You and the Taxman - Ernst & Young · 2014-04-28 · case of Li & Fung (Trading) Limited v CIR,...

You and the TaxmanInsights on tax issues that matter

Putting productivity in the front seat

Leaner, meaner, faster: streamlining for greater efficiency

The intricacies of tax structuring in Asia

Seven tax policy trends you need to know in Asia

Throwing the tax net over business travellers

Game changer: FATCA’s impact on financial institutions

Sourcing rules: an application of fact?

Issue 1, 2012

You and the Taxman Issue 1, 2012 You and the Taxman Issue 1, 2012

You and the Taxman Issue 1, 2012 1You and the Taxman Issue 1, 2012

“Productivity is the magic elixir of economic progress”, Alan Greenspan once said. And it is with this spirit that Singapore is embracing productivity.” The opening paragraph of our first article “Putting productivity in the front seat” sums up aptly the gist for Singapore’s productivity push – that in order to achieve sustained economic development, we need to work better, smarter and faster. With Budget 2012 round the corner, this article suggests improvements to the Productivity and Innovation Credit so that more companies can tap on it.

“Leaner, meaner, faster: streamlining for greater efficiency” discusses how large

companies with complex legal structures may find it useful to rationalise their legal entities. Unwinding inefficient tax or legal entity structures could lead to cost savings.

In keeping with the tax structuring flavour, “The intricacies of tax structuring in Asia” discusses the issues companies face in structuring operations in Asia, be it making a new investment, expanding a business or repatriating profits. The article also offers some practical points that companies should consider in undergoing tax structuring.

Tax controversy is here to stay. To avoid as many potential points of disputes as possible with the tax authorities, taxpayers need to better understand what drives tax policies. “Seven tax policy trends you need to know in Asia” highlights these trends.

Globally-mobile employees may inadvertently trigger tax liabilities when they travel overseas for work. “Throwing the tax net over business travellers” highlights why tax authorities are paying attention to these business travellers and discusses the tax risks that business travellers face abroad.

All financial institutions need to know about FATCA (short for the Foreign Account Tax Compliance Act) which is aimed at preventing tax evasion by US persons. “Game changer: FATCA’s impact on financial institutions” has more on what FATCA is all about and why it is so important for financial institutions to be prepared for implementing FATCA compliance.

Lastly, “Sourcing rules: an application of fact?” delves into the Hong Kong tax case of Li & Fung (Trading) Limited v CIR, which debates the source of income, a traditional area of contention between taxpayers and tax authorities. Tax

wat

chRussell AubreyPartner, Transaction Tax - Asean Ernst & Young Solutions LLP

2 You and the Taxman Issue 1, 2012 You and the Taxman Issue 1, 2012You and the Taxman Issue 1, 2012 You and the Taxman Issue 1, 2012

You and the Taxman 04Putting productivity in the front seat Productivity has emerged as a main theme in recent fiscal budgets to achieve sustained economic development. This article suggests several ways to improve the Productivity and Innovation Credit so that more companies can benefit from it.

07Leaner, meaner, faster: streamlining for greater efficiency In a climate of increasing scrutiny by tax authorities, companies with unwieldy and complex set-up of separate legal entities may find legal entity rationalisation useful to lock in cost savings and enhance efficiency.

11The intricacies of tax structuring in Asia This article discusses the tax issues companies face in structuring operations in Asia and provides some practical pointers to address these issues.

15Seven tax policy trends you need to know in Asia Knowing the intention behind tax legislation and what drives the tax authority of a nation can provide vital clues to the tax authority’s next steps and help companies with their tax planning. This article highlights the key trends driving tax policies in Asia Pacific.

In this issue

You and the Taxman

04

You and the Taxman Issue 1, 2012 You and the Taxman Issue 1, 2012You and the Taxman Issue 1, 2012 3You and the Taxman Issue 1, 2012

18Throwing the tax net over business travellers As workforces become more mobile globally, tax authorities are becoming more aggressive in collecting tax revenue from business travellers. Read how business travellers can trigger tax liabilities for both themselves and their employers.

Elsewhere outside Singapore 21Game changer: FATCA’s impact on financial institutions This article discusses how new US tax rules aimed at preventing tax evasion by US citizens and residents will shake up the global financial industry

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26Sourcing rules: an application of fact? How to determine source of income, a perennial area of contention between taxpayers and revenue authorities, is debated in the Hong Kong case of Li & Fung (Trading) Limited v CIR.

30This section lists the latest Inland Revenue Authority of Singapore e-Tax guides, Monetary Authority of Singapore circulars and treaties signed or ratified.

Lessons in case law

At a glance

Editor: Russell Aubrey

Contributors: Russell Aubrey Andy Baik Cheong Choy Wai Duncan Edwards Angela Ee Soh Pui Ming Tan Bin Eng Desmond Teo Tracy Tham Wu Soo Mee Sandie Wun Editorial coordinator: Karen Lew Design: Soo Soon Tat

Email: [email protected]: www.ey.com/sg

For more information on the articles published in this issue, please contact:

The Editor You and the TaxmanErnst & Young Solutions LLPOne Raffles QuayNorth Tower, Level 18Singapore 048583Tel: +65 6535 7777Fax: +65 6532 7662

Editor note: You and the Taxman is published exclusively for clients of Ernst & Young Solutions LLP. Although every care has been taken in its production, it cannot take the place of specific advice for clients’ particular circumstances. Readers are advised to contact Ernst & Young Solutions LLP for more details and any update on the topics discussed in any of our publications before taking action based on the advice and views expressed by our writers. For specific tax questions, please contact the Ernst & Young Solutions LLP tax executive who handles your tax affairs.

In line with our commitment to minimise our impact on the environment, this document has been printed on recycled paper.

MICA (P) 145/12/2011Printed by Hock Cheong Printing Pte Ltd


“Productivity is the magic elixir of economic progress”, Alan Greenspan once said. And it is with this spirit that Singapore is embracing productivity.

It is no accident that productivity has emerged as a main theme in Singapore’s past two fiscal budgets. This push to produce goods and services better, smarter and faster, signifies a concerted effort to move Singapore up the innovation ladder and achieve sustained economic development.

In Budget 2010, the government announced its key goal to grow productivity by 2% to 3% a year over the next decade. With this in mind, a multitude of initiatives in the form of tax benefits, grants and training subsidies were introduced.

That saw the birth of the Productivity and Innovation Credit (PIC) scheme. Then, the PIC offered a 250% tax deduction or allowance of up to S$300,000 on qualifying spending invested in six categories of activities along the innovation value chain: R&D, registration of intellectual property (IP) rights, acquisition of IP rights, design activities, automation through technology or software, and training of employees. Companies could also tap on a 150%

enhanced deduction for R&D spending should they exceed the S$300,000 cap.

Although the PIC scheme is a broad-based incentive available to all companies, it was designed to be more attractive for small and medium-sized enterprises (SMEs).

In Budget 2011, significant enhancements were made to the PIC scheme:

• The 250% enhanced tax deduction or allowance was increased to 400%

• The cap of S$300,000 per activity was increased to S$400,000

• PIC benefits were extended to R&D done abroad

• The expenditure cap can be combined for years of assessment (YAs) 2011 and 2012 at S$800,000 and YAs 2013 to 2015 at S$1.2 million

• The cash conversion option was simplified and enhanced

• Deferral of up to S$100,000 of tax payable relating to PIC spending, to the following year to finance future spending

Putting productivity in the front seat

“Given the impending challenging economic environment, it is even more pertinent to be bold and aggressive in this space by encouraging productivity and R&D in a broad-based manner. ”

Tan Bin Eng and Tracy Tham suggest how the Productivity and Innovation Credit can be improved to enable more companies to invest in productivity initiatives

You and the Taxman


Refinements from practical experience

Based on our recent experience in assisting clients with their tax returns for the YA 2011, the PIC has been a success in terms of awareness and reach. With Budget 2012 coming up, it would be an opportune time to enhance the PIC in the following ways, so that more companies can take advantage of the scheme:

Cash conversion option

• Increase the quantum of cash payout for SMEs to provide additional aid for those in need of cash: Currently, the maximum cash payout is limited to S$30,000. Increasing the cash payout would be relevant and timely in view of the potential economic crunch, which could limit the effectiveness of the tax deductions under the PIC.

• Allow the full tax-deduction value to be encashed: The cash payout is currently converted based on 30% of

the maximum deduction quantum of S$100,000. This is at a discount to the tax deduction value. We hope that the government can increase the current conversion rate of 30% such that the full tax-deduction value can be converted to cash. This would effectively put cash back into the hands of SMEs to ensure that they continue to invest in productivity initiatives.

Training of employees

• Broaden the qualifying in-house training expenditure to include internal training that need not be certified by Workforce Skills Qualification (WSQ) or Institute of Technical Education (ITE): Many internal training programmes to upgrade the knowledge, skills and productivity of employees are not accredited or approved. We hope the government will include such training programmes under the PIC scheme if the companies can furnish the objective and syllabus covered in the programmes to demonstrate the productivity element in the programmes.

