APAC News

31 March 2019

Volume 11, Issue 1

AU: Single Touch Payroll PH: Corp Code & Tax Amnesty CN: Foreign Investment Law

HK: Economic Substances Compliance MY: Common Technical Updates SG: Budget 2019 The topics of interest for this edition are in the Reporting Standards jigsaw puzzle above.

News of APAC firms also be able to work with This month, Leanne New name of the Singapore team on from Adelaide will be their Xero clients – Philippines office spending 3 weeks in Inside this issue: something which we have Our Philippines network Singapore with the several years’ experience firm has adopted a fresh accounting and taxation with”. logo and the new name of teams, while Abbie Chan Australia 2 M.F. Padernal and Co to will have 3 weeks in “Similarly, Abbie already reflect the current July/August with the has overseas experience 2 leadership team. Adelaide audit team. from her time working in 4 New Zealand and “These are great first Malaysia and will provide Malaysia 5 Staff secondment candidates”, says Tom a valuable resource to Lee Green from To aid with network co- Green as they finalise the Philippines 6 LeeGreen. “Leanne works operation within the requirements to become an predominantly with our region, Steven Tan Russell Approved Transnational Singapore 8 Singapore clients Bedford PAC (Singapore) Audit Firm” says Andrew operating in Australia and and Lee Green Strategic Lim from Steven Tan this will give her an Accountants (Adelaide, Russell Bedford. Australia) have entered opportunity to gain a into an arrangement for better understanding of Both firms will be looking short term secondments the Singapore business for further secondment between the two firms. environment. She will opportunities within the

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region in years to Sweeney (from Lee Green) Hong Kong is also on come. “From a staff point and I initially discussed at secondment to the RB of view, being able to offer the 2018 APAC conference Malaysia office for 3 this opportunity for in Vietnam” says Lian months since mid-January secondment within the Heng Ki from Steven Tan 2019. He is enjoying the network provides a point Russell Bedford. work as well as the sun of difference as an and hot dishes of Kuala employer of choice and Elsewhere, Felix Lui of RB Lumpur. was something Michael

SINGLE TOUCH PAYROLL IS COMING TO ALL AUSTRALIAN AUSTRALIA EMPLOYERS

It is now a matter of contributions were not there will be different months before all reported. According to the options available to you. employers will be ATO, Single Touch Payroll The ATO has put the call required to comply with information will be used out for developers to the Single Touch Payroll to prefill activity create simple, low cost (STP) provisions. statements in the future. software and apps for less Previously, only than $10 a month. This “substantial” employers If an employer is using may suit some businesses (20 or more employees) payroll software, it is but it is worth considering were required to comply highly likely that it will be your accounting and but from 1 July 2019, all STP ready, however, there record-keeping needs are some instances where more broadly, rather than “…new way for employers will be brought into the system. this is not the case. payroll in isolation. employers to report Saward Dawson can assist “Micro employers” (1-4 their gross pay…” What is Single Touch if you are not sure about employees) will be Payroll? your situation. If you do presented with different

have STP ready software, options including initially It is a new way for the transition should not allowing their registered employers to report their be difficult but the initial tax agent to report gross pay, PAYG and set up is critical. quarterly on their behalf. super contribution Finally, if you have no information to the ATO Options for small internet connection or an after every pay run. employers unreliable connection, you Previously reporting was may be eligible for an done either monthly or If you do not currently exemption. quarterly and super use a payroll software,

CHINA ADOPTS NEW FOREIGN INVESTMENT LAW CHINA

China's national to improve the according to an legislature, the National transparency of foreign explanatory document. People's Congress, passed investment policies and The law replaces three the Foreign Investment ensure domestic and existing laws on Chinese- Law (“the law”) at the foreign enterprises are foreign equity joint closing meeting of its subject to a unified set of ventures, wholly foreign- annual session on 15 rules and compete on a owned enterprises and March 2019. The law aims level playing field, Chinese-foreign

