1. 18 www.newsletter.co.uk Tuesday,September1,2015NewsLetter
BUSINESS
F
iftyyearsagoon
August9th,1965,
Malaysiaexpelled
Singaporefromthe
MalaysianFedera-
tionandthetwoentitieswent
theirseparateways.
FivedecadesonitisMalay-
sia which is shedding tears as
hundredsofmillionsofdollars
have found their way into the
bank account of their Prime
Minister,NajibRazak,whileat
muchthesametimetheLead-
er of the Opposition has been
jailedonchargesofsodomy.
Singapore on the other
hand has been an incredible
success as measured by per
capitagrossdomesticproduct
(US$56,000)andevenmoreso
byitsstabilityofGovernment.
Singapore’sPeople’sAction
PartyhasheldpowersinceIn-
dependence and still enjoys a
reputation for honesty and
competence.
In one sense comparing
the two countries is unfair.
Malaysia with 450 times the
land area and a population of
30 million is much harder to
govern than a nation state of
5.6 million people the size of
theIsleofWright.
But this should not be al-
lowed to undermine the ef-
forts of Lee Kuan Yew, its
founder and first Prime Min-
ister who was its leader from
1965 to 2004 and is generally
acceptedasthearchitectofits
phenomenalsuccess.
Initially haunted by its ra-
cial and linguistic divisions,
with its mixture of Chinese,
Malay and Indians, he was to
becomethearchitectofamul-
tiracial success story arising
from a collection of people
whoin1965lackedacommon
destiny.
Yet the city has overtaken
Shanghai and Tokyo to be-
come the largest centre in
its time zone for foreign ex-
changetrading.
It is also the home for
14,000 commodity traders
and a growing base for as-
set management and private
banking.
It is also gaining in impor-
tance as a legal centre for in-
ternational arbitration. It
has benefited from its early
British ownership and is re-
spected for its adherence to
theRuleofLaw.
With English and Manda-
rin as its base languages it is
positionedontheworld’sbus-
iest shipping route between
East and West Asia through
which some 40 per cent of
today’s world shipping trade
passes.
Itisalsoaplacewhereclev-
er people like to work. The
youngoftenchafeagainstout-
moded rules such as a ban on
longhairandchewinggumor
having gay sex and they often
feel stifled by the absence of
freespeech.
Itisgenerallyacceptedthat
if the country wants to be as
successful for the next half
century it will have to loosen
up.
Butdon’tholdyourbreath
waiting for a rush of reforms
inthenextfewyears.
The People’s Action Party
is probably the only political
party in the rich world never
tohavebeenoutofpower. But
in the last elections in 2011 it
recorded its worst perform-
ance since 1965 winning on-
ly 60 per cent of the popular
vote.
To its credit the Party ac-
knowledged the results as a
rebukeandsincetheelection
has held more than 660 ‘dia-
logue sessions’ to more fully
appreciategrievances.
Not surprisingly the Par-
ty believes it does not have
to ‘lose to change’, and West-
erners should realise we are
talking about a Chinese dom-
byIanRainey
ManagingDirector,
MSLSearchandSelection
‘Thecityhas
overtakenShang-
haiandTokyoto
becomethelarg-
estcentrefor
foreignexchange
trading,andis
alsothehomefor
14,000commod-
itytradersanda
growingbasefor
assetmanage-
mentandprivate
banking...’
An object lesson
in global success
as Singapore
marks its 50th
inated island where their
forefathers have not been ac-
customedtochampioningop-
position.
It is important to note
though that when Lee Kwan
Yew died in April this year
there was a national out cry-
ing of grief as people queued
for more than eight hours in
torrential rain and tropical
heat to watch his coffin pass
on the 10 mile route of his fu-
neralprocession.
He was among a number
of 20th century luminaires
askedbytheWallStreetJour-
nal in 1999 to pick the most
influential invention of the
millennium.
He alone shunned the
printing press, the combus-
tion engine and the internet
choosingthe‘airconditioner’.
Ifyouhaveworkedinthetrop-
ics as I have you would find it
difficulttoarguewithhim.
Measured against all oth-
er developed countries, Sin-
gapore stands at No 5 in the
worldwhenmeasuredonGDP
percapitaanditsurpassesthe
USA,Switzerland,Norway,Ja-
panandtheUK.
Unfortunatelyitalsoranks
at fifth among the world’s
mostexpensivecitiestolive.
With China now poised to
be the world’s No 1 economy,
Singapore has positioned it-
self as the place to go to for
Westerncompanieswhowant
exposuretoChinabutnotnec-
essarily the costs and com-
plexitiesofsettingupshopon
theChinesemainland.
Addthatthechaosanddirt
thatissynonymouswithBang-
kok, Manila, Kuala Lumpur
and Jakarta it is easy to see
why Singapore is the first
choiceandevenmoresosince
HongKongisincreasinglybe-
coming a satellite of the Chi-
nesemainland.