R&D

• Broaden the scope of eligible expenditure to include overheads as well as equipment used to carry out the R&D: These types of expenditure have a direct nexus to the R&D work being carried out and should be included under the PIC enhanced tax deduction or allowance.

• Remove restrictions for pure software projects: The current R&D definition excludes companies which develop software for internal use to qualify for the enhanced tax deductions. For example, a company which develops an internal software to automate and improve a manual backend process would not be able to claim the enhanced tax deduction on the costs incurred to develop this software. As the software development work is carried out to increase productivity through greater technology adoption, the costs incurred should qualify for the enhanced tax deductions so long as the other key attributes of the R&D definition are met.


• Equity financing schemes and loans offered to companies to provide financial aid in R&D and innovation projects

• Collaborations between public and private sectors where the public sector identifies cutting-edge technologies and undertakes development risks to bring them to a stage that is easily commercialised by industry

On the road to productivity

Many analysts have studied the connection between spending for R&D and productivity growth and the consensus has formed around the view that R&D spending has a significantly positive effect on productivity growth.

Given the impending challenging economic environment, it is even more pertinent to be bold and aggressive in this space by encouraging productivity and R&D in a broad-based manner. This will avoid any back-sliding of efforts from the previous fiscal budgets. The government should take this “window of opportunity” to entrench Singapore firmly in the front seat of productivity.

Tan Bin Eng is Director, Business Incentives Advisory and Tracy Tham is Manager, Business Incentives Advisory at Ernst & Young Solutions LLP

Note: This article was written prior to the Budget 2012 announcement. Changes in Budget 2012 are not reflected in this article.

• Allow avenue for R&D service providers to avail of enhanced tax deductions: Currently, R&D service providers cannot tap on the automatic enhanced tax deductions as they do not own the R&D results. In many situations, such delineation is not clear-cut. There may be significant time and cost investments in initial R&D activities before the service provider can secure a contract and such costs need not necessarily be borne by the customer. As many such R&D activities go towards meeting the objective of capability and knowledge development, there should be an avenue available to R&D service providers obtain benefits of the enhanced tax deductions. We hope the government can consider an approval process to allow such companies to be considered on a case-by-case basis.

Other productivity boosts

The PIC is not the only tool used to boost productivity. Let’s not forget the other initiatives that companies can tap on:

• Grants or subsidies on approved R&D projects which can help to defray costs such as manpower and materials

• Grants or subsidies on training costs to support companies in upgrading the skills and knowledge of their employees

• Non-financial assistance schemes such as free consultation services and toolkits furnished to companies, mainly SMEs, to help improve their operations and train their staff


Leaner, meaner, faster: streamlining for greater efficiency

“With tax authorities closing in and the high costs of maintaining a complex set-up of separate legal entities, multinationals may be better off rationalising their organisational structures to lock in cost savings and enhance efficiency. ”

As companies grow, their legal entity structures may become unwieldy and excessively complex over time. In a climate of increasing scrutiny by tax and other regulatory authorities, it may be wise to simplify these sprawling structures.

Over time, corporate groups may find that they have added layers of legal entities to their structure. This could be driven by a myriad of reasons: mergers and acquisitions (M&A), tax planning strategies, legal requirements or business objectives.

For example, a series of M&As may have led to separate legal entities in different jurisdictions because the acquiring company which purchased operating subsidiaries in another jurisdiction decided to leave the existing legal forms intact. Tax planning may also involve inserting legal entities to achieve the end goal of reducing the group’s overall tax liability.

Unfortunately, the presence of a tangled web of legal entities leaves behind a trail of different regulatory and financial requirements. This can be expensive to sustain. A complex legal entity structure could lead to higher administrative expenses, drains in productivity and possibly a higher tax liability - the opposite of what tax planning is supposed to achieve.

One of the cardinal rules of tax planning is that the tax structure must have business or economic substance in the jurisdiction where it operates. This could include having an established physical presence such an office, staff or equipment or having decision making powers such as holding directors’ meetings where strategic decisions are made.

In times of global economic uncertainty, tax authorities around the world, especially those facing budget pressures, are becoming more aggressive in their tax collection drives. Hence, they are devoting more attention to rooting out artificial structures.

Russell Aubrey and Angela Ee discuss the case for rationalising the legal structure of businesses

You and the Taxman


Globally, with the trend that tax planning must follow substance on business and given the attack by tax authorities on intermediate holding companies in particular, many corporate groups may need to review whether structures should be streamlined.

With tax authorities closing in and the high costs of maintaining a complex set-up of separate legal entities, multinationals may be better off rationalising their organisational structures to lock in cost savings and enhance efficiency. This is where legal entity rationalisation is useful.

What is legal entity rationalisation

Legal entity rationalisation (LER) is an integrated restructuring, tax and financial exercise that enables companies to simplify their legal entity structures. This systematic approach to harmonising operational and legal entity structures helps to improve corporate efficiency and transparency by identifying and addressing legacy issues and other hidden risks.

LER is especially valuable for companies going through a major lifecycle event such as an acquisition or initial public offering. It is also constructive for companies with large and complex entity structures that can increase compliance costs and heighten regulatory concerns to embark on LER.

An LER exercise forces companies to evaluate and assess the necessity of each and every entity. A cost-benefit approach enables companies to assess

whether the tax savings outweigh the ongoing maintenance costs of these entities. These costs include audit and tax compliance costs, costs of maintaining larger accounting teams, and time taken to prepare management, statutory and consolidated accounts.

To achieve the greatest benefits, companies need to look beyond the piecemeal reduction of entities to reduce costs. An effective LER process will help to pinpoint the optimal entity structure that will lead to operational efficiencies, reduced costs and lower tax liabilities.

To reap the efficiency and transparency benefits in the long term, companies need to embed LER into the corporate governance agenda. Otherwise, the absence of controls to manage and maintain the legal entity structure could lead the organisation to balloon in size again, making it unwieldy, costly, risky and inefficient once again.

Profile of companies which should consider LER:

• Companies with large unwieldy group structures

• Companies that have been highly acquisitive in the past or intend to make an acquisition

• Companies that operate in regulated sectors

• Companies that operate in multiple jurisdictions


Conclusion

Given the heightened focus on corporate governance and the need for cost control, LER offers a way of simplifying and streamlining complex corporate structures that could reap significant cost savings and lower risk.

Russell Aubrey is Partner, Transaction Tax – ASEAN and Angela Ee is Partner, Transaction Advisory Services at Ernst & Young Solutions LLP

The project should be rolled out in phases, with strategic objectives hammered out at the outset. A cross-functional team should be pooled together to roll out the implementation.

During the restructuring, legal and regulatory issues need to be addressed, such as the reallocation of customer and vendor contracts, transferability of regulatory licences. Tax issues will also need to be ironed out, such as what to do with trapped cash in foreign jurisdictions or how to preserve tax losses, tax credits and other tax attributes within the group without any adverse impact. Creating an optimal legal entity that will retain these valuable tax attributes is crucial.

Benefits of embarking on an LER exercise

From a tax standpoint, corporate groups can reap substantial benefits from unwinding inefficient tax or legal entity structures. These include the ability to transfer tax losses creating a tax neutral environment, the release of inter-company balances and reserves, and the chance to realise tax planning opportunities.

From a financial perspective, an LER exercise can reduce compliance, audit, tax and administrative costs because of a leaner legal entity structure. Resources can be deployed and acquisition or sales costs reduced. This leads to better capital and cash efficiency.

Undergoing an LER exercise allows the group to enhance risk management by understanding the corporate history of legacy companies which had been lost as a result of staff turnover. It also lightens the compliance burden as the group no longer has to deal with a myriad of regulations in different jurisdictions. The reduced number of regulators to report to and reduced compliance obligations saves time. The end result is enhanced transparency and corporate governance.

Considerations

The LER projects are usually jointly spearheaded by the tax and transaction advisory departments. However, it is also important to obtain buy-in from the various key project stakeholders such as legal, accounting and senior management as their involvement is crucial to the success of the project.


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Ready to close a deal?

ContactLeslie Koh

Partner, Transaction Advisory Services + 65 6309 6149

[email protected]

As the marketplace shrinks and competition increases, organisations need to plan for growth. Whether you are contemplating a buy-or-sell- transaction, we can help you identify, negotiate, structure and close the deal, making sure your transaction and business strategies complement each other.

Learn how our M&A professionals draw on our local industry insights and our extensive global network to help you manage the transaction process from deal sourcing through post-acquisition integration.

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You and the Taxman Issue 1, 2012 11You and the Taxman Issue 1, 2012

The intricacies of tax structuring in Asia

“While business objectives should steer decisions, companies should also keep an eye on consequential tax implications. ”

You and the Taxman

Cheong Choy Wai and Sandie Wun discuss the tax issues companies face as they structure operations in an increasingly globalised economy

In structuring business operations across the globe, it is not uncommon for companies to function on an “across borders, without boundaries” mantra. Tax needs to rank high on the list of considerations in this regard.

