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Investment In Singapore Presented By David Kk Chong

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Investment In Singapore Presented By David Kk Chong

  1. 1. Investment in Singapore An overview of regulatory and tax laws 14 - 15 November 2006 New Delhi by David K.K. Chong M.Sc., LL.M., Advocate & Solicitor of Singapore Advocate & Solicitor of Malaya Advocate & Solicitor of Brunei Barrister of England & Wales Solicitor of Australia Barrister & Solicitor of British Virgin Islands
  2. 2. Why Singapore? <ul><li>Swiss-based most competitive economy in the world </li></ul><ul><li>Washington-based most free economy in the world </li></ul><ul><li>magazine world’s best city for business best city in Asia to work and live in </li></ul>World Economic Forum Heritage Foundation Fortune
  3. 3. Legal Framework & Justice <ul><li>Swiss-based </li></ul><ul><li>ranked legal framework 1st </li></ul><ul><li>in terms of level of confidence international business community has in the administration of justice ranked 4th </li></ul>‘ World Competitiveness Yearbooks’ International Institute of Management Development
  4. 4. Justice <ul><li>1. Denmark </li></ul><ul><li>2. Norway </li></ul><ul><li>3. Canada </li></ul><ul><li>4. Singapore </li></ul><ul><li>5. New Zealand </li></ul><ul><li>6. Australia </li></ul><ul><li>7. Switzerland </li></ul><ul><li>8. Hong Kong </li></ul><ul><li>9. Ireland </li></ul><ul><li>10. Finland </li></ul><ul><li>11. Iceland </li></ul><ul><li>12. Netherlands </li></ul><ul><li>13. Austria </li></ul><ul><li>14. Israel </li></ul><ul><li>15. Sweden </li></ul><ul><li>16. United Kingdom </li></ul><ul><li>17. Germany </li></ul><ul><li>18. Luxembourg </li></ul><ul><li>19. USA </li></ul><ul><li>20. Malaysia </li></ul>
  5. 5. Legal System <ul><li>Singapore law is based on English law </li></ul><ul><li>Singapore tax & company law also based on English principles </li></ul><ul><li>once upon a time Section 5 Civil Law Act provided for the law of England to be observed in all commercial matters </li></ul>
  6. 6. Income subject to Tax <ul><li>Section 10(1) ITA </li></ul><ul><li>(a) profits from any trade, business , profession or vocation </li></ul><ul><li>(b) profits from any employment </li></ul><ul><li>(d) dividends , interest or discounts </li></ul><ul><li>(e) pension, charge or annuity </li></ul><ul><li>(f) rents , royalties , premiums </li></ul><ul><li>(g) any gains or profits of an income nature </li></ul><ul><li>not falling within any of above </li></ul>
  7. 7. Capital Gains <ul><li>Capital Gains not subject to tax </li></ul><ul><li>except: </li></ul><ul><ul><li>Section 10F ITA gains from short-term real property transactions on or after 15 May 1996 before the expiration of 3 years from date of acquisition </li></ul></ul><ul><ul><li>Section 10G ITA gains from short-term transactions of shares in private real property companies </li></ul></ul><ul><li>Approved Holding Companies </li></ul>
  8. 8. Approved Holding Companies <ul><li>Any gain by AHC on the disposal of shares in subsidiaries will be treated as a capital gain if: </li></ul><ul><ul><li>immediately prior to date of disposal of shares; and </li></ul></ul><ul><ul><li>from date company is granted AHC status to date of disposal of shares </li></ul></ul><ul><li>they own at least 50% of the shares for a period of not < 18 months continuously </li></ul><ul><li>AHC status granted from 17 February 2006 to 16 February 2011 </li></ul><ul><li>Tax certainty for 5 years from date of AHC status </li></ul><ul><li>Loss from sale of shares cannot be set off against other income </li></ul>