2 contractual joint ventures, Protection of the investment information CHINA which have been effective intellectual property reporting system for 40 years. The law will rights (Continued) become effective on 1 The State shall establish January 2020. The The state shall protect the an information reporting following are the intellectual property system for foreign highlights of the law: rights of foreign investors investment. Foreign and foreign-invested investors or FIEs shall Admission administration enterprises, the law submit investment system of national stipulates. Technical information to the treatment plus a negative cooperation based on competent commercial list voluntary principles and administration commercial rules is departments through the The law stipulates that the encouraged and no enterprise registration treatment given to foreign administrative offices and system and the enterprise investors and their their staff shall use credit information investments at the stage of administrative means to publicity system. Failure investment admission force the transfer of to do so will be subject to shall not be less than that technology. correction within a time given to domestic limit and even a penalty investors and their Establishing and between 100k to 500k investments and the state perfecting foreign RMB. shall grant national investment service system treatment to foreign By the end of 2018, about investment other than the The law provides that the 960,000 foreign-invested negative list. The negative State shall establish and enterprises had been set list will simplify the improve the service up in China, with the approval process of system for foreign accumulated foreign “…investment foreign investment in off- investment, and provide direct investment admission shall not list areas and create an consultation and services exceeding 2.1 trillion U.S. be less than the open, fair, transparent on laws, regulations, dollars. Foreign direct given to domestic and predictable business policies and measures, investment into China has investors…” environment for them. and information on ranked first among investment projects for developing countries for Fair and equal treatment foreign investors and 27 consecutive years, of domestic and foreign foreign investment according to the United enterprises enterprises. This will Nations Conference on effectively promote the Trade and Development Foreign-invested transformation of (UNCTAD). The new law enterprises (“FIE”) will government functions, is expected to boost equally enjoy government establish communication investment liberalization policies supporting mechanism between and confidence of foreign enterprise development, government and FIEs, and investors. As usual, a set and be able to participate make the government of detailed in standard-setting on an more proactive in implementation rules are equal footing and in providing more services expected to be released in government procurement and support to FIEs. the near future. through fair competition, according to the law. Establishment of foreign

3 ECONOMIC SUBSTANCE COMPLIANCE – HONG KONG OFFSHORE JURISDICTIONS

In addressing the carrying on relevant substance requirements. concerns of the EU Code activities unless they are Economic substances of Conduct Group for resident for tax purposes Business Taxation and in another jurisdiction. An in-scope entity (other OECD guidance around than a pure holding Relevant activities the economic substance of company) is required to include: entities in low or no tax be in compliance with the jurisdictions, these • Banking business economic substance jurisdictions (which requirements if: • Insurance business include Bermuda, • The relevant activity is Cayman Islands, British • Shipping business directed and managed Virgin Islands, Jersey, • Fund management in the home country; Guernsey and the Isle of business Man) have recently • There are an adequate introduced legislation • Financing & leasing number of suitably requiring “in-scope” business qualified employees physically present in the entities to demonstrate • Headquarters business adequate local economic home country; • Distribution & service “…applies to all substance. • There is adequate centre business home country Hong Kong is a regional expenditure incurred in entities…unless… hub for local and foreign • Holding business the home country; resident for tax….in investors to structure their • another Intellectual property • There are physical inbound or outbound jurisdiction…” business offices or premises as investments, often making The home country appropriate for the use of vehicles legislation may further home country core incorporated in these define some of the income-producing offshore jurisdictions. activities as being subject activities; This article considers the to home country licensing relevant new regulations • For intellectual property (e.g. fund management by and whether and to what business requiring the licensed persons in the extent our local or foreign use of specific home country). Certain investors are affected. equipment, the activities may not The discussions below equipment is located in therefore be in-scope reflect the general the home country. where home country situations for these An in-scoped pure licensing is not required offshore jurisdictions. holding company but may nonetheless be There may be minor (defined as an entity subject to annual variations on which primary function is reporting to confirm / implementation details to hold equity interest in declare their tax amongst the jurisdictions. other companies and does residence. In-scope entities and not carry on any Each home country entity relevant activities commercial activity) is not tax resident in another considered to have In general, the offshore jurisdiction and carries on adequate substance if it: jurisdiction (“home the relevant activities in • Complies with the country”) has introduced the home country must statutory obligations legislation that applies to comply with the economic all home country entities under the companies’

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HONG KONG law of the home within one year of 30 June information to the home

country; 2019. country tax authority on (Continued)

annual basis with details • Has adequate employees New companies that are of: and premises for incorporated on or after 1