The surge in economic activity, particularly in Asia, has been driven for years by the availability of abundant raw materials, relatively cheaper labour, and most importantly, growing and untapped markets. Therefore, as foreign investors in Asia invest, expand or repatriate their profits, they would need to consider their tax costs. This encompasses not only income tax, but also indirect tax and transaction tax like stamp duty.

Should tax structuring be done at the onset to consider future tax exposures?

As foreign direct investment into the Asia Pacific region increases over time, tax authorities in the region have also stepped up their patrols resulting in evolving tax trends, tax risks and tax costs. Tax structuring done before the start of the investment may no longer be relevant to the needs of the business within this evolving business climate.

Therefore, businesses need to consider tax implications when they change business activities and operations such as making a new investment, expanding an existing business, injecting capital or even repatriating profits to shareholders.

Making a new investment

As business grows, companies may find that they need to be even closer to their customers and suppliers - by being on the ground and locating a business presence in one or more countries in the region.

Diversity in terms of language, culture, legal systems, tax legislation and business environment is a challenge which companies face in entering relatively “new” countries in Asia. Knowledge gained while setting up shop in one country - such as statutory registration procedures, financing structures, holding or acquisition structures, and tax rules - may not be transferable because each country has its own rules. What’s more, the tax and regulatory concepts in some Asia Pacific countries are less structured and experience in the practical application of the written law is critical.


In some Asian countries such as Taiwan, a branch entity is generally preferred over a subsidiary. In others, a corporate entity is more common.

For companies which prefer to first explore the grounds prior to formally establishing a presence in Asia Pacific, Representative Offices (ROs) may be a good starting point in some countries but not in others. The compliance requirements and allowable RO activities differ for each country.

In fact, the Chinese tax authority had since 2010, made three separate announcements with respect to ROs in China. The latest one, effective 1 March 2011, released a set of new administrative measures defining the scope of activities that can be carried out by ROs and announced the need for an annual report to be submitted to the local registration authority. Despite this latest announcement, more guidance is required from the Chinese tax authority as certain areas such as the format of the annual report is still unclear.

Generally, because of anticipated profit levels, companies should review available incentives options and grants prior to investing in a country. Incentives such as Thailand’s Board of Investment incentives, Singapore’s headquarter incentives, or Vietnam’s investment incentives, generally require companies to meet certain commitment levels or make investments in qualified areas of investment. In particular, countries in the region place high interest in investment in R&D and intellectual property (IP).

For example, China has tax incentives for companies in high technology industries while Singapore has an attractive domestic tax regime in relation to the tax treatment of IP as well as R&D expenses on top of available tax incentives.

Hence, companies which intend to invest within the region should take into account tax considerations besides the usual business considerations such as the adequacy of IP protection laws, availability of high quality workforce and reliable infrastructure.

Expanding the business

For decades, companies were able to lower running costs by shifting manufacturing activities to locations within the Asia Pacific. What has changed is that manufacturing activities are now shifting to the less developed countries.

Invariably, globalisation means that product design could be undertaken in one or more countries (sometimes even over the internet), parts or products manufactured in several more countries and the finished goods sold everywhere. The creation of designs, movement of parts across borders and storage of goods could lead to various tax issues such as direct tax, indirect tax and customs issues.

In a globalised economy, companies are expected to provide customers with speedy response and deploy employees whenever and wherever the business needs are. International travel however may unintentionally pose certain tax risks to both the business traveler and the organisation. These business travelers may become “accidental expatriates”,

inadvertently creating a tax exposure in terms of corporate income tax, social tax, individual tax as well as other business risks such as non-compliance with immigration laws due to over-staying and consequently reputational risks for the company.

Injecting additional capital or debt into a business

For multinational companies that are well established in developed countries, tax and regulatory concepts that are widely understood and used there such as fiscal unity, using hook stock, cross border mergers, changing registered seat of companies, use of hybrid instruments and entities are often not commonly used in Asia. This could make financing a business expansion within Asia more challenging as the same tax reducing strategies may not be feasible.

Typical issues to consider in each country would be the thin capitalisation rules, whether the deductibility of interest expenses is restricted and foreign exchange regulations, among others.

Global external and internal financing could also create tax implications worldwide. For example, the worldwide debt cap rules in the UK restrict


tax deductions for certain intercompany financing costs to the level of the worldwide group’s net non-UK external financing costs. Robust calculations should therefore be made each time a company decides to inject additional capital or debt to ensure there is no adverse tax impact elsewhere in the group.

Companies need to carefully review financing activities undertaken by subsidiaries located in some countries as these may fall within prohibited activities of the relevant jurisdiction’s Controlled Foreign Companies tax rules of the parent company.

Repatriating profits to shareholders

When establishing a new operational and business structure, the underlying assumption would be optimistic – that the investment will reap good profits. Tax issues to consider include the tax implications on various methods of profit repatriation, namely, dividends, capital reduction and share buy-back, amongst others.

Until 2010, China did not impose withholding tax on dividends. China’s profit repatriation tax policy changed in 2011 when a 10% dividend withholding tax was imposed. Unless shareholders

of the China subsidiaries were located in jurisdictions with double taxation agreements (DTAs) enjoying a reduced withholding tax rate such as Hong Kong and Singapore (both of which have DTAs that provide for a reduced 5% dividend withholding tax rate), this withholding tax became a cost that could not be easily mitigated.

Tax legislation around the region has also been developing at a fast pace. Tax legislators and tax administrators in the Asia Pacific region have become more aggressive. In the span of a few years, many Asian tax authorities have


stepped up their scrutiny on permanent establishment issues and sourcing or taxing of gains from indirect transfers.

Asian tax authorities are also questioning beneficial ownership, substance over form or commercial justification of certain tax structures prior to allowing companies to enjoy the reduced tax rates under DTAs. Many DTAs are also now renegotiated to include the exchange of information clause.

Balancing act

As pressures mount for companies to increase shareholder value in the current economic climate, they need to be cautious in structuring international operations. While business objectives should steer decisions, companies should also keep an eye on consequential tax implications. At the other end of the spectrum, companies cannot afford to incur excessive resources for corporate governance or in ascertaining all possible tax implications (whether hidden or not) prior to making an investment or business decision, especially in the current fast-moving global economy. Therefore, they need to tread a fine balance.

Whilst restructuring a company’s supply chain involves the move of key activities to relatively tax friendlier locations within the Asia Pacific, this has to have strong commercial drivers and business substance. Similarly, local tax authorities are also scrutinising indirect transfers of entities to ensure that capital gains are not forfeited because companies hide behind the veil of a tax haven or a treaty beneficial country with no substance.

South Korea, China and India among others in the Asia Pacific have included such limitations of benefit clauses and conditions into their tax legislation, guidelines and circulars. There has also been an increase in the number of court cases where the taxability or sourcing of gains are questioned.

Do your homework

Here are some practical points that companies may consider in undergoing tax structuring or implementing tax strategies. This is not an exhaustive list and as the tax environment constantly changes, there would no doubt be new issues that arise.

• Involve the organisation’s tax department early on in making business decisions as these decisions invariably will have a tax impact. This would mitigate tax (re)structuring costs that may arise.

• Use global tax filing compliance tools, techniques or systems which can track compliance deadlines in each country. This lowers the costs and risks of serious penalties and controversies, including reputational risks along with heavy financial penalties.

• Outsource tax compliance work to a professional firm to free up valuable resources in-house to develop tax strategies or to deal with other tax planning issues. This would also be a good way to keep up-to-date with latest changes in tax laws at the local jurisdiction level.

• Human resource tools may be deployed to track the days in and days out of key personnel in the organisation to limit the inadvertent risk of creating a taxable presence in each country.

• Engage in discussions with tax authorities, professional bodies and professional firms to keep up with the latest tax trends and developments around the region.

• Undertake advanced pricing agreements or advanced tax rulings procedures to ensure that a comfortable agreement is obtained prior to implementing a proposed transaction. For example, the tax authorities in Korea and Singapore both offer advanced tax rulings procedures.

Ultimately, understanding the subtleties of the vast Asian tax landscape and doing your homework in advance will help in your tax structuring and investment decisions in the region.

Cheong Choy Wai is Partner, Tax Services and Sandie Wun is Associate Director, International Tax Services at Ernst & Young Solutions LLP


Seven tax policy trends you need to know in Asia

“The key to avoiding as many potential points of tax controversy as possible lies in keeping informed of the latest tax policies and staying engaged with the tax authorities.”

You and the Taxman

Andy Baik sums up the latest tax policy trends in Asia

In the world of taxation, the word “controversy” may conjure up the image of a contentious tug-of-war between corporate taxpayers and tax authorities. The key to avoiding as many potential points of tax controversy as possible lies in keeping informed of the latest tax policies and staying engaged with the tax authorities.

This article looks at the key trends driving tax policies in the Asia Pacific region.

Fiscal adjustments in response to economic conditions

The consensus on fiscal policy throughout the Asia Pacific region seems to be this: governments should spend money and lower interest rates when recession hits, and tighten the purse strings and keep a lid on inflation when growth resumes.