  9. 9. Simple System <ul><li>no CFC rules </li></ul><ul><li>no thin capitalization rules </li></ul><ul><li>no capital duty </li></ul><ul><li>no transfer pricing rules except section 53(2A) ITA & guidelines in IRAS Circular 23 February 2006 ‘IRAS endorses the arm’s length principle as the standard to guide transfer pricing. The arm’s length principle is the internationally accepted standard adopted by many member countries of the OECD ….’ </li></ul>
  10. 10. Transfer Pricing (1)‏ <ul><li>Section 53(2A) ITA where a non -resident person carries on business with a resident person and it appears to the Comptroller that owing to the close connection between the resident person and the non-resident person and to the substantial control exercised by the non-resident person over the resident person the course of business between those persons can be so arranged and is so arranged that the business done by the resident person in pursuance of his connection with the non-resident person produces to the resident person either no profits or less than the ordinary profits which might be expected to arise from that business the non-resident person shall be assessable and chargeable to tax in the name of the resident person as if the resident person were an agent of the non-resident person. </li></ul>
  11. 11. Transfer Pricing (2)‏ <ul><li>Section 53(3) ITA true amount of profits cannot be readily ascertained Comptroller assess and charge fair and reasonable percentage of the turnover of the business </li></ul><ul><li>cost plus 5% </li></ul>
  12. 12. onshore offshore 20% 10% 0% not remitted capital income 0% 0% remitted 13(8) ITA 13(9) ITA 0% 3 types of DT relief 9.5% Taxation of Singapore Companies
  13. 13. Singapore Tax System <ul><li>Singapore’s tax system is territorial and remittance based </li></ul><ul><li>Section 10(1) ITA income tax shall be payable on the income ‘ accruing in or derived from Singapore [territorial] or received in Singapore from outside Singapore [remittance]’. </li></ul>
  14. 14. Individual Tax Rate YA 2006 chargeable income SGD rate for every $ of the 1st 20,000 Nil for every $ of the next 10,000 3.75% for every $ of the next 10,000 5.75% for every $ of the next 40,000 8.75% for every $ of the next 80,000 14.5% for every $ of the next 160,000 18% for every $ exceeding 320,000 21%
  15. 15. Remittance of Foreign-Sourced Income (Individual)‏ <ul><li>Section 13(7A) ITA There shall be exempt from tax any income arising from sources outside Singapore and received in Singapore: (a) by any individual who is not resident in Singapore; and (b) on or after 1st January 2004 by any individual who is resident in Singapore if the Comptroller is satisfied that the tax exemption would be beneficial to the individual but excludes such income received by him through a partnership in Singapore </li></ul>
  16. 16. Company Tax Rate <ul><li>20% </li></ul><ul><li>cf. Hong Kong 17.5% </li></ul><ul><li>Economic Expansion Incentives (Relief from Income Tax) Act Cap. 86 </li></ul><ul><li>concessionary rate of tax 10% e.g. Section 43E ITA headquarters company (‘OHQ’)‏ </li></ul>
  17. 17. Tax Exemption Scheme for New Companies <ul><li>1st SGD 100,000 chargeable income (excluding Singapore dividends )‏ </li></ul><ul><li>full tax exemption will apply to 1st 3 consecutive Years of Assessment falling within YA 2005 to YA 2009 </li></ul><ul><li>conditions: </li></ul><ul><ul><li>incorporated in Singapore </li></ul></ul><ul><ul><li>tax resident of Singapore </li></ul></ul><ul><ul><li>not > 20 shareholders </li></ul></ul><ul><ul><li>all shareholders are individuals </li></ul></ul>