The next elections are
in September this year but
I would be surprised if they
show anything but favour for
the present government and
thePeople’sActionPartynow
ledbyLeeKwanYew’sson,Lee
HsienLoon.
Again I reiterate the coun-
try still harbours a major-
ity Chinese population, who
like their mainland counter-
parts in China, have not been
broughtuponWesterndemo-
craticprinciples.
feature

2. 31Tuesday,September1,2015 www.newsletter.co.uk NewsLetter
BUSINESS
Howdevolvedtaxation
islikelytoimpacton
yourbusiness
Revenuemanagement
mentorder.
The rate will be applied to
tradingincomeonlyandother
sourcesofincomewillremain
chargeableattheUKmainrate
ofcorporationtax.
TheoperationoftheNorth-
ern Ireland corporation tax
rate will, however, differ for
small and medium-sized en-
terprises (SMEs) and large
companies.
SMEs will fall fully within
theregimeifmorethan75per
cent of their workforce time
and expenses are incurred in
NorthernIrelandwhereas,for
large companies, the regime
will apply to profits that are
attributable to trading activ-
ities carried out in Northern
Ireland.
Duetotheincreaseddevo-
lution, differences also arise
dependent upon the nature
of the transaction and where
itoccurs.
FromApril6,thisyear,any
landtransactionsinScotland
are subject to the new Land
and Buildings Transaction
Tax (‘LBTT’) which replaces
StampDutyLandTax(‘SDLT’).
However as anticipated,
the rates announced will re-
sult in some ‘winners’ and
some‘losers’.
A third issue for compa-
nies to consider is whether
it is possible to extract and
identify the source of all in-
come from your accounting
systems.
This could be particular-
C
orporationtax
hasbeenanever-
presentitemon
theagendaofmost
in-depthdebates
aboutthehealthoftheNorth-
ernIrelandeconomyinrecent
years.
Thediscussionwasreignit-
ed last month following
George Osborne’s somewhat
surpriseannouncementinhis
SummerBudgetofacutinUK
corporationtax.
As well as altering the dy-
namic of the corporation tax
debate locally, one thing the
SummerBudgetdidteachusis
thatwhilelegislationisstillto
beagreedandenacted,greater
devolution of taxes is coming
overthehorizon,particularly
forbothNorthernIrelandand
Scotland.
It’s absolutely vital for lo-
cal businesses that they start
thinking seriously about how
this will impact them and en-
sure they attain the best pos-
sible advice about the most
efficient and cost-effective
method of managing the
changeprocess.
Devolution is likely to in-
creaseadministrationandadd
complication for businesses
but, with early forward plan-
ning and thought, the impact
can be managed by business
ownersthinkingstrategically
around four pertinent issues
inthecontextofdevolution.
Firstly,ifyouhaveemploy-
ees resident in different are-
as of the UK then you need to
makesureyourpayrollandIT
systemsarecapableofdealing
withthis.
This is immediately rel-
evant for those employees in
Scotland,wheresometaxrais-
ing powers have already been
devolved and more are set to
follow on the back of the re-
centreferendum.
From April 2016 the UK
main rates of income tax ap-
plying to non-savings and
non-dividend income will
be reduced by 10 per cent for
‘Scottishtaxpayers’.
Instead, the Scottish Gov-
ernment will be able to levy
a Scottish Rate of Income
Tax (‘SRIT’), which will apply
equally to all Scottish taxpay-
ers.
TheSRITcanbereducedto
zero, however there is no up-
perlimit.
Secondly, if your business
derives income from more
than one country within the
UK then you will need to be
mindfulofthetaxratesinthat
country.
Northern Ireland has
gained agreement for devolu-
tion of corporation tax from
2017, subject to a commence-
Peter
legge
writtenby
TaxPartner,
GrantThorntonNI
ly relevant to construction
companies, for example, who
may be working on a number
of projects across the UK and
Ireland.
Ifyouarenotinthehabitof
carrying out regular audits of
youraccountingsystems,now
would certainly be an appro-
priatetimetostart.
Finally, it’s vital that firms
who undertake business
throughout the UK, identify
and allocate all costs associ-
ated with income streams
from various parts of the UK,
as these will determine and
support the rates at which
the company’s profits are to
betaxed.
By closely identifying and
monitoring these costs, busi-
nessescanalsoprotectagainst
‘surprise’fluctuationstotheir
bottom-line.
Many members of the
Northern Ireland business
community have taken part
– and perhaps enjoyed – the
CorporationTaxdebateinre-
centyears.
It’s time, now, for compa-
niestorealisethatgreaterdev-
olutionoftaxesacrosstheUK
hasalreadycommenced.
Despite some uncertainty
still existing on the prerequi-
sites for commencement of
the devolved corporation tax
rateinNorthernIreland,busi-
nessshouldbeusingthistime
to consider the potential im-
pactandidentifychangesthat
mayneedtobemade.