Buoyed by strong economic growth in recent years, Asia Pacific nations have strove for fiscal consolidation by increasing tax collections and tempering spending. This was to reduce the debt accumulated after massive injections of money to save failing economies during the 2007-2008 global financial crisis.

However, economic problems in the US and Europe now threaten to cast a pall over the region again. With the greater odds of economic slowdown looming, the priority for most governments will be to save jobs and businesses. Thus, we could see Asia Pacific governments increasing fiscal spending, leading to higher budget deficits or lower budget surpluses.

Lowering of corporate tax rates to compete for investment

Asia Pacific nations have been vying strongly for international investment by reducing statutory corporate tax rates.

In the region, Hong Kong and Singapore lead the race to the bottom with headline corporate tax rates of 16.5% and 17% respectively. Singapore’s reduction in the corporate tax rate to 17% in 2010 was its sixth rate cut since 2000. Taiwan is the newest member of the low-tax-rate club, cutting its statutory rate from 25% to 17% in 2010.

Other nations such as Indonesia, Thailand, New Zealand, Korea and Malaysia have also participated in the general trend towards lower corporate tax rates, by implementing phased reductions.


Broadening of the tax base

While headline corporate tax rates are on a general downtrend, nations are broadening their tax base to maintain revenue. Some governments have enacted or raised other taxes to make up for the shortfall in the collection of corporate tax revenue due to lower tax rates.

An increasing trend, however, is for governments to make legislative and administrative adjustments to cast a wider net over taxable income. This includes implementing stricter interpretations of existing law, enforcing new and existing economic substance rules, introducing transfer pricing rules, initiating tax information exchanges with countries and stepping up audits on cross-border transactions.

These tactics can collectively increase the amount of corporate income that is defined as taxable, making up for the revenue lost to a rate cut.

Tax breaks for favoured industries

Asia Pacific nations have long used the tax code to nurture or expand selected industries. These come in the form of tax incentives for sectors that can underpin the nations’ economic growth. Some of the more common beneficiaries of tax concessions include the financial services, energy production, high-technology and shared services sectors.

Recently, governments have sweetened the tax breaks for “green” industries – industries that manufacture green-related products or use manufacturing methods that are energy efficient or boast environmental advantages.

Tax policies are also increasingly favouring research and development (R&D) and the intellectual property (IP) that R&D produces, as many companies prefer to house their R&D activities in nations that offer IP protection to the same extent as in their home nations.

Aggressive tax enforcement to maintain revenue

Globally, tax administrators are heightening their tax collection drives and squeezing taxpayers harder in order to keep coffers filled.

In Asia, we are seeing stricter tax audits, a universal feature of an increasingly aggressive tax administration. For example, China’s tax authorities have tightened up enforcement on non-resident taxpayers and cross-border transactions to snuff out anti-avoidance. Joint audits conducted by two or more nations’ tax administrations are the newest development.

Governments are also intensifying cooperation by inking tax information exchange agreements (TIEAs) so that they can keep tabs on global investors’ international activity by requesting information such as the status of corporate bank accounts suspected of containing undeclared assets.


Hong Kong is one territory that has come a long way in this area from the time whence it had refused to collect or supply information requested by other nations unless Hong Kong needed the information for its own tax collection purposes.

Transfer pricing, a traditional area of contention, is one of the main challenges facing corporate taxpayers and tax administrators. In Asia Pacific, there has been an increase in the use of advance pricing agreements (APAs) so that companies and tax administrations can come to an agreement on a set of transfer prices. In a significant development, China published its first public document on APAs in 2010, describing the regulations associated with China’s unilateral, bilateral and multilateral APAs. It plans to revise this document every year, which will promote systematic administration of transparent APAs.

Increased taxation of immobile assets

The increasingly mobile nature of capital and labour make them difficult to tax. Hence, nations across the Asia Pacific are pursuing new revenue streams, including the taxation of immobile assets such as land and mineral extraction. As these are assets which are not moveable, taxes on them are easier to enforce.

China and Australia are examples of nations moving into this arena, with China implementing new taxes on land and Australia proposing new mining taxes. China and Australia are hoping that targeted taxes can take some froth out of a potential bubble in these sectors, without completely stifling them or damaging other parts of the economy.

Political tension over shift to indirect taxes

The long term trend in Asia Pacific is towards a greater reliance on indirect taxes such as value added tax (VAT) and goods and services tax (GST) as a source of tax revenue. However, political tension over plans to introduce or increase existing indirect taxes is slowing down the momentum of this trend. For example, Malaysia’s plan to enact a GST has been repeatedly scuttled while Thailand has extended its temporary GST rate cut from 10% to 7% by another two years.

Andy Baik is Partner, International Tax Services at Ernst & Young Solutions LLP

In summary, knowing the intention behind tax legislation and what drives the tax authority of a nation can provide vital clues to the tax authority’s next steps. This will help companies with their tax planning and structure in the region.


The days when tax authorities paid scant attention to business travellers are long gone. Today, with international business travellers spending more time travelling the globe, they can trigger not only tax liabilities for themselves but also for the company that they work for. Business travellers and their employers need to be aware of the rising risks and complexities in this tax labyrinth.

Business travellers provide companies with the flexibility, mobility and efficiency to meet the demands of clients or draw on their expertise to execute projects in other countries. However, the deployment of business travellers to other countries can trigger a tax trap for both employees and their employers.

It used to be that business travellers hardly drew the notice of tax authorities in other countries unless they spent more than half a year in the host countries. Relying on that tradition, companies often make the wrong assumption that business travellers trigger personal tax liability only if they spend 183 days of a calendar year in the host country.

In reality, this 183-day test is but just one of other tests used to determine whether a business traveller has created a taxable presence in the host country. The source of the business traveller’s remuneration and the location of the legal entity to which the costs of the business traveller

are charged are other ways to determine whether any personal tax liability has arisen.

Records of the number of days spent in the country are no longer enough. Tax authorities are increasingly demanding to know the number of visits, who they are performing the duties for, who bears the costs and compensation and what type of work is performed by the business travellers.

Throwing the tax net over business travellers

“　The deployment of business travellers to other countries can trigger a tax trap for both employees and their employers”

Wu Soo Mee discusses the growing risks of business travel

You and the Taxman


This makes the administrative task of complying with the documentation requirements a challenging one. Different departments in the company need to work together to track the specific details of the trip accurately and systematically.

Why tax authorities are hunting down business travellers

Globalisation has resulted in a paradigm shift in how companies work and how tax authorities gather revenue. Tax authorities are reacting to the increased mobility of workforces by pursuing these business travellers for taxes due. Here’s why tax authorities are tracking down business travellers:

• Rapidly growing business travel: Companies are deploying an increasing number of workers to other countries to negotiate deals, implement projects or oversee operations.

• Business travellers have higher incomes: Globally mobile employees tend to be higher paid because of their expertise and value that they bring to their companies while traveling abroad. Therefore, governments worldwide are increasingly shifting their attention to this group of globally mobile workforce.

　• Synchronisation of tax policies: Tax authorities share leading practices, so an enforcement approach which works well to raise revenue in one country will influence other countries to follow suit.

　• Targeting the largest global companies: It is more efficient for tax authorities to target large companies, rather than small business owners on their business trips.

• Increase tax revenue: Governments need to fill their tax coffers to fund public finances. They have turned to stricter enforcement of tax collection across the board in order to raise taxes. This includes the taxation of business travellers.

　• Tapping on technology to identify tax obligations: Governments armed with technology that can record the entry and exit of travellers at their borders and the purposes of those travels can now exploit this information for tax purposes.

The business reaction

Multinational companies’ reactions to the stricter enforcement of tax collection of business travellers have ranged from ignoring the issue to proactive compliance.

The traditional response has been to reduce as much tax liabilities as possible. Top of the agenda is to minimise permanent establishment (PE) exposure and the resulting business taxes. Second on the list is making sure employees do not trigger personal tax obligations. These responses have forced the human resources and finance or tax departments to work more concertedly.

At the other end of the spectrum, some companies are considering it less risky in the long run if they start filing as soon as they generate any business activity. Their take is that if you are going to grow the business in the foreign country, they are going to trigger a PE eventually. So, to avoid protracted disputes with the tax authorities, they prefer to start filing from day one for corporate tax and meeting the employer’s tax withholding and reporting obligations for employees. This response requires a huge coordinated effort between human resources and finance or tax to generate the documentation required to track travel, compensation and work done.

The third group of companies is ignorant to the problem. This lack of awareness and inaction is a ticking time bomb - not doing anything now could mean escalating personal and corporate tax liabilities years down the road if the tax authorities unearth their lack of compliance.


Inherent risks of business travellers

The inherent risks of business travellers are summarised in the chart below.

The rise of the knowledge economy means that global companies can now shift their workforces nimbly. The trend towards a more aggressive stance on taxing personal income of business travellers mean that tax authorities are adopting a position that certain activities of business travellers are tantamount to a PE. In these cases, companies which do not have a traditional PE in the physical sense (such as branch offices or warehouses), may suddenly find themselves on the receiving end of a notice for corporate tax filing.