  18. 18. Partial Exemption <ul><li>20% </li></ul><ul><ul><li>1st SGD 10,000 75% exempt (SGD 2,500 x 20% = 500)‏ </li></ul></ul><ul><ul><li>next SGD 90,000 50% exempt (SGD 45,000 x 20% = 9,000)‏ </li></ul></ul><ul><ul><li>500 + 9,000 = 9,500 </li></ul></ul><ul><ul><li>therefore 1st SGD 100,000 taxed at effective rate of 9.5% </li></ul></ul>
  19. 19. onshore offshore 20% 10% 0% not remitted capital income 0% 0% 9.5%
  20. 20. Remittance of Foreign-Sourced Income (Company)‏ <ul><li>Section 13(8) ITA tax exemption received in Singapore on or after 1 June 2003 (need not be earned on or after 1 June 2003)‏ </li></ul><ul><ul><li>foreign-sourced dividend (no shareholding requirement)‏ </li></ul></ul><ul><ul><li>foreign branch profits </li></ul></ul><ul><ul><li>foreign-sourced service income </li></ul></ul><ul><li>Section 13(9) ITA 2 conditions: </li></ul><ul><ul><li>foreign-sourced income subjected to tax in foreign jurisdiction </li></ul></ul><ul><ul><li>headline tax rate of foreign jurisdiction  15% </li></ul></ul>
  21. 21. IRAS Circulars (1)‏ <ul><li>IRAS Circulars Tax Exemption for Foreign-sourced Dividend, Foreign Branch Profits and Foreign-sourced Service Income </li></ul><ul><li>IRAS Main Circular 21 May 2003 </li></ul><ul><li>IRAS Supplementary Circular 30 July 2004 </li></ul><ul><li>IRAS Supplementary Circular 31 May 2006 </li></ul>
  22. 22. IRAS Circulars (2)‏ Singapore Co. Singapore Co. Hong Kong Co. Mauritius Co. Investments Investments
  23. 23. onshore offshore 20% 10% 0% not remitted capital income 0% 0% remitted 13(8) ITA 13(9) ITA 0% 9.5%
  24. 24. Relief against Double Taxation <ul><li>3 types of relief against double taxation: </li></ul><ul><ul><li>Section 48 ITA Commonwealth income tax relief </li></ul></ul><ul><ul><li>Section 50 ITA DTAs </li></ul></ul><ul><ul><li>Section 50A ITA no DTAs </li></ul></ul><ul><li>Section 49 ITA double tax arrangements </li></ul><ul><li>Section 50 ITA tax credits </li></ul><ul><ul><li>not all DTAs provide tax relief for underlying tax </li></ul></ul><ul><li>Section 50A ITA unilateral tax credits </li></ul><ul><ul><li>tax relief for underlying tax if  25% </li></ul></ul><ul><ul><li> 25% apply to Minister of Finance for waiver </li></ul></ul><ul><li>unilateral tax credits: </li></ul><ul><ul><li>income from certain professional services rendered in certain ‘non-treaty’ countries </li></ul></ul><ul><ul><li>employment income </li></ul></ul><ul><ul><li>dividends </li></ul></ul><ul><ul><li>profits from overseas branch of Singapore resident company </li></ul></ul><ul><ul><li>qualifying royalty income </li></ul></ul>
  25. 25. Commonwealth Income Tax Relief (1)‏ <ul><li>Section 48(1) ITA resident lower of: </li></ul><ul><ul><li>Commonwealth rate of tax </li></ul></ul><ul><ul><li>half Singapore rate of tax </li></ul></ul><ul><li>Section 48(2) ITA non -resident (a) if Commonwealth rate does not exceed Singapore rate half Commonwealth rate of tax (b) if Commonwealth rate exceeds Singapore rate the difference between: </li></ul><ul><ul><ul><li>the Singapore rate of tax </li></ul></ul></ul><ul><ul><ul><li>half Commonwealth rate of tax </li></ul></ul></ul>
  26. 26. Commonwealth Income Tax Relief (2)‏ <ul><li>Commonwealth countries no DTA with Singapore: 1. Bahamas 10. Nauru 2. Botswana 11. Nigeria 3. Brunei 12. Samoa 4. Gambia 13. Sierra Leone 5. Ghana 14. Swaziland 6. Guyana 15. Tanzania 7. Kenya 16. Tonga 8. Lesotho 17. Uganda 9. Malawi 18. Zambia </li></ul>