• holding and, where January 2019 should Any relevant activities relevant, managing comply with the economic carried on during the those equity substance requirements reporting period and investments. immediately. They will how they satisfy the

have one year from the economic substance Compliance timeline date of incorporation to tests; or Existing in-scope entities meet reporting • If they are not tax will need to comply with obligations. resident in the home economic substance Reporting obligations country, information of requirements by 30 June the jurisdiction where 2019 and meet the All home country entities they are tax resident. reporting obligation are required to provide

COMMON REPORTING STANDARD IN MALAYSIA MALAYSIA

The Common Reporting The CRS was Under the CRS, Standard (“CRS”) was implemented in Malaysia Malaysian Financial

developed by the with effect from 1 Institutions are required Organisation of January 2017 through the to collect and report to Economic Cooperation following legislations: the Malaysian Tax and Development Authority the financial (OECD) to put a global a) Income Tax information of non-

model of Automatic (Automatic Exchange resident account holders.

Exchange of Information of Financial Account This information will into practice to protect Information) Rules then be exchanged the integrity of tax 2016. automatically with the “…allow tax participating treaty systems. authorities of b) Income Tax partners. participating (Automatic Exchange CRS allows tax jurisdictions to of Financial Account As at 2 January 2018, authorities of obtain financial participating jurisdictions Information) more than 100 account information to obtain financial (Amendment) Rules jurisdictions have …” account information from 2017. committed to exchange their respective country CRS information, which

financial institutions and c) Labuan Business include countries like automatically exchange Activity (Automatic Singapore, Hong Kong, that information annually Exchange of Financial China, India, Australia, with the other Account Information) Indonesia and etc. participating tax Regulations 2018. authorities.

5 REVISED CORPORATION CODE OF THE PHILIPPINES PHILIPPINES

On February 20, 2019, Perpetual Existence except as otherwise President Rodrigo specifically provided by

Duterte signed into law Under the Old Code, a special law”.

Republic Act No. 11232, corporation is limited to otherwise known as the 50 years, unless the life of Incorporators, Directors Revised Corporation the corporation is and Trustees Code of the Philippines extended. Under the New (the New Code), which Code, a corporation shall The New Code removed

updated the 38-year-old have perpetual existence, the minimum number of Corporation Code of the unless otherwise incorporators, directors Philippines (the Old specified in the Articles and trustees of five (5) Code). The significant of Incorporation. under the Old Code. amendments under the Corporations existing Section 10 of the New

New Code are: (1) one- prior to the effectivity of Code states that “any

person corporation; (2) the New Code shall have person, partnership, perpetual existence; (3) a perpetual term unless association or minimum capital stock; the corporation, upon the corporation, singly or (4) incorporators, required vote of its jointly with others but directors, trustees and stockholders, notifies the not more than fifteen (15) officers; and (5) remote SEC that it elects to retain in number, may organize communication and in- its specified term. Under a corporation for any absentia voting. the New Code, a lawful purpose or corporation whose purposes.” This allows One-person Corporation corporate life has expired juridical persons to act as is now allowed to apply incorporators under the ” … allows the creation Under the New Code, a for revival of corporate New Code, unlike the of an “emergency one-person corporation existence, together with Old Code which limits board”…to prevent (OPC) may now be all the rights and incorporators to natural grave, substantial, and formed by a single privileges under its persons. irreparable loss…” stockholder, who may be certificate of a natural person, trust or incorporation and subject The New Code also an estate. However, to all the duties, debts allows the creation of an banks and quasi-banks, and liabilities existing “emergency board” when pre-need, trust, prior to the expiration of the vacancy in the board insurance, public and the term. prevents the remaining publicly listed directors from companies, and non- Minimum Capital Stock constituting a quorum chartered government- and emergency action is owned and controlled The New Code removed required to prevent corporations may not the 25% subscription of grave, substantial, and incorporate as OPC. the authorized capital irreparable loss or Further a juridical entity, stock and payment of the damage to the such as a corporation, total subscription, and corporation. During an may not be the the minimum paid-up emergency, the stockholder in an OPC. capital requirement of remaining directors or The president and the Php5,000.00 under the trustees may fill the sole director of the OPC Old Code. The New Code vacancy temporarily will be the single states that “stock from among the officers stockholder; however, he corporations shall not be of the corporation to pass cannot act as the required to have a the necessary emergency corporate secretary. minimum capital stock, action.