Furthermore, non-compliance with complex immigration, withholding tax, social security, employment law and other reporting requirements could expose companies to further risks in terms of potential penalty assessments, which

will have a direct impact on the bottom line.

The business travellers themselves also do

not want to expose themselves to any non-compliance risk in the foreign country, which could affect their ability to enter and exit the country freely in the future. Such unnecessary exposures are

regarded as an unwelcome burden

and a distraction to their business operations.

By planning in advance and ensuring compliance with local

legislation, business travellers can focus fully on the companies’ business needs.

Last but not least, the oversight of such tax, employment law and immigration requirements could have far more adverse consequences for companies in the form of criminal proceedings and imprisonment for violators. Such events, though still rare, often attract media attention and cause damage to a company’s reputation in a foreign country. Needless to say, in more extreme cases, it may even impair the organisation’s ability to operate in that particular country in the future.

Inherent risks

Short term business travelers

Permanentestablishment

risk

Regulatorycompliance

Businessreputation

risk

Unhappyemployees

Budgetaryrisk

Risk ofprosecution

Employmentlaw risk

These are some key questions a company should consider to check if there is a need to address your business travellers’ needs :

• Is your company fully aware of the circumstances of employees who travel abroad on short term assignments?

• Do you know which employees are “visiting” and whether these visits pose a compliance issue to your company?

• Do you send employees abroad to work on a project at a moment’s notice and find these projects take longer than expected?

• Does your company have a concern that employees are being sent abroad to work on short term assignment without the knowledge of the corporate human resource or mobility team?

Wu Soo Mee is Partner, Human Capital at Ernst & Young Solutions LLP


Game changer: FATCA’s impact on financial institutions

“Implementing FATCA compliance within an entity requires education and cooperation of not only the tax department, but also of other functions with the group.”

Elsewhere outside Singapore

Desmond Teo and Duncan Edwards discuss how new US tax rules aimed at preventing tax evasion by US citizens and residents will shake up the global financial industry

The US government is introducing a new provision within the Hiring Incentives to Restore Employment (HIRE) Act 2010, the “Foreign Account Tax Compliance Act” or “FATCA” for short, to identify US citizens or residents who stash away untaxed dollars in offshore accounts, earning income they do not declare.1 This will have wide-ranging implications on the way global financial institutions operate and their relationship with clients.

Interestingly enough, FATCA sounds like a shortened acronym for “fat cat”, a term which President Obama has often used to refer to wealthy US individuals who avoid paying taxes by tucking away their money in unreported offshore accounts. FATCA gives the Internal Revenue Service (IRS) the arsenal to get back its share of taxes from those “fat cats” who may not have been paying their fair share of US taxes.

So, in March 2010, US President Barack Obama signed FATCA into US law. It will come into force on 1 July 2013 and will require non-US financial institutions to report details of offshore accounts with more than US$50,000, held by US persons, to the US tax authority, the IRS or subject those accounts to withholding taxes.

How does FATCA work?

Firstly, what is an FFI or foreign financial institution? FFIs, as defined by FATCA, covers a broad range of financial institutions, including banks, insurance companies, investment funds, pension funds, mutual funds, private equity funds and broker dealers. Most financial institutions will therefore be caught by FATCA, yet another wide-ranging implication.

FATCA then requires FFIs to become tax collection and information-gathering agents on behalf of the US government. Under FATCA, FFIs wear two hats with distinct responsibilities - as the payor (withholding agent) of withholdable payments and as the payee (recipient) of withholdable payments.

The new rules also place an onus on FFIs to file with the IRS information regarding how much investment income has been earned by American persons, information which previously should have been provided by taxpayers. To do this, an FFI will enter into an agreement with the IRS to report on accounts held by US persons (comprising US entities, citizens or permanent residents, i.e., green card holders). The FFI then becomes known as a “participating FFI”.

1 The HIRE Act is a law to provide tax benefits for businesses to hire unemployed workers. FATCA is an “offset” provision in the HIRE Act. Tax revenue collected from FATCA will help to offset the costs of the HIRE ACT.


FFIs that do not enter into an agreement with the IRS, known as “non-participating FFIs”, will suffer a 30% withholding tax on all relevant US-sourced payments, such as dividends and interest paid by US corporations. The same 30% withholding tax will also apply to gross sale proceeds from the sale of relevant US property. Participating FFIs suffer no withholding taxes on such payments at that point of receipt. There is therefore a significant penalty on non-participating FFIs and it is expected that most FFIs will enter into an agreement with the IRS, another major implication.

Equally, any customer that refuses to allow a participating FFI to report their investment income to the IRS will suffer similar withholding taxes similar to the above, which is where the FFI becomes the tax collection agent. These customers are known as “recalcitrants”.

FATCA’s far-reaching impact

FATCA will have a great impact on FFIs, especially those in well known offshore banking locations such as Singapore, Hong Kong and Switzerland. Singapore financial institutions which hold or manage money for US persons are being targeted by FATCA. Similarly, Singapore branches of global financial institutions will also be targeted by FATCA.

As FATCA will require FFIs to submit detailed information on their US customers to the IRS, there is significant pressure on the financial services sector to get their compliance and IT systems in place so that they can be FATCA-compliant from mid 2013, or earlier. For example, FFIs will need to review the way they approve and capture new customers in the systems, in order to evaluate if they are US persons. FFIs will also have to ask existing customers who are US persons if they are willing to have their personal and account details reported to the IRS. If not, they become recalcitrants.

Therefore, participating FFIs will need to invest in three key areas in the next 1 – 2 years:

• Documentation: capturing process changes and analysing the customer database

• Withholding: building functionality for withholding on recalcitrant account holders

• Reporting: building and sustaining a reporting model for all US persons to cover account balances and gross payments

Challenges in navigating FATCA

To successfully navigate FATCA, there are significant challenges which financial leaders must address. These include:

1. Programme governance or ownership: The enterprise-level effort required to allocate people, budget and project ownership across businesses, operations, compliance and tax.

2. Legal entity analysis: Determining the status of entities for FATCA purposes may be challenging i.e., are they in or out of scope?

3. Existing account information: There may currently exist a misplaced confidence on the extent to which existing Know Your Client (KYC) information is readily available or could be leveraged. Our experience is that most do not facilitate the identification of US persons for FATCA purposes and therefore need to be enhanced.


4. Lack of central customer data: Very few organisations have a single source of necessary information to readily make the required determinations with respect to account holders.

5. Timing: The short time frame, it is now only less than 18 months away, for implementation requires immediate focus on key start-up tasks.

6. Technology: Numerous unrelated systems must be addressed and modified to enable new required information reporting and withholding.

7. Education: Generally, there is not a full awareness of FATCA, its requirements and the resulting impact to the businesses, which will necessitate early, senior-level commitment and communication. If employees fail to comply with FATCA, there could be penalties for the FFI.

8. Vendors: Vendors’ FATCA readiness and capabilities will need to be addressed.

9. Passthru payments: FFIs will need to identify where income has been earned and sourced i.e., is it US investment income and on at least a quarterly basis, as they “passthru the payment” to their clients. This is not easy when you have tiered investments.

10. Private banking relationships: FFIs will need to identify private banking relationships and educate relationship managers and conduct an electronic and manual “diligent review” of every private banking account.

The clock is ticking on FATCA

Time is short with less than 18 months to go before FATCA commences. FFIs need to obtain a detailed understanding of FATCA and analyse its impact on the business. They must have a clear understanding of what their business will look like in the coming years and how they want to position themselves in the new environment.

Here are some important steps to take:

Understand FATCA: Workshops and other consultations with external specialists can help financial leaders gain an understanding of the new regulations and their effect on business activities.

Making strategic decisions: Financial intermediaries must decide whether US persons will be retained as clientele and whether US securities will be included in the product range. If an institution says “yes” to these basic questions, then FATCA looms in.


Analysing implementation guidance: The implementation guidance for FATCA and the actual specifics of the requirements must be continually analysed and the operating model must be adapted accordingly so that organisations can prepare adequately for compliance. FFIs need to:

• Educate the firm about the need to comply with FATCA

• Conduct a high-level review of business operations and entities that may be affected

• Assign primary points of contact for the FATCA initiative within those operations and entities that may be affected

• Develop an initial FATCA roadmap illustrating timeline, principal workstreams, outputs and targeted internal deadline

• Document how entities currently keep track of customer accounts and whether the accounts are linked to one another

• Ascertain what data is kept in paper form versus electronically

• Identify processes, procedures and technology systems that will need to be enhanced or added

Implementing FATCA: Financial institutions will need time to adapt their processes and systems to the new regulations. Ideally, systems should be ready three months before the new FATCA regulations apply (IT freeze) to ascertain smooth functioning.

Summary

FATCA is not just another tax issue that affects aspects of compliance. Rather, it touches the whole value chain and requires completely new and extended information and reporting systems. Implementing FATCA compliance within an entity requires education and cooperation of not only the tax department, but also of other functions with the group, including legal, operations, IT, risk management and central management. Therefore, FFIs need to put together a process to meet the FATCA implementation deadline and sooner rather than later.