  27. 27. Unilateral Tax Credits for Dividend Withholding Tax <ul><li>Section 50A(1)(c) notwithstanding that there are no arrangements under Section 49 with the government of any territory outside Singapore, tax credit under Section 50 shall… be given to any person resident in Singapore for tax payable under the law of that territory in respect of any dividend derived therefrom </li></ul>
  28. 28. <ul><li>Section 50A(2) ITA where any dividend in respect of which tax credit is given under Section 50A(1)(c) ITA is paid by a company which is resident outside Singapore to a person resident in Singapore who owns not less than 25% of the shares of the company paying the dividend the tax credit shall take into account any tax paid by that company in the country in which it is resident in respect of its income out of which the dividend is paid </li></ul>Unilateral Tax Credit for Underlying Corporate Tax (1)‏
  29. 29. Unilateral Tax Credit for Underlying Corporate Tax (2)‏ <ul><li>Section 50A(3) ITA where under arrangements under Section 49 with the government of any territory outside Singapore no provision is made for tax credit in respect of income out of which any dividend is paid by a company resident in that territory, tax credit under Section 50 in respect of such income shall be given to any person resident in Singapore who owns not less than 25% of the shares of the company paying the dividend </li></ul><ul><li>Section 50A(6) Minister may waive requirement of 25% share ownership under Section 50A(2) & (3)‏ </li></ul>
  30. 30. DWHT & Underlying Corporate Tax Singapore Co. 0% USA Co. 35% corporate tax 30% DWHT not < 25% shareholding
  31. 31. onshore offshore 20% 10% 0% not remitted capital income 0% 0% remitted 13(8) ITA 13(9) ITA 0% 3 types of DT relief 9.5% Taxation of Singapore Companies
  32. 32. One-Tier Corporate Tax System <ul><li>wef 1 January 2003 </li></ul><ul><li>one-tier corporate tax system replaced old imputation system </li></ul>
  33. 33. CBDT Circular 789 13 April 2000 <ul><li>Central Board of Direct Taxes (CBDT) Department of Revenue Ministry of Finance Circular 789 of 13 April 2000 </li></ul><ul><li>Certificate of Residence issued by Mauritius sufficient evidence for accepting status of residence & beneficial ownership </li></ul><ul><li>Delhi High Court 31 May 2002 ruled Circular invalid </li></ul><ul><li>Indian Supreme Court 7 October 2003 ruled in favour of appellants Global Business Institute Ltd & Government of India </li></ul>
  34. 34. India-Singapore CECA <ul><li>Comprehensive Economic Cooperation Agreement (CECA)‏ </li></ul><ul><li>wef 1 August 2005 </li></ul><ul><li>India-Singapore DTA 1994 wef 1 January 1994 (Singapore) wef 1 April 1994 (India)‏ </li></ul><ul><li>Protocol to amend 1994 DTA signed on 29 June 2005 wef 1 August 2005 </li></ul>
  35. 35. India-Singapore Protocol (1)‏ <ul><li>Article 3 of Protocol 1. A resident of a Contracting State shall not be entitled to the benefits of Article 1 of this Protocol if its affairs were arranged with the primary purpose to take advantage of the benefits in Article 1 of this Protocol. 2. A shell/conduit company that claims it is a resident of a Contracting State shall not be entitled to the benefits of Article 1 of this Protocol. A shell/conduit company is any legal entity falling within the definition of resident with negligible or nil business operations or with no real and continuous business activities carried out in that Contracting State. 3. A resident of a Contracting State is deemed to be a shell/conduit company if its total annual expenditure on operations in that Contracting State is less than SGD 200,000 or INR 5,000,000 in the respective Contracting State as the case may be, in the immediately preceding period of 24 months from the date the gains arise. </li></ul>
