is Singapore heading in terms of tax compliance?► Adoption of risk-based compliance approach to assess

taxpayers► Steps taken by IRAS to-date► Voluntary Disclosure Program (VDP)► Enhanced Taxpayer Relationship Program► GST Assisted Compliance Assurance Program (ACAP)

in April 2011► Corporate Income Tax – Objection and Appeal Process

(with effect from 1 January 2014)► Next ?► Co-creating a Tax Risk Management (TRM) framework

for Singapore► TRM to be the proposed basis of IRAS’ compliance

program


Common issues in tax compliance

► Classification of income and expenses► For tax incentive companies► Normal vs concessionary income► Allocation keys for expenses

► Information flow is ineffective within entity/across entities► Lack of controls to manage errors and protect data integrity► Lack of records to substantiate transactions► Manual data extraction resulting in inefficiencies and wrong

classification► Lack of tax trained personnel to perform pre-submission

review► Failure to comply with withholding tax


Compliance focus by IRAS

► Past and ongoing► Timely filing of corporate tax returns► Accurate filing of income and expenses, especially by

family owned and managed companies► Abuse of tax exemption scheme for new companies► Claims of capital allowance and industrial building

allowance► Up and coming► Classification of income and expenses by companies

enjoying tax incentives► Related-party transactions and allocation of development

cost by real estate developers ► Income declaration by companies whose principal

activities are that of tutoring services or tuition agencies



Updates to the fund Industry

Presented by Desmond Teo

Partner, Financial Services and International Tax

21 March 2013


Singapore asset management industryConfirming our suspicion over the past 10 years


Designated investments and specified income

üAll stocks and shares of any company, other than an unlisted company that is in the business of trading or holding of Singapore immovable properties (other than the business of property development) are covered

üREITs are considered “securities” and covered even if they have Singapore real estate

Non-qualifying debt securities and other securities issued by private companies that are in the business of trading or holding of Singapore

The list of designated investments was simplified and some changes of particular interest:


Designated investments and specified income

üUnless excluded, all income and gains derived on or after 17 February 2012 from designated investments will be considered as specified income

ü Disposal gains from any REITS

Interest and other payments that fall within the ambit of Section 12(6) of the Income Tax Act (ITA), unless excluded

Distributions made by a trustee of a SGX-listed REIT

The list of specified income will be enhanced and revised as an exclusion list. Some key income/gains impacted:


Other changes impacting prescribed funds

SPVs (Exempt SPV) that enjoy the Singapore tax exemption which are wholly-owned by the Prescribed Fund

Key changes/clarifications► 100% ownership must be at all

times during the basis period where the Exempt SPV enjoys tax exemption

► Prescribed Fund must meet the prescribed conditions for Section 13R/X

Investors

Exempt SPV

Must be 100% at all times during the basis period where Exempt SPV enjoys tax exemption

Prescribed Fund must meet the prescribed conditions for Section 13R/X

Prescribed Fund

Prescribed Fund that enjoy the Singapore tax exemption

Key changes/clarifications► Conditions to be met at all times

during the basis period for the year of assessment


GST remission for prescribed funds

► GST remission for prescribed funds managed by fund managers in Singapore• Fixed recovery rate for 1 January 2013 to 31 December 2013 will be 87%

• Operating costs for the fund are marginally increasing

2009 2010 2011 2012 2013Fixed Recovery Rate 93% 92% 91% 90% 87%GST leakage / $1 mil

expenses $4,900 $5,600 $6,300 $7,000 $9,100

$0

$2,000

$4,000

$6,000

$8,000

$10,000

70%

75%

80%

85%

90%

95%

100%


Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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www.ey.com.

© 2013 Ernst & Young Solutions LLP. All Rights Reserved.

FEA no. 12000446

Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A).

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young Solutions LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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