Desmond Teo is Associate Director, Financial Tax Services and Duncan Edwards is Executive Director, Global Financial Services at Ernst & Young Solutions LLP


Are you FATCA fit?Contact

Liew Nam Soon Partner, Financial Services Advisory

+ 65 6309 8092 [email protected]

FATCA is complex. It raises many questions for global banks and other financial intermediaries. We have the right blend of tax and business knowledge so that you are informed and prepared for the changes required by the Foreign Account Tax Compliance Act (FATCA).

Learn how our experience can help you navigate FATCA.

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Sourcing rules: an application of fact?

“It is unclear whether the Inland Revenue Authority of Singapore would consider adopting what seems to be a more liberal position for offshore profits as decided by the Hong Kong Courts.”

Lessons in case law

Soh Pui Ming discusses the considerations taken in determining the source of profits in a Hong Kong tax case

The “source” of income has been a perennial area of contention between taxpayers and revenue authorities in countries that adopt the territorial basis of taxation such as Hong Kong and Singapore. That’s why tax professionals always monitor tax cases in this particular area because they set case precedence, guidance and sometimes opportunities from taxpayers’ perspective.

In the Hong Kong tax case of Li & Fung (Trading) Limited v CIR, heard by the Court of First Instance (CFI) in April 2011, the judge held in favour of the taxpayer, and ruled that agency commission, earned through services provided by its affiliates outside of Hong Kong, was offshore income and hence not taxable in Hong Kong.

Facts of the case

• The taxpayer, Li & Fung (Trading) Limited (LFT), is a Hong Kong-based company of the Li & Fung Group that provides services to its customers as a buying agent. It conducts sourcing for suppliers, places orders on behalf of its customers, monitors production schedules and conducts quality control.

• LFT is headquartered in Hong Kong and normally enters into contracts with customers for the provision of its services as a result of the efforts of its senior staff based in Hong Kong.

• Upon delivery of the finished goods by the suppliers to its customers, LFT would usually receive a commission from its customers of 6% of the total free-on-board (FOB) value of the merchandise.


• LFT has a network of affiliates outside Hong Kong. Where both the customers and suppliers are outside Hong Kong, LFT would engage its overseas affiliates to perform most of the services. In return, LFT would pay its overseas affiliates a fee equal to a percentage, say 4%, of the FOB value of the merchandise.

• The services identified in the service agreements between LFT and its customers are listed in the table below. The agreement signed between LFT and its affiliates, although not a mirror reflection of the customer agreement, covers similar services (see table).

LFT and customer LFT and affiliate

Typical services provided by LFT to its customers as specified in the agency agreements include:

• Locating suppliers, arranging manufacturing, placing orders in the territory of the suppliers on behalf of its customers

• Monitoring suppliers’ production schedules

• Maintaining quality control on the merchandise

• Arranging shipment and assisting suppliers with the preparation of all relevant export documentation

• Attempting to settle possible merchandise claims on behalf of its customers

• Keeping customers abreast of new developments in the suppliers’ markets

• Signing or countersigning contracts or purchase orders on the customers’ behalf

A typical agreement identifies the services to be provided by an affiliate to LFT as follows:

• To research and locate suppliers, to coordinate the supply of products and to advise the customer (LFT’s customer) in respect of sourcing of products

• To furnish continuous information concerning suppliers, product availability and market conditions

• To arrange and obtain samples of products from suppliers and to assist the suppliers with any problems relating to the export

• To assist and advise on methods of transporting, storing and delivering goods

• To assist in investigating and settling any claims and complaints against products or goods supplied

• To arrange for the packaging and shipping of the goods

• To provide inspectors to monitor quality control of products whenever such quality control services are required by the end customer

• To do such other acts and things as the end customer and LFT shall from time to time mutually agree

The issue in dispute

• LFT claimed that its net commission income of 2% (i.e., 6% - 4%) from the existing arrangements where the customers and suppliers were located outside Hong Kong, was derived offshore and hence not chargeable to tax in Hong Kong.

• The Commissioner of Inland Revenue assessed the net commission income to tax for the years from 1992 to 2002.

• The case on sourcing of income was heard by the Board of Review (BoR) which held in favour of the taxpayer, and by the CFI which also came to the same conclusion.


not be able to earn the 6% commission income. On this basis, the BoR held that LFT’s net commission income was earned in the place where the overseas affiliates carried out LFT’s instructions, regardless of whether they did so as agents or sub-contractors.

Court of First Instance’s decision

　• The Commissioner argued that LFT’s profits could not have been generated through the activities of LFT’s overseas affiliates alone. Therefore, as LFT managed and supervised its affiliates from Hong Kong, that part of LFT’s gross profits of 2% was onshore. The Commissioner stressed that LFT’s management and supervision of its overseas affiliates from Hong Kong were key factors in producing its profits, without which merchandise could not have been delivered to its customers and commission could not have been earned.

• The Commissioner submitted that of the services listed in the agency agreements between LFT and its customers, it was obvious that certain activities such as identifying suppliers, placing orders and monitoring production schedules – required the supervision of senior staff located in Hong Kong with the relevant regional knowledge and experience. These activities in Hong Kong enabled the 6% commission to be earned. Hence, he argued, that the net commission of 2% should be attributed to LFT’s activities in Hong Kong.

• However, the judge was not persuaded. The judge commented that although LFT maintained management and supervisory support services for its

overseas affiliates in Hong Kong, these were “antecedent activities” that, although “commercially essential to the operations and profitability of [LFT’s] business.., do not provide the legal test for ascertaining the geographic source of profits”.

• The judge noted that, as a matter of well established case-law principles (which was reiterated in the case of ING Baring), the place where the “brains” or decision-makers of a business are located is irrelevant in determining the geographical source of the profit.

• The CFI affirmed the decision of the BoR.

Commentary

The CFI, in its decision in the Li & Fung case reaffirmed the conclusion in the ING Baring case – that to determine the source of profits, one must identify the activities that directly give rise to the profits (instead of the antecedent or incidental activities).

This runs contrary to the Practice Note No. 21 (DIPN 21) revised in Dec 2009 by the Hong Kong Inland Revenue Department (IRD), that the ING Baring case principle primarily applies to stock broking commissions. From the decision taken in the Li & Fung case, it seems that the principles from the ING Baring case can be applied in a wider sense in determining the source of other types of income.

Nevertheless, the DIPN 21 provides a good summary of the case law principles and the Hong Kong IRD’s views and positions for determining the source of profits.

Board of Review decision

• The Commissioner argued before the BoR that LFT was actually operating a “supply-chain management business”, whereby it received commission income based on 6% of the customer’s export sales value and at the same time paid its affiliates overseas the 4% service fee. Further, the Commissioner suggested that the overseas affiliates were subcontractors employed by LFT. The difference of 2% earned by LFT represented its management’s own activities and those of its affiliates from LFT’s headquarters in Hong Kong. The commission income thus has a Hong Kong source and should be taxable.

• The BoR applied the principles laid out by the Court of Final Appeal (CFA) in the case of ING Baring Securities (Hong Kong) Limited v CIR (2007) – that in determining the geographical location or the source of a profit, only the immediately direct profit-producing activities matters (and not the antecedent or incidental activities).

• The BoR found that LFT engaged its overseas affiliates to perform those direct profit-producing activities on its behalf outside Hong Kong as LFT’s agent. The profit-producing activities started from the placement of orders with suppliers overseas and continued throughout the whole process of supervised production of merchandise made by the suppliers, quality control and shipment of the merchandise from the suppliers to LFT’s customers. In the absence of these sourcing and agency activities that LFT carried out through its affiliates abroad, LFT would


Some of the important principles outlined in Paragraph 17 of the DIPN 21 include:

• Determining the locality of profits is a hard, practical matter of fact – one needs to examine nature of the profits and the transactions which give rise to them.

• One must examine what the taxpayer has done to earn the profits and where he has done it. In other words, what were the operations which produced the relevant profits and where did these take place.

• The relevant operations need not comprise all of taxpayer’s activities carried out in the course of business, only the effective causes which produced the profits in question. Antecedent or incidental activities should be disregarded.

• Apportionment of profits arising partly in and partly outside Hong Kong is possible where gross profits from an individual transaction arise from different places.

• The place where day-to-day investment decisions are taken does not generally determine the locality of profits.

• The source of profits should be attributed to the operations of the taxpayer which produce them, not to other members of the group. However, in certain cases where a related company is acting on behalf of the taxpayer, then the activities of the related company should be considered.

• The absence of a permanent establishment overseas does not, of itself, mean that all of the profits are derived from Hong Kong.

• The place where the taxpayer’s profits arise may not necessarily be the place where he carries on business.

The DIPN 21 also went on to explain the IRD’s view on the source of profits for different businesses, including trading profits, re-invoicing centre and manufacturing profits. Although the DIPN 21 provides some degree of guidance in ascertaining tax positions, each case will ultimately have to be determined based on its own facts.