  36. 36. <ul><li>4. A resident of a Contracting State is deemed not to be a shelf/conduit company if: (a) it is listed on a recognised stock exchange of the Contracting State, or (b) its total annual expenditure on operations in that Contracting State is equal to or more than SGD 200,000 or INR 5,000,000 in the respective Contracting State as the case may be, in the immediately preceding period of 24 months from the date the gains arise. </li></ul>India-Singapore Protocol (2)‏
  37. 37. PRC DTAs <ul><li>Div. Int Roy </li></ul><ul><li>Hong Kong 5/10% 7% 7% </li></ul><ul><li>Barbados 5% 10% 10% </li></ul><ul><li>Mauritius 5% 10% 10% </li></ul><ul><li>Seychelles 5% 10% 10% </li></ul><ul><li>Macau 10% 7/10% 10% </li></ul><ul><li>Singapore 7/12% 7/10% 10% </li></ul>
  38. 38. Singapore IRAS <ul><li>Inland Revenue Authority of Singapore </li></ul><ul><li>http://www.iras.gov.sg </li></ul>
  39. 42. Singapore DTAs (1)‏ <ul><li>1. Australia 15 (A) 10 10 (j)‏ </li></ul><ul><li>Austria 10 / 0 (  10%) (a) 5 (a)(bi) 5 </li></ul><ul><li>3. Bahrain (Q) 0 5 (a) 5 </li></ul><ul><li>4. Bangladesh 15 10 10 (j)‏ </li></ul><ul><li>5. Belgium (B) 15 10 5 </li></ul><ul><li>6. Bulgaria 5 (a) 5 (a) 5 </li></ul><ul><li>7. Canada 15 15 (bi) 15 (o)‏ </li></ul><ul><li>8. China 12 / 7 (  25%) (C) 10 (a)(bii)(c) 10 </li></ul><ul><li>9. Cyprus 0 10 (a)(bii)(c) 10 </li></ul><ul><li>10. Czech Republic 5 0 10 </li></ul><ul><li>11. Denmark 10 / 5 / 0 (  25%) (a) 10 (a) 10 </li></ul><ul><li>12. Egypt (D) 15 15 (a) 15 (o)‏ </li></ul><ul><li>13. Finland 10 / 5 (  10%) (a) 5 (a) 5 </li></ul><ul><li>14. France 15 / 10 (  10%) 10 (a)(bi) 0 (j)‏ </li></ul><ul><li>15. Germany 15 / 10 (  25%) (E) 10 (a) 0 (j)‏ </li></ul><ul><li>16. Hungary 10 / 5 (  25%) (a) 5 (a)(bi) 5 </li></ul><ul><li>17. India 15 / 1 0 (  25%) (F) 15 / 10 (d ) 10 </li></ul><ul><li>18. Indonesia 15 / 10 (  25%) 10 (a)(bi) 15 (o)‏ </li></ul><ul><li>19. Israel 0 (G) 15 15 (k)(o) </li></ul><ul><li>20. Italy 10 12.5 (a) 20 / 15 (o)‏ </li></ul>Dividends (%)* Interest (%)‏ Royalties (%)**
  40. 43. Singapore DTAs (2)‏ <ul><li>21. Japan 15 / 5 (  25%) 10 (a) 10 </li></ul><ul><li>22. Korea 15 / 10 (  25%) 10 (a) 15 (o)‏ </li></ul><ul><li>23. Kuwait 0 7 (a) 10 </li></ul><ul><li>24. Latvia 10 / 5 (  25%) (a) 10 (a) 7.5 </li></ul><ul><li>25. Lithuania (H) 10 / 5 (  25%) (a) 10 (a) 7.5 </li></ul><ul><li>26. Luxembourg 10 / 5 (  10%) (a) 10 (a) (I) 10 (l)‏ </li></ul><ul><li>27. Malaysia (Z) 0 (a) 10 (a) 8 </li></ul><ul><li>Mauritius 0 0 0 </li></ul><ul><li>Mexico 0 15 (a)(bi)(bii)(e) 10 </li></ul><ul><li>Mongolia (J) 10 / 5 (a) 10 / 5 (a)(bii) 5 </li></ul><ul><li>31. Myanmar 0 10 (a)( bii)(f) 15 / 10 (l )(o)‏ </li></ul><ul><li>32. Netherlands 15 / 0 (  25%) 10 (a) (K) 0 (K)‏ </li></ul><ul><li>33. New Zealand 15 15 15 (j)(o)‏ </li></ul><ul><li>Norway 15 / 5 (  25%) (a) 7 (a) (L) 7 (L)‏ </li></ul><ul><li>Oman 5 (a) 7 (a) 8 </li></ul><ul><li>36. Pakistan 10 / 12.5 / 15 (M) 12.5 (a) 10 (j)‏ </li></ul><ul><li>37. Papua New Guinea 15 10 10 </li></ul><ul><li>38. Philippines 25 / 15 (  15%) ( N) 15 (bi) 25 / 15(m )(o)‏ </li></ul><ul><li>39. Poland 10 / 0 (a) 10 (a) 10 </li></ul><ul><li>40. Portugal 10 (P) (a) 10 (a)(bi) 10 </li></ul>Dividends (%)* Royalties (%)** Interest (%)‏
  41. 44. Singapore DTAs (3)‏ 40. Romania 5 (Q) (a) 5 (a)(bi) 5 41. Slovak Republic 10 / 5 (≥ 10%) 0 10 42. South Africa 15 / 5 (  10%) (R) (a) 0 5 43. Sri Lanka 15 10 (a)(bii) 15 (o)‏ 44. Sweden 15 / 10 (  25%) 15 (a)(g) 0 (j)‏ 45. Switzerland 15 / 10 (  25%) 10 (h) 5 (h )(j) ( S)‏ 46. Taiwan 40 (T) 20 15 (j)(o) 47. Thailand 20 (  25%) (U) 25 / 10 (a) (bii) (U) 15 (o)‏ 48. Turkey 15 / 10 (  25%) 10 (a)(i) 10 49. United Arab Emirates (V) 5 7 (a) 5 (n)‏ 50. United Kingdom 15 / 5 (  10%) (W) 10 (a) 10 51. Vietnam 12.5 / 7/5 (X) 10 (a) 15 / 5 (o)‏ Non-treaty Countries 0 15 10 (o)‏ Dividends (%)* Interest (%)‏ Royalties (%)**