6 Section 24 of the New as allowing stockholders meetings, as required by PHILIPPINES Code now requires the or members to exercise the Old Code. treasurer to be a resident their right to vote of the Philippines. In through remote Existing corporations (Continued) addition, corporations communication or in affected by certain vested with public absentia when authorized provisions of the New

interest are now obliged under the by-laws, Code are given a period

to appoint a compliance subject to the rules and of two (2) years from its officer. regulations to be issued effectivity within which by the Securities and to comply with the The New Code now Exchange Commission requirements thereon. allows board meetings by (SEC). With this The SEC will be issuing

way of amendment, the supplemental regulation

videoconferencing, stockholders and specifying the teleconferencing, or other members need not be requirements and alternative modes of physically present or detailed procedures to communication, as well represented by proxies in comply with the New Code’s provisions.

TAX AMNESTY ACT

Republic Act (RA) No. tax liabilities and wipe the gross estate. The ETA 11213, or the Tax their slates clean. The may be availed of within Amnesty Act of 2019, was remaining two (2) two (2) years from the finally signed by separate tax amnesty effectivity of the President Rodrigo programs, namely: Estate Implementing Rules and Duterte on February 14, Tax Amnesty (ETA) and Regulations (IRR) to be 2019, after almost two Tax Amnesty on issued by the Department years, but he vetoed Delinquencies (TAD), of Finance (DoF) and the several provisions, were retained in RA No. BIR. particularly the General 11213. Tax Amnesty (GTA). The The TAD can be availed ” tax amnesty on GTA was supposed to The ETA shall cover the of in the following cases delinquencies shall cover all national internal estate of decedents who by paying an amnesty tax cover all national revenue taxes (i.e., died on or before at the corresponding internal revenue taxes income tax, withholding December 31, 2017 and rates based on the basic for taxable year 2017 tax, value-added tax, grants an amnesty in tax assessed: (a) 40% for and prior years…” etc.), with or without exchange for payment of delinquencies and assessments, that have estate tax at the rate of assessments that have remained unpaid as of 6% of the decedent’s total become final and Dec. 31, 2017. As Package net estate at the time of executory; (b) 50% for tax 1B of the Comprehensive death, or 6% of the cases with a final and Tax Reform Program, the decedent’s undeclared executory judgment by tax amnesty is meant to estate if an estate tax the courts; (c) 60% for complement Republic Act return was previously pending cases for tax No. 10963 or the TRAIN filed with the Bureau of evasion and other Law. With the changes Internal Revenue (BIR). A criminal offenses under brought about by the minimum estate amnesty the Tax Code, with or TRAIN Law, the tax tax of P5,000 shall be paid without assessments duly amnesty was supposed to if the allowable issued; and (d) 100% for give taxpayers a chance deductions at the time of withholding tax agents to settle their outstanding death exceed the value of who withheld taxes but

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failed to remit the same the effectivity of the IRR. by the third quarter of PHILIPPINES to the BIR. The TAD shall 2019, at the earliest. cover all national internal Currently, the DoF and revenue taxes for taxable the BIR are drafting the (Continued) year 2017 and prior years. IRR, with the intention The TAD may be filed that tax amnesty

within one (1) year from applications may be filed

SINGAPORE BUDGET 2019 OVERVIEW OF TAX CHANGES SINGAPORE

On 18 February 2019, the Extend Writing Down or 15 years).

