TAX NEWS PWC SINGAPORE L TAX SERVICES
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Tax updates for the period
11 May 2021 to
15 June 2021
Tax News
PwC Singapore l Tax Services
Singapore updates
Public consultation on the draft Income Tax (Amendment) Bill 2021
The Ministry of Finance has published the draft Income Tax (Amendment) Bill 2021 (the
draft Bill). The draft Bill incorporates proposed legislative amendments to the Income
Tax Act to effect tax measures announced in the 2021 Budget Statement and changes
arising from the periodic review of the tax system. Non-Budget amendments proposed
include legislative provisions for the tax treatment of trading stock that is appropriated
for non-trade or capital purposes and vice versa, and the alignment of the maximum
penalty amounts for non-filing and other related offences under the Income Tax Act with
those for similar offences under the Goods and Services Tax Act and the Property Tax
Act.
Click here for details.
Goods and Services Tax
The Inland Revenue Authority of Singapore (IRAS) has published the summary of
responses received from the public consultation exercise on the draft e-Tax Guides on
“Taxing imported low-value goods by way of the overseas vendor registration regime”
and “Taxing imported remote services by way of the overseas vendor registration
regime”.
Click here for details.
The IRAS has issued a revised circular “GST: Transfer Pricing Adjustments (Second
Edition)” on 1 June 2021. The revised circular explains the GST treatment for
adjustments on the transfer prices of transactions between related parties.
Amendments made in the revised circular include:
• The extended administrative concession for taxable goods imported under an
import GST suspension scheme and clarification that import GST suspension
schemes exclude the Import GST Deferment Scheme (IGDS).
• Clarification that no tax needs to be paid to Singapore Customs and no adjustments
need to be made to GST returns if the person qualifies for the administrative
concession. If the person is under IGDS and is not entitled to full input tax credit,
additional tax need not be paid to Singapore Customs but adjustments to the GST
return will still be required.
• Clarification on when GST adjustments are required if no invoice is issued, and no
payment is made/received for the transfer pricing adjustment.
Click here for details.Singapore-Indonesia tax treaty On 11 May 2021, Indonesia ratified the updated tax treaty with Singapore which was signed on 4 February 2020. The updated treaty has not yet been ratified by Singapore. It will enter into force upon the exchange of ratification instruments by both countries. Singapore-Malaysia tax treaty The Income Tax (Singapore — Malaysia) (Avoidance of Double Taxation Agreement) (Modifications to Implement Multilateral Instrument) Order 2021, which entered into force on 1 June 2021, implements the applicable provisions of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) to the articles of the tax treaty. Click here for details. Overseas updates Australia The Australian Federal Budget 2021-2022 was delivered on 11 May 2021. Click here for details. On 12 May 2021, the Australian Taxation Office (ATO) updated its Taxation Ruling TR 2002/5 on Permanent Establishments (PE) to formally recognise the ongoing COVID- 19 pandemic as an ‘extraordinary circumstance’ where a forced presence of employees in Australia for more than six months may be considered ‘temporary’ for the purposes of the PE test. The ATO also updated its website on 25 May 2021 to confirm the extension to 31 December 2021 of its administrative guidance for foreign entities which may otherwise inadvertently create an Australian PE due to dislocated employees working in Australia as a result of the ongoing pandemic. Click here for details. The ATO has released a draft Practical Compliance Guideline, PCG 2021/D4, on cross- border arrangements connected with intangibles. The draft PCG covers a broad range of issues including intangible transfers, the development, enhancement, maintenance, protection and exploitation functions, and the characterisation of intangible payments. There is a significant focus on transfer pricing, and the ATO notes that numerous other Australian tax laws may also be relevant, including capital gains tax, withholding tax, the general anti-avoidance rules, and diverted profits tax. The draft PCG outlines a framework for how the ATO assesses the risk of arrangements involving intangibles. There is a strong focus on documentation and evidence available such that the absence of adequate evidence is likely to result in an arrangement being considered high risk under the ATO’s framework. Click here for details. Japan The 2021 Tax Reform Proposals contained a number of provisions accelerating the digital transformation of the administrative processes and procedures of the National Tax Agency, regional taxation bureaus and local tax offices (collectively, NTA). While discussion on these changes has been ongoing for some years, the COVID-19 pandemic highlighted the urgent need for transformation. The 2021 Tax Reform Proposals were passed into law by the Japanese government on 26 March 2021 and promulgated on 31 March 2021. Click here for a detailed summary of the new legislation, and guidance that the NTA has published in relation to transformation of the tax administrative processes and procedures.
Malaysia The Inland Revenue Board has issued a FAQ on the deferment of tax instalment payments falling due during the period of 1 April 2021 to 31 December 2021 for companies in the tourism sector and selected businesses such as cinemas and spas. Click here for details. Thailand The Digital Services Tax Law came into force on 11 February 2021. The value-added tax (VAT) liability under this law will affect overseas digital service providers or operators of electronic platforms on revenue received from 1 September 2021 onwards. As a result, the digital service providers and the electronic platforms will be required to register and pay 7% VAT on revenue generated from the electronic services used in Thailand. Click here for details. US The US Treasury released a “Green Book” general explanation of tax proposals included in President Joe Biden’s fiscal year 2022 budget submission to Congress. The Green Book provides new details on proposals to increase corporate and individual taxes to help offset the US$4.1 trillion combined cost of President Biden’s previously proposed American Jobs Plan and American Families Plan. Corporations and individuals should review the Treasury Green Book explanation of the President’s tax increase proposals as part of their efforts to evaluate and model the potential effect of these proposals on their employees, job creation, and investments in the United States. Click here for details. Investors’ appetites for environmental, sustainability and governance linked instruments continues to grow. As with any new asset category heading quickly into the mainstream, corporate issuers should prepare for more scrutiny over what constitutes an eligible and attractive sustainability offering. Click here for details. President Biden is proposing cutting US greenhouse gas emissions 50-52% from 2005 levels by 2030, moving up the timetable. Emissions-reduction pledges from world leaders set the stage for a renewed push to coordinate globally on climate. Companies shouldn’t miss the significance of this moment. In the US, while formal proposals for legislation and policies to support the lowered target have not been presented, leading companies will take the signal to seize the opportunities from accelerated decarbonisation. The more aggressive US decarbonisation goal reinforces the belief about the acceleration of net zero or carbon reduction commitments and the wide-ranging impact of these initiatives. Click here for details. Vietnam In the view of the tax authorities, projects manufacturing prioritised supporting industry products which were set up before 2015 are not eligible for the very favourable corporate income tax (CIT) incentives applicable to supportive industries. To ensure equality for all projects manufacturing prioritised supporting industry products, the Government has released Decree 57/2021 (effective on 4 June 2021), which amends and supplements Decree 218/2013 (amended by Decree 12/2015) on CIT incentives for such companies.