Like Hong Kong, Singapore taxes income on a territorial basis. The lack of tax cases on this subject in Singapore makes the determining of source a delicate task. On this note, it is unclear whether the Inland Revenue Authority of Singapore would consider adopting what seems to be a more liberal position for offshore profits as decided by the Hong Kong Courts.

Soh Pui Ming is Partner, Tax Services at Ernst & Young Solutions LLP

Note: This article has been written before the Court of Appeal hearing.

Conclusion

It remains to be seen whether the Court of Appeal (set for hearing in February 2012) will overturn the CFI decision.

During the BoR and CFI hearing, no argument was made by the Commissioner that LFT entered into the agency agreements and service agreements with its affiliates in Hong Kong, which contributed to the profits earned. It appears that the Hong Kong tax law principles on the sourcing of profits has evolved from the “place of contract” and the “totality of facts” approach (where all facts are to be considered), to one which focuses on the direct income-generating activities.

Stay tuned for the Court of Appeal decision on this front*.

* Another interesting issue that is worth monitoring in this case which has been held back pending submission of material documents relates to whether LFT’s deduction of a 2% marketing commission, paid to its affiliate in the British Virgin Islands from its onshore profits, was caught by the anti-avoidance provisions.


Corporate and personal tax

5 December 2011 Section 10(25) of the Singapore Income Tax Act - interpretation and practice (third edition)

1 December 2011 Clarification on the tax treatment of directors' fees derived by non-resident directors of companies that have no presence in Singapore (revised)

1 December 2011 Change to assess the income of a husband and wife as separate individuals (revised)

6 September 2011 Ascertainment of income from business of making investment

6 September 2011 Tax exemption for foreign-sourced income

6 September 2011 Group relief system

22 August 2011 Pharmaceutical manufacturing industry: tax treatment of research and development and intellectual property-related expenditures

15 July 2011 Productivity and innovation credit

15 July 2011 Qualifying conditions for pension/ provident funds to be approved under section 5 of the Income Tax Act

8 July 2011 Tax deduction for shares used to fulfill obligations under an employee equity-based remuneration scheme

30 June 2011 Concession for enterprise development – deduction of certain expenses incurred before business revenue is earned

27 June 2011 Mergers and acquisitions scheme (first edition)

22 June 2011 Foreign tax credit pooling (first edition)

21 April 2011 IRAS voluntary disclosure program (fourth edition)

20 April 2011 Machinery and plant : section 19/19A of the Income Tax Act (updated)

15 April 2011 Tax treatment of employee stock option and other forms of employee share ownership plans – alternative to the deemed exercise rule (supplementary e-tax guide) (second edition)

5 April 2011 IRAS voluntary disclosure program (third edition)

IRAS e-Tax guides issued or revised from 1 January 2011 to 31 December 2011

At a glance

Property tax

2 December 2011 Revision of annual values for HDB flats from 1 January 2012

30 March 2011 Treatment of fixed machinery under the Property Tax Act

Goods and Services Tax (GST)

28 November 2011 GST guide for the market participants in the National Electricity Market of Singapore ("NEMS") (third edition)

25 November 2011 GST guide for the biomedical industry (second edition)

25 November 2011 GST : approved contract manufacturer and trader (ACMT) scheme (seventh edition)

20 October 2011 Partially exempt traders and input tax recovery (fourth edition)

22 September 2011 GST : fringe benefits (fifth edition)

1 September 2011 GST : specialised warehouse scheme and zero-rating of supplies

1 September 2011 GST : approved contract manufacturer and trader (ACMT) scheme (sixth edition)

1 September 2011 GST guide for the marine industry – 2011 budget changes

1 September 2011 GST guide for the biomedical industry (first edition)

1 August 2011 GST guide on the electronic tourist refund scheme (eTRS) (second edition)

1 June 2011 GST : the insurance industry (third edition)

1 June 2011 GST guide on insurance: cash payments and input tax on motor car expenses (third edition)

26 May 2011 GST: guide for retailers participating in tourist refund scheme (fourth edition)

25 May 2011 GST: guide for visitors on tourist refund scheme (fourth edition)


Stamp duty

15 December 2011 Removal of fixed and nominal duties (second edition)

7 December 2011 Additional buyer’s stamp duty (ABSD) on purchase of residential properties

15 September 2011 Imposition of stamp duty on sellers for sale or disposal of residential property (seventh edition)

17 June 2011 Imposition of stamp duty on sellers for sale or disposal of residential property (sixth edition)

18 March 2011 Stamp duties payable by limited liability partnerships and partners thereof (second edition)

18 February 2011 Relief for the transfer of assets upon conversion of an existing company to a limited liability partnership (LLP)

18 February 2011 Relief for the transfer of assets upon conversion of an existing firm to a limited liability partnership (LLP)

18 February 2011 Remission for aborted leases

18 February 2011 Removal of fixed and nominal duties

13 January 2011 Imposition of stamp duty on sellers for sale or disposal of residential property (fifth edition)

Goods and Services Tax (GST)

21 April 2011 IRAS voluntary disclosure program (fourth edition)

5 April 2011 IRAS voluntary disclosure program (third edition)

5 April 2011 GST : assisted compliance assurance programme (ACAP)

28 February 2011 GST guide on the electronic tourist refund scheme (eTRS)

28 January 2011 Import GST deferment scheme (third edition)

17 January 2011 Guide for visitors on tourist refund scheme (third edition)

14 January 2011 GST: a guide on exports (tenth edition)

11 January 2011 GST : guide for charities and non-profit organisations (sixth edition)

11 January 2011 GST : guide for property developer (fourth edition)

11 January 2011 GST: property owners and property holding companies (fourth revision)

11 January 2011 GST : real estate agencies (third revision)

11 January 2011 GST : treatment of advertising services (third edition)

11 January 2011 GST : the insurance industry (second edition)

11 January 2011 GST : construction industry (second edition) (Chinese version)

11 January 2011 GST : construction industry (fourth edition)

11 January 2011 GST : travel industry (fifth edition)

11 January 2011 GST and the retailers (revised edition)

11 January 2011 GST guide for motor traders (revised)

11 January 2011 GST : manufacturing sector (revised edition)

11 January 2011 GST : general guide for businesses (sixth edition)

11 January 2011 GST : approved contract manufacturer and trader (ACMT) scheme (fifth edition)

11 January 2011 GST guide for e-commerce (revised edition)

5 January 2011 GST guide for free trade zones (FTZs), warehouses and excise factories

3 January 2011 GST incurred on purchase of land for residential development (fourth edition)

1 January 2011 GST guide for the marine industry – 2010 budget changes (second edition)

1 January 2011 GST guide for the aerospace industry (fifth edition)

1 January 2011 GST for the gold jewellery industry (third edition) (Chinese version)

1 January 2011 GST for the gold jewellery industry (fourth edition)

32 You and the Taxman Issue 1, 2012 You and the Taxman Issue 1, 2012

DTAs signed

29 November 2011 Singapore – Canada (protocol)

24 June 2011 Singapore – India (protocol)

14 June 2011 Singapore – Uzbekistan (protocol)

24 May 2011 Singapore – Italy (protocol)

13 April 2011 Singapore – Spain

24 February 2011 Singapore – Switzerland (revised)

3 February 2011 Singapore – Estonia (protocol)

DTAs ratified

19 December 2011 Singapore – Panama

2 December 2011 Singapore – Qatar (protocol)

2 December 2011 Singapore – Mexico (protocol)

1 November 2011 Singapore – Spain

7 October 2011 Singapore – Uzbekistan (protocol)

12 August 2011 Singapore – India (protocol)

19 July 2011 Singapore – Albania

26 May 2011 Singapore – Saudi Arabia

8 April 2011 Singapore – Ireland

Double taxation agreements (DTAs) signed or ratified from 1 January 2011 to 31 December 2011

17 October 2011 Goods and Services Tax remission on expenses for prescribed funds managed by prescribed fund managers in Singapore

8 June 2011 Tax treatment of financial arrangements that conform to Shariah principles (Islamic financing arrangements)

28 April 2011 Tax incentives for project and infrastructure finance

18 April 2011 Changes to tax incentive schemes for insurance business

31 March 2011 Tax exemption on payments falling under section 12(6) of the Income Tax Act made to non-residents (excluding permanent establishments in Singapore) by banks, finance companies and certain approved entities

29 March 2011 Tax incentive scheme for trustee companies

MAS circulars issued from 1 January 2011 to 31 December 2011


2012 Goods and Services Tax (GST) Workshop

Practical complexities in a simple GST GST collection is the second largest contributor to the Singapore tax revenue at $8.2 billion after income tax and it has grown by 18.6% as compared to the previous financial year. GST now accounts for almost one quarter of the Singapore tax revenue. From a GST compliance perspective, $105 million in taxes and penalties were collected as a result of GST audits and investigations conducted by the Inland Revenue Authority of Singapore (IRAS). (Source: IRAS Annual Report 2010/11)

Businesses are thus encouraged to be proactive in managing their GST compliance. Having the right GST knowledge is a step in managing the risks and improving compliance. This will in turn help to avoid unnecessary IRAS audits, time and resources needed to rectify GST errors and penalties for filing incorrect GST returns.