Minister for Finance (the Allowance (WDA) for Minister), Mr. Heng Swee acquisition of IP rights The qualifying IPRs Keat, presented (IPRs) under Section 19B include patents, Singapore’s 2019 Budget trademarks, registered Statement. The key Singapore has always designs, copyrights,

thrust of this year’s wanted to be the geographical indications

Budget is to build “a intellectual property hub etc., but exclude strong, united of Asia. There are various customer lists and work Singapore,” consistent tax schemes to support processes. with Singapore’s goal to taxpayers in the creation, be a competitive Smart protection, exploitation The transferee or acquirer

Nation. Various aspects and acquisition of IP of the IP rights must

are addressed in the rights, like the following obtain both legal and Budget including tax deductions and economic ownership of measures to help allowance in the the IPR from the companies build Singapore Income Tax transferor, unless waiver capabilities, innovate, Act: is granted by the relevant grow, deepen workers' authority. “…various tax capabilities, and gain • Section 14D Research schemes to support easier access to funding. and development in Under current tax law, …creation, At the same time, the I P, this Section 19B WDA protection, Minister has reiterated • Section14A will expire in Year of exploitation and Singapore’s commitment Registering of IP, Assessment (YA) 2020. acquisition of IP to keep the overall tax The Minister has • Section 14WA rights…” burden low despite the proposed to extend this Licensing costs of IP need to raise revenues in WDA scheme to cover • Section 19B the future to fund qualifying capital Acquisition of IP. increasing expenditure. expenditure acquired on or before the last day of Keeping a competitive Under Section 19B of the tax regime is a key anchor Singapore Income Tax the basis period for to our economic growth Act, companies and YA2025. and to attract and retain partnerships are granted foreign investments. WDA on capital Extend 100% Investment expenditures incurred on Allowance under the Below are some tax acquiring qualifying IPRs Automation Support related highlights of the for use in its trade or Package Budget: business. The writing This Package was down period is based on introduced in the YA Business Tax election (5 years, 10 years

8 2016 Budget for 3 years, had been received To promote Singapore as SINGAPORE from 1 April 2016 to 31 directly in the hands of a REITs hub in Asia, the March 2019. Basically, the unitholders. Minister has proposed to this Package is meant to extend the existing support companies to S-REITs are granted the concessions until 31 (Continued) automate, drive following income tax December 2025. productivity, and to scale concessions: up, including a 100% In addition, the sunset investment allowance on • Tax exemption on S- clause for the tax the amount of approved REITs distributions exemption on S-REITs capital expenditures on received by distributions received by projects approved by individuals (except individuals will be Enterprise Singapore. individuals through a removed.

partnership in Since the introduction in Extend income tax Singapore or from the 2016, this Automation concessions for carrying on of a trade, Support Package has Singapore-listed Real business or helped many companies Estate Investment Trusts to automate their profession. Exchange-Traded Funds operations and raise • 10% concessionary (REITs ETFs) productivity. withholding tax rate for S-REITs Currently, REITs ETFs To continue this support, distributions received are granted the following an extension by 2 more by qualifying non- income tax concessions: years has been proposed resident non- to extend this Package to individual investors. • Tax transparency cover projects approved • Tax exemption on treatment on the by Enterprise Singapore qualifying foreign distributions received from 1 April 2019 to 31 sourced income (i.e. by REITs ETFs from S- March 2021. dividend, interest, REITs which are made “…to support

out of the S-REITs companies to The capital expenditure trust distributions specified income. automate, drive cap remains at $10 and branch profits) • Tax exemption on productivity…” million per project. received by S-REITs REITs ETFs and wholly-owned Extend income tax Singapore resident distributions received concessions for subsidiary companies by individuals (except Singapore-listed Real of S-REITs, that is individuals through a Estate Investment Trusts paid out of qualifying partnership in (S-REITs) income or gains in Singapore or from the respect of overseas carrying on of a trade, Currently, S-REITs are property acquired on business or granted tax transparency or before 31 March profession). if their trustees distribute 2020 by the trustee of • 10% concessionary at least 90% of their withholding tax rate taxable income to the S-REITs or its for REITs ETFs unitholders in the same wholly owned distributions received year in which the income Singapore resident is derived. subsidiary company. by qualifying non- resident non- Tax transparency refers All the above income tax individual investors. to the treatment whereby concessions are All these income tax no tax will be imposed at scheduled to lapse after concessions are the trustee level and the 31 March 2020. scheduled to lapse after income will treated as if it

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SINGAPORE 31 March 2020. concessions: restriction but have other additional conditions, Again, to promote • Tax exemption on like minimum fund size.