  42. 45. <ul><li>* Dividends paid by a company which is a resident of Singapore to a resident of a </li></ul><ul><li>treaty country are exempt from any tax in Singapore which is chargeable on dividends </li></ul><ul><li>in addition to tax chargeable in respect of profits or income of the company. The rates </li></ul><ul><li>shown in this column therefore reflect the position of the other treaty country. </li></ul><ul><li>** In certain circumstances, the reduced rates do not apply to royalties for copyrights </li></ul><ul><li>of literary or artistic works, including cinematographic films and films or tapes for radio </li></ul><ul><li>or television broadcasting. Reference should be made to the relevant tax treaty. </li></ul><ul><li>(A) Under Australian domestic law, no withholding tax is imposed on franked dividends. Consequently for dividends paid by Australian resident companies, the rates in this column apply to unfranked dividends only. </li></ul><ul><li>(B) Belgium has signed a supplemental tax treaty with Singapore which came into force with effect from 5 May 2004. </li></ul><ul><li>Under China domestic tax law, (i) withholding tax for dividends is 20%; (ii) dividends remitted abroad by foreign investment enterprises and foreign enterprises are exempt from withholding tax. </li></ul><ul><li>(D) The treaty signed with Egypt on 22 May 1996 was ratified on 27 January 2004 and is effective in Singapore with respect to taxes on income from the year of assessment 2006 onwards. </li></ul><ul><li>(E) A new treaty was signed on 28 June 2004 but this has not been ratified. Under the new treaty, withholding tax rate on dividends is 15 / 5% (  10%), for interest and royalties it is 8%. </li></ul><ul><li>(F) Under Indian domestic law, dividends declared or paid by Indian companies are exempt from tax in the hands of the recipients. However, Indian companies must pay dividend distribution tax at a rate of 14.025% on dividends declared, distributed or paid by them. </li></ul><ul><li>(G) Under a disputed interpretation of the treaty, a 15% rate may apply to dividends paid out of the profits of an approved enterprise or property. </li></ul><ul><li>(H) T he treaty was ratified on 28 June 2004 and is effective in Singapore with respect to taxes on income from year of assessment 2006 onwards. </li></ul>
  43. 46. <ul><li>(I) Under Luxembourg domestic tax law, there is no withholding tax on interest and royalties. </li></ul><ul><li>(J) The treaty signed with Mongolia on 10 October 2002 was ratified on 22 October 2004 is effective in Singapore from year of assessment 2006 onwards. </li></ul><ul><li>Under Dutch domestic law, interest and royalties are not subject to withholding tax. </li></ul><ul><li>Under Norwegian domestic law, interest and royalties are not subject to withholding tax. </li></ul><ul><li>(M) The 10% rate applies if the payer is engaged in an industrial undertaking and the recipient is a company, the 12.5% rate applies if the recipient is a company, the 15% rate applies in all other cases. </li></ul><ul><li>(N) The rate is 15% if the recipient holds at least 15% of the capital of the payer during the two tax years preceding the year of the dividend payment. </li></ul><ul><li>(O) The lower rate applies to certain dividends paid to government units or companies. </li></ul><ul><li>(P) The 5% substitute gift and inheritance tax was abolished, effective from 