Click here for details. International tax news G7 Finance Ministers commit to Pillar One and Two including global minimum tax rate of 15% The G7 Finance Ministers announced an agreement on 5 June 2021, in which the participating countries committed to new taxing rights that allow countries to reallocate some portion of profits of large multinational companies to markets (i.e., where sales arise—'Pillar One’), as well as enact a global minimum tax rate of at least 15% (‘Pillar Two’). The meeting marked an early test of whether the US position on the OECD Inclusive Framework’s ‘Taxation of the Digitalising Economy’ project would provide momentum to finding a common base for agreement. Click here for details. EU Parliament and Member States agree on public country-by-country reporting Committees of the European Parliament and the Council of the EU have agreed to compromise text on a Directive on public country-by-country reporting. The text will amend Directive 2013/34/2u, which deals with financial reporting of certain types of undertakings. The agreed changes will require multinational groups or standalone undertakings with a total consolidated revenue of at least €750m, in that and the previous financial year, whether headquartered within the EU or not, to publicly disclose the corporate income tax they pay in each EU Member State plus in each of the countries that are either on the EU list of non-cooperative jurisdictions for tax purposes (‘the EU’s blacklist’) or listed for two consecutive years on the list of jurisdictions that do not yet comply with all international tax standards but have committed to reform (the ‘EU’s grey list’). This Directive aims to make corporate tax in the EU more transparent by introducing the same reporting obligations for European businesses and non-European multinational companies doing business in the EU through their branches and subsidiaries. While some commentators believe the proposal does not go far enough (particularly regarding aggregated vs. disaggregated information), the proposal nevertheless is a significant step towards multinationals’ tax information becoming available for public scrutiny. Click here for details. European Commission releases ‘Communication on Business Taxation for the 21st Century’ The European Commission (EC) released a “Communication on Business Taxation for the 21st Century” on 18 May 2021, setting a tax agenda for the next two years with five key actions. The aim is to align the EU tax framework with the new realities of the globalised and digitalised economy post-COVID, and to ensure that Member States’ tax systems are fit for purpose. In the Commission’s words: “the EU needs a robust, efficient and fair tax framework that meets public financing needs, while also supporting the recovery and the green and digital transition by creating an environment conducive to fair, sustainable and job rich growth and investment”. Click here for details. EC proposal to address distortions caused by foreign subsidies The EC proposed a new regulation on 5 May 2021 to address foreign subsidies, which in certain cases seem to be distorting the internal market. This proposal aims to ensure a level playing field in the internal market. This proposal is an important next step which follows the EC’s publication of a White Paper on distortive
subsidies. The proposal is part of the broader EU 2020 industrial strategy driven by the
principle of ‘enhancing strategic autonomy’.
Click here for details.
PwC Singapore International Tax website
For more tax updates from around the region and globally, please click here.
Analysis of tax developments worldwide
International Tax News is designed to help multinational organisations keep up with the
constant flow of tax developments. Among the topics featured in the April 2021 edition
are:
• Canada’s 2021 budget addresses mandatory disclosures, digital sales tax, interest
limitation, and hybrid mismatches
• Australian Tax Office proposes hybrid rules guidance
• France updates list of non-cooperative states and territories
• China’s new corporate income tax preferential policies for small and thin-profit
enterprises and super research & development deduction
Click here for details.
Global VAT Online – a summary of updates
PwC's Global VAT Online provides up-to-date business critical information on VAT/GST
rates, rules and requirements around the world to help you maintain control, mitigate
risk and improve the overall effectiveness of your VAT/GST function. It is a subscription
service for all your indirect tax needs in a digital world.
Click here for details.Contact us
If you would like to discuss any of the issues raised, please get in touch with your usual PwC contact or
any of the individuals listed below.
Chris Woo Paul Lau Tan Ching Ne
Tax Leader Partner, Tax Partner, Corporate Tax
+65 9118 0811 +65 6236 3733 +65 9622 9826
chris.woo@pwc.com paul.st.lau@pwc.com ching.ne.tan@pwc.com
Lennon Lee Andrew Fairfoull Kor Bing Keong
Partner, Financial Services Tax Partner, Global Structuring Partner, Goods and Services
+65 8182 5220 +65 9620 7417 Tax (GST)
lennon.ks.lee@pwc.com andrew.fairfoull@pwc.com +65 9112 6982
bing.keong.kor@pwc.com
For further details on our industry specialists, please click here.
© 2021 PricewaterhouseCoopers Singapore Pte Ltd. All rights reserved. This content is for general information purposes
only, and should not be used as a substitute for consultation with professional advisors.You can also read