Singapore as a REITs hub specified income The Minister has (Continued) in Asia, the Minister has derived from announced the following proposed to extend the designated enhancements to the 13X existing concessions until investments scheme: 31 December 2025 and • Withholding tax the sunset clause for the Collective 13X structures exemption on interest tax exemption on REITs enhanced to include co- related payments ETFs distributions investments made by the funds to received by individuals will also be removed. non-resident persons For 13X fund approved as a collective structure, There are two types of Singapore is home to the for e.g., a Master-Feeder- qualifying funds in largest number of REITs Special Purpose Vehicle Singapore: in Asia, other than Japan. (SPV) structure, one of

This extension of the the conditions for this 1. Basic tier funds concession actually Master SPV Structure to (which comprised demonstrates the be approved as a Section 13CA and Singapore Government’s collective structure is that effort to build an Section 13R schemes) the SPV must be wholly- attractive tax regime for 2. Enhanced tier funds owned by the master the S-REITs sector. (Section 13X scheme) fund.

Basic Tier Funds - In addition, the removal It is proposed that under Removal of “not 100% of the sunset clause for a collective 13X structure, owned by Singapore the individuals receiving co-investments will be persons” condition S-REITs distribution and allowed as long as the co-

REITs ETFs distribution investor is an Currently, for basic tier should also provide some incentivised fund (i.e. funds, in other word, certainty and a level 13CA, 13R or 13X fund) funds seeking to enjoy “…removal of the playing field for investors or a foreign investor. In the 13CA or the 13R sunset clause for the who are contemplating other words, the SPV schemes must not be individuals on which financial need not be 100% owned 100% owned by receiving S-REITs instruments to invest. by the master fund. Singapore persons. distribution…”

Extend and refine the tax Collective 13X structures The Minister has incentive schemes for enhanced to allow use of proposed the removal of funds managed by SPVs in any legal form this condition with effect Singapore-based fund from YA 2020. In the managers (Qualifying Currently, only SPVs future, funds can be 100% Funds) which are companies can owned by Singapore be covered under the persons and still enjoy The Minister has collective 13X structure. the Section 13CA or 13R proposed that the 13CA, The Minister has schemes subject to the 13R and 13X schemes, announced that SPVs in satisfaction of other which were due to expire any legal form can be conditions. on 31 March 2019, be covered under such

extended to 31 December structure. Enhanced Tier Fund 2024.

Collective 13X structures Enhanced tier funds (13X Currently, qualifying enhanced to allow use of scheme) do not have the funds are granted the more than two tiers of Singapore ownership following tax SPVs

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Currently, only two tiers gains of the managed couple of years ago. All SINGAPORE of SPVs are permitted accounts may be subject income from designated under the collective 13X to Singapore tax. investments is exempt structure. The Minister unless specifically has announced that this Protection under the excluded. (Continued) restriction will be 13CA or 13X schemes removed. may be sought to However, designated mitigate such Singapore investments remain an Collective 13X structures tax exposure. However, inclusion list, meaning enhanced to allow debt the application of the only investments and credit funds to be current 13CA or 13X specifically mentioned on eligible for “committed rules to managed this list will come within capital” concession accounts poses some the scope of exemption. challenges. And in this list, several of Presently, only private the designated equity, real estate and For instance, the 13CA investments have infrastructure funds are scheme is provided to a currency and able to rely on the prescribed person which counterparty restrictions, “committed capital” is defined only in the for e.g. securities in concession in meeting the context of an individual, foreign currency issued minimum fund size a company or a trust and by foreign government, condition under Section hence, the 13CA scheme deposits held in 13X scheme. It has been may not be applicable to Singapore with any announced that debt and offshore entities in other approved banks, foreign credit funds will also be legal forms. currency deposits held eligible for this outside Singapore with concession. Further, the 13X scheme financial institutions requires the applicant outside Singapore, Collective 13X structures fund to be an investment interest rate or currency enhanced to allow vehicle that does not contracts with certain managed accounts carry out any active counterparties or loans business operations other granted to certain “…provides for A managed account is than investment business. counterparties. exemption of defined as a dedicated This condition is typically specified income investment account not met in the context of This Minister has derived from where an investor places managed accounts. announced in this Budget designated funds directly with a that the currency and investments…” fund manager without The inclusion of managed counterparty restrictions using a separate fund accounts for the 13X will be removed with vehicle. scheme should therefore effect from 19 February result in an increase in 2019. In addition, this Organisations that the assets under Budget has announced require customised management in the inclusion of investment portfolios Singapore. investments such as based on their investment Islamic financial products objectives and risk Designated investments that are commercial appetites may generally equivalents of designated prefer to appoint an The 13CA, 13R and 13X investments and credit investment manager schemes provide for facilities and advances. instead of investment in exemption of specified third party funds. income derived from Specified income will However, where offshore designated investments. include Singapore managed accounts are The definition of sourced interest income discretionarily managed specified income was by fund managers in changed to take the form Funds under the 13CA, Singapore, the income or of an exclusion list a 13R and 13X schemes