2003. </li></ul><ul><li>(Q) The treaty signed with Bahrain on 18 February 2004 was ratified on 31 December 2004 and is effective in Singapore from year of assessment 2006 onwards. </li></ul><ul><li>Dividends are not subject to withholding tax in South Africa. </li></ul><ul><li>Under Swiss domestic law, no withholding tax is imposed on royalties, management fees, rents, licences and technical assistance fees etc. </li></ul><ul><li>(T) For dividends paid to Singapore residents which beneficially own the dividends, the withholding tax on the dividends and the corporate income tax payable on the profits of the payer may not exceed 40% of the taxable income of the payer out of which the dividends are paid. </li></ul><ul><li>(U) Under Thailand domestic law, withholding taxes for dividends and interest are 10% and 15% respectively. The treaty rate for dividends is 20%(  25%) and for interest is 10% (if received by financial institutions) and 25% if otherwise. </li></ul>
  44. 47. <ul><li>(V) Withholding taxes are not imposed in the UAE. </li></ul><ul><li>Under United Kingdom domestic law, no withholding tax is imposed on dividends. </li></ul><ul><li>(X) (a) 5% if the beneficial owner has contributed, directly or indirectly, more than 50% of the capital of the company paying the dividends or more than US$10 million; </li></ul><ul><li>(b) 7% if the beneficial owner has contributed, directly or indirectly, between 25% and 50% of the capital of the company paying the dividends; and </li></ul><ul><li>(c) 12.5% of the gross amount of the dividends in all other cases. </li></ul><ul><li>The treaty signed with Oman on 6 October 2003 was ratified on 7 April 2006 and is effective in Singapore from year of assessment 2008 onwards. </li></ul><ul><li>The new agreement signed with Malaysia on 5 October 2004 was ratified on 13 February 2006 and is effective in Singapore in respect of taxes on income from year of assessment 2008 onwards. </li></ul>
  45. 48. <ul><li>(a) Exempt if paid to the government of the other state. </li></ul><ul><li>(i) Interest is exempt under certain specified circumstances. </li></ul><ul><li>(ii) The lower rate applies if the interest is received by a bank or similar financial institution. </li></ul><ul><li>(c) The rate is 7% for interest paid to banks or other financial institutions. </li></ul><ul><li>(d) The 10% rate applies to interest paid to financial institutions. The 15% rate applies to other interest. </li></ul><ul><li>(e) The rate is 5% for interest paid to banks. </li></ul><ul><li>(f) The rate is 8% for interest paid to banks or other financial institutions. </li></ul><ul><li>(g) The rate is 10% for interest paid by industrial undertakings to financial institutions in Sweden. </li></ul><ul><li>(h) No withholding tax applies to interest or royalties with respect to certain approved transactions. </li></ul><ul><li>(i) The rate is 7.5% for interest paid to financial institutions. </li></ul><ul><li>(j) Royalties on literary or artistic copyrights, including film royalties, are taxed at non-treaty rates. </li></ul><ul><li>(k) The tax rate on the royalties in the recipient’s country is limited to 15% under the treaty. </li></ul><ul><li>(l) The 10% rate applies to payments relating to patents, designs, models, plans, secret formulas or processes, and to industrial, commercial or scientific equipment or experience. The 15% rate applies to payments for all other cases. </li></ul><ul><li>The rate is 15% if the royalties are paid by a Board of Investment registered preferred </li></ul><ul><li>enterprise or for royalties paid for copyrights of literary, artistic or scientific