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SINGAPORE enjoy tax exemption on continue to receive the securities are instead specified income derived tax deferral benefits taxed in the hands of the from designated under the DUT scheme unitholders when

investments. Specified on and after 1 April 2019, distributed. (Continued) income currently does if they continue to meet not include payments all the conditions. Tax exemption is allowed that fall within the ambit on such distribution if the of section 12(6) of the This Designated Unit unitholder is a Singapore Income Tax Act (in Trust scheme was tax resident individual or essence, Singapore- introduced in 1995 to a non-resident person sourced interest), subject encourage the Singapore and has no PE in to certain exceptions. domestic trust industry. Singapore. Under this DUT scheme, With effect from 19 specified income derived The Minister has February 2019, specified by a DUT is not taxed at proposed to allow the income will not exclude the trustee level but is AUT scheme to lapse income falling within the taxable upon distribution after 18 February 2019. ambit of Section 12(6). in the hands of the investors and qualifying Personal Tax 10% concessionary foreign investors and withholding tax for S- individuals are exempt Personal Income Tax REITs and REITs ETFs from tax on distributions Rebate for resident distributions to non- made by a DUT. individual for YA 2019 resident funds under Sections 13CA and 13X In 2014, the DUT scheme The Minister has schemes was restricted to retail proposed to grant a one- unit trusts and non-retail off Personal Income Tax Qualifying non-resident unit trusts that was Rebate of 50%, but funds under sections previously qualified for capped at $200, to 13CA and 13X schemes the scheme were required resident individual will be able to avail to apply for other tax taxpayers for YA 2019. “…not taxed at the themselves of the 10% incentives for funds trustee level but is concessionary tax rate under Section 13CA or Enhance Grandparent taxable upon applicable to qualifying 13X. Caregiver Relief distribution…” non-resident non- individual investors With the extension and This Grandparent when investing in S- enhancement of the fund Caregiver Relief was

REITs and REITS ETFs. tax incentives announced announced in 2004 to This is applicable for S- in Budget 2019, this DUT support working mothers REITs and REITs ETFs scheme will effectively with Singapore citizen distributions made become unnecessary. children who engage the during the period from 1 help of their parents, July 2019 to 31 December Lapse the Approved grandparents, parent-in- 2025. Unit Trust (AUT) law or grandparents-in- Scheme law to take care of their Lapse the Designated children. Unit Trust (DUT) Under the AUT scheme, Scheme the trustee is taxed on its One of the conditions is investment income, and that the child has to be 12 The Minister has 10% of the gains derived years old or below. proposed that the DUT from the disposal of scheme will be allowed to securities. The Minister has lapse after 31 March 2019. announced to remove the The remaining 90% of the restriction in the child’s Existing DUT will gains from the disposal of age, with effect from YA

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2020. regional and global services from 1 January SINGAPORE responsibilities who will 2020 and the impending generally not qualify for GST rate hike. Lapse the Not Ordinarily Resident (NOR) Scheme the NOR status to enjoy the tax concessions of Recovery of GST for (Continued) Under the NOR Scheme, time apportionment of Qualifying Funds an eligible individual Singapore employment who is granted the NOR income, it seems that the The Minister has status for a 5 year period Government has levelled proposed that the GST may apply for the the playing field by remission scheme for the following NOR tax removing this NOR Funds under Section concessions: scheme which is 13CA, 13R and 13X predominantly enjoyed schemes will be extended • Time apportionment by foreign individuals. to 31 December 2024. of Singapore employment income Goods and Services Tax Others • Tax exemption of employer’s Extend the existing GST Tightening of GST concessions for S-REITs import relief for contribution to any and Singapore-listed travellers and duty-free non-mandatory Registered Business allowance overseas person or Trusts (S-RBTs) provident fund Travellers who spend less Currently, S-REITs and S- than 48 hours outside The Minister has RBTs are allowed via a Singapore will enjoy GST proposed that the NOR GST remission to claim import relief up to $100, scheme will lapse after GST on their: instead of the current “…S-REITs and S- YA 2020. $150, of the value of RBTS in the