works. </li></ul><ul><li>Royalties approved under the Economic Expansion Incentives (Relief from Income Tax) Act are exempt. </li></ul><ul><li>This rate does not apply to royalties with respect to the operation of mines or quarries or </li></ul><ul><li>the exploitation of natural resources. A contracting state may exempt or reduce the tax on </li></ul><ul><li>industrial royalties in accordance with its domestic laws. </li></ul><ul><li>Royalties derived from Singapore are subject to a final tax of 10% </li></ul><ul><li>with effect from 1 January 2005. </li></ul>
  46. 49. Singapore Pte Ltd <ul><li>Section 17 Companies Act (Cap. 50) o ne subscriber </li></ul><ul><li>Section 142(1) CA A company shall as from the date of its incorporation have a registered office within Singapore. </li></ul><ul><li>Second Schedule CA Registration fee SGD 300 </li></ul>
  47. 50. Director & Secretary <ul><li>Section 145(1) CA Every company shall have at least one director who is ordinarily resident in Singapore and, where the company only has one member, that sole director may also be the sole member of the company. </li></ul><ul><li>Section 145(2) CA No person other than a natural person of full age and capacity shall be a director of a company. </li></ul><ul><li>Section 171(1) CA Every company shall have one or more secretaries each of whom shall be a natural person who has his principal or only place of residence in Singapore. </li></ul><ul><li>Section 171 (1E) Where a director is the sole director of a company, he shall not act or be appointed as the secretary of the company. </li></ul>
  48. 51. <ul><li>Section 205C(1) An exempt private company shall be exempt from audit requirements in respect of a financial year if its revenue in that year does not exceed the prescribed amount of SGD 5 million (in respect of a financial year from 1 June 2004) exempt private company means a private company in the shares of which no beneficial interest is held directly or indirectly by any corporation and which has not more than 20 members </li></ul>Audit
  49. 52. Portcullis TrustNet (Singapore) Pte Ltd Portcullis TrustNet (Hong Kong) Ltd SINGAPORE HONG KONG Tel: (65) 6836 9555 Tel: (852) 2525 9991 Fax: (65) 6538 6585 Fax: (852) 2877 6852 Email: Info.Singapore@portcullis-trustnet.com Email: Info.HongKong@portcullis-trustnet.com Portcullis TrustNet (Samoa) Ltd Portcullis TrustNet (Cook Islands) Ltd SAMOA COOK ISLANDS Tel: (685) 25478 Tel: (682) 21080 Fax: (685) 26637 Fax: (682) 21087 Email: Info.Samoa@portcullis-trustnet.com Email: Info.CookIslands@portcullis-trustnet.com Portcullis TrustNet (BVI) Ltd Beijing Beida Portcullis Investment Advisers Co. Ltd BRITISH VIRGIN ISLANDS BEIJING, PRC Tel: (1284) 494 5296 Tel: (8610) 8266 7760 Fax: (1284) 494 5283 Fax: (8610) 8266 7761 Email: Info.BritishVirginIslands@portcullis- Email: annie.zhang@portcullis-trustnet.com trustnet.com
  50. 53. Portcullis TrustNet (Labuan) Ltd Portcullis TrustNet (Malaysia) Sdn Bhd MALAYSIA MALAYSIA Tel: (6087) 439 191 Tel: (603) 2026 2484 Fax: (6087) 439 193 Fax: (603) 2026 2482 Email: Info.Labuan@portcullis-trustnet.com Email: Info.Malaysia@portcullis-trustnet.com Portcullis TrustNet (Mauritius) Ltd Portcullis TrustNet (Seychelles) Ltd MAURITIUS SEYCHELLES Tel: (230) 203 2020 Tel: (248) 289 206/(65) 6832 7403 Fax: (230) 212 6149 Fax: (248) 289 210/(65) 6538 6585 Email: Info.Mauritius@portcullis-trustnet.com Email: Info.Seychelles@portcullis-trustnet.com Portcullis TrustNet (Taiwan) Pte Ltd Taiwan Tel: (886) 2 2313 1355 Fax: (886) 2 2313 1356 Email: Morris.Huang@portcullis-trustnet.com.tw

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