• Qualifying business goods bought overseas. infrastructure The last 5 year qualifying business, ship period for the NOR status expenses For travellers who spend leasing and aircraft will be granted for YA • Business expenses 48 hours or more outside leasing sector…GST 2020 and will expire in incurred to set up Singapore, the quantum remission will be YA 2024. financing SPVs and of GST relief will be extended… ” • Business expenses of reduced to $500 (instead Individuals who have financing SPVs of the present $600). been accorded the NOR The 2 changes will take status prior to YA 2020 The GST remission is effect from 19 February will continue to be scheduled to lapse after 2019. eligible to apply for the 31 March 2020.

NOR tax concessions, until their 5 years NOR To continue facilitating Duty-free allowance on status expires. the list of S-REITs and S- liquor products for travelers RBTs in the infrastructure

This lapse came as a business, ship leasing and The duty-free allowance surprise as the NOR aircraft leasing sector, the enjoyed by travellers on scheme was introduced existing GST remission liquor products will be in 2002 to attract foreign will be extended until 31 reduced from 3 litres to 2 talent with regional and December 2025. litres with effect from 1 global responsibilities to relocate to Singapore. This is a welcomed move April 2019. However, there may be especially in view of the Singaporeans and SPRs introduction of reverse who may also have charge on the imported

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Disclaimer

The information contained herein is of a general nature and is not intended to address the circumstances

of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

Business consultants with a Russell Bedford Asia Pacific Offices & Contacts global perspective

Australia - Melbourne China - Shanghai Philippines Bruce Saward Charles Wang Ma. Milagros F. Padernal [email protected] [email protected] [email protected] www.sawarddawson.com.au www.jialiangcpa.cn www.mfpadernal.com

Austr alia - Perth India Singap ore Martin Michalik Shreedhar T. Kunte Andrew Lim mmichalik @stantons.com.au stk@sharpand tannan .com andrew@ru ssel lbedford.com.sg www.stantons.com.au www.sharp -tan nan. com www.russel lbedford.com.sg

Australia - Sydney Indonesia

Mark Edwards Syarief Basir Arthur Lin [email protected] [email protected] [email protected] www.c amphinboston.com.au www.russellbedford.co.id www.russellbedford.com.tw

Australia - Adelaide Korea (South) Thailand Thomas Green Kiwun Suh Chaiyath Angsuwithaya [email protected] [email protected] [email protected] www.leegreen.com.au www.cjac.kr Vietnam - Hanoi Malaysia China - / Shanghai Linh Thuy Do Loh Kok Leong Guoqi Wang [email protected] [email protected] [email protected] www.russellbedford.vn www.russellbedford.com.my www.huaander.com

Pakistan Vietnam - Ho Chi Minh City China - Hong Kong / Guangzhou / Rashid Rahman Mir Van Anh Thai Shanghai [email protected] [email protected] Jimmy Chung www.russellbedford.vn [email protected]

www.russellbedford.com.hk

Russell Bedford International Russell Bedford International is a global network of independent firms of accountants, 3rd Floor, Paternoster House auditors, tax advisers and business consultants. 65 St Paul’s Churchyard London EC4M 8AB Ranked as one of the world's top accounting networks*, Russell Bedford International is United Kingdom represented by some 700 partners, 6000 staff and 300 offices in almost 100 countries in [email protected] Europe, the Americas, Middle East, Africa, Indian Sub-Continent and Asia-Pacific. www.russellbedford.com *Ranked by global revenues in International Accounting Bulletin World Surveys. Networks defined in accordance with IFAC Code of Ethics.

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