The majority of GST errors are often due to the lack of knowledge of the GST rules and regulations. It is imperative that the staff responsible for the company’s GST returns are equipped with the necessary GST knowledge.

Ernst & Young’s GST workshops provide an excellent platform to view GST afresh and to keep abreast of any changes. Our workshops provide

valuable insights into major GST risk areas and common errors.

Join us at our GST workshops for updates and an in-depth analysis on the practical issues and problems that businesses face, and how to better manage these issues. Attend the Common GST issues module and choose any of the following optional modules:• “All about goods”• “Services exposed”• “Preparation of GST forms”

Who should attend Financial controllers, finance managers, accountants and accounting staff involved in the preparation of GST returns. Staff from operations, sales, logistics and administration have also benefited from our workshops.

Workshop leaders and facilitatorsYeo Kai Eng (Tax Partner)Kor Bing Keong (Tax Partner)Chew Boon Choo (Senior Manager)Tham Chang Yong (Manager)Rosalina Chan (Manager)Claren Lai (Manager)Garry Tan (Manager)Monica Sum (Manager)

Workshop agenda

Day 1

Common GST issues• Mechanics of GST, value of supply

and types of supply• Inter-company billings and recovery

of expenses• Conditions governing input tax claims• Deeming of output tax• Invoices in a foreign currency• Bad debt relief• Transfer of going concern• Updates on GST

All about goods• Place and time of supply• Imports• Zero-rating of exports• Handling of goods on behalf

of overseas principal• Exercise or case study

Day 2

Services exposed• Place of supply• Time of supply• Zero-rating of international services• Exercise or case study

Preparation of GST forms• Completion of forms (GST F5, F7 and F8)• Payment or refund of GST• Record keeping requirements• Common errors• Exercise or case study

Ernst & Young Solutions LLP reserves the right to cancel the seminar or amend the schedule, venue and speaker(s) due to circumstances beyond our control. Registration is on a first-come-first-served basis. We regret that we cannot give fee refunds, but changes in the personnel attending can be accommodated.

CPE hours: 7 to 14 CPE hours, depending on choice of modules

Raffles City Convention Centre (City Hall MRT Station) Level 4, Plaza Meeting Room 2 Stamford Road, Singapore 178882

AddressErnst & Young Solutions LLP Finance department One Raffles Quay, North Tower Level 18, Singapore 048583 Tel: +65 6535 7777 Fax: +65 6532 7662 Website: ey.com/sg

Registration/Enquiries Cherie SY Chan Tel: +65 6309 8297 Fax: +65 6532 7662 Email: [email protected]

Register online now at www.ey.com/sg/gst

© 2012 Ernst & Young Solutions LLP. All Rights Reserved.

Group discount - A discount of 10% applies to organisations registering three or more participants in one registration.

Name(s) Designation(s)



Company Contact person

Address S( )

Tel Fax

Email (Please state clearly as confirmation is sent via email)

Ernst & Young client: Yes No Ernst & Young alumni: Yes No

Please send payment only after you have received confirmation of your registration.

Clients/Alumni of EY Public

Common GST issues + 3 modules $740 $790

Common GST issues + 2 modules $580 $630

Common GST issues + 1 module $400 $450

* Fees stated include lunch on first day of workshop, materials, refreshments and GST

Registration form (Please fax completed form to Cherie SY Chan at +65 6532 7662)

1st day, morning9:00 a.m. to 12:30 p.m.

(Lunch provided)Common GST issues

Inclusive in all course combinations

23 February 22 March 19 April

Optional modules - please indicate the dates for the modules you would like to register for:

1st day, afternoon1:30 p.m. to 5:00 p.m. All about goods 23 February 22 March 19 April

2nd day, morning9:00 a.m. to 12:30 p.m.

Services exposed 24 February 23 March 20 April

2nd day, afternoon1:30 p.m. to 5:00 p.m.

Preparation of GST forms 24 February 23 March 20 April


International Tax Services

International Tax

Andy Baik+65 6309 [email protected]

Paul D’Arcy +65 6309 [email protected]

Jang Nam Wun +65 6309 [email protected]

Gagan Malik +65 6309 [email protected]

Transfer Pricing and Tax Effective Supply Chain Management

Luis Coronado+65 6309 [email protected]

Cornelia Wolff+65 6309 [email protected]

Asean Tax Leaders

Adrian Ball Asean and Singapore Tax Leader+65 6309 [email protected]

Lance KamigakiGuam Tax Leader+1 671 649 [email protected]

Ben Koesmoeljana Indonesia Tax Leader+62 21 5289 [email protected]

Yeo Eng PingMalaysia Tax Leader+603 7495 [email protected]

Emmanuel AlcantaraPhilippines Tax Leader+632 894 [email protected]

Lakmali NanayakkaraSri Lanka Tax Leader+94 11 2686 [email protected]

Yupa WichitkraisornThailand Tax Leader+66 2264 0777 (Ext. 55003)[email protected]

Christopher ButlerVietnam Tax Leader+84 8 3824 5252 [email protected]

If you would like to know more about the issues discussed and our services, please contact:

Adrian Ball Managing Partner – Tax, Asean and Singapore +65 6309 [email protected]

For further information, you can also contact one of the following or your usual Ernst & Young contact:

Singapore Tax Partners and Directors

Business Tax Services

Amy Ang +65 6309 [email protected]

Ang Lea Lea+65 6309 [email protected]

Helen Bok +65 6309 [email protected]

Chai Wai Fook+65 6309 [email protected]

Cheong Choy Wai +65 6309 [email protected]

Chia Seng Chye +65 6309 [email protected]

Chong Lee Siang +65 6309 [email protected]

Choo Eng Chuan +65 6309 [email protected]

Chung-Sim Siew Moon+65 6309 [email protected]

Goh Siow Hui +65 6309 [email protected]

Kang Choon Pin +65 6309 [email protected]

Lim Gek Khim+65 6309 [email protected]

Lim Joo Hiang+65 6309 8654 [email protected]

Lor Eng Min+65 6309 [email protected]

Latha Mathew+65 6309 [email protected]

Florence Ng+65 6309 [email protected]

Ivy Ng +65 6309 [email protected]

Poh Bee Tin +65 6309 [email protected]

Nadin Soh +65 6309 [email protected]

Soh Pui Ming+65 6309 [email protected]

Angela Tan+65 6309 [email protected]

Tan Bin Eng+65 6309 [email protected]

Tan Lee Khoon+65 6309 [email protected]

Human Capital

Grahame Wright+65 6309 [email protected]

Tina Chua+65 6309 [email protected]

Jeffrey Teong +65 6309 [email protected]

Wu Soo Mee+65 6309 [email protected]

Indirect Tax

Customs and International Trade

Shubhendu Misra+65 6309 [email protected]

GST

Yeo Kai Eng +65 6309 [email protected]

Kor Bing Keong+65 6309 [email protected]

Transaction Tax

Russell Aubrey+65 6309 [email protected]

Tax partners and directors


Our tax professionals in Singapore provide you with deep technical knowledge, both global and local, combined with practical, commercial and industry experience. We draw on our global insight and perspectives to build proactive, truly integrated direct and indirect tax strategies that help you recognize the potential of business change and build sustainable growth, in Singapore and wherever else you are in the world.

We draw on extensive accounting and compliance experience and tried-and-tested methodologies that allow you to manage your direct and indirect tax compliance and reporting obligations effectively. We help you assess, improve and monitor your tax function’s processes, controls and risk management and maintain effective relationships with the tax authorities.

Our talented people, consistent methodologies and unwavering commitment to quality service help you to build the strong compliance and reporting foundations and sustainable tax strategies that help your business achieve its ambitions. It’s how we make a difference.

Business Tax Services Our Business Tax Services in Singapore are designed to meet your business tax compliance and advisory needs. Our tax professionals draw on their diverse perspectives and skills to give you a seamless service through all the challenges of planning, financial accounting, tax compliance and maintaining effective relationships with the tax authorities. Our holistic approach:

• Builds sustainable tax strategies based on technical, practical, commercial and industry knowledge

• Provides the deep accounting and compliance knowledge and tried-and-tested methodologies you need for efficient reporting

• Helps you assess, improve and monitor your tax function’s processes, controls and risk management

• Supports you in managing your relationships with tax authorities effectively

About our tax services

Transfer Pricing and Tax Effective Supply Chain Management (TESCM)Our transfer pricing professionals help you review, document, manage and defend your transfer pricing policies and processes – aligning them with your business strategy. Whether you are changing business structures or models, managing the impact of major transactions or negotiating with the tax authorities, we bring you a global perspective based on our long-standing experience of what really works.

Our multidisciplinary TESCM teams work with you on supply chain design, business restructuring, systems implications, transfer pricing, direct and indirect tax, customs and accounting. We can help you build and implement the structure that makes sense for your business, improve your processes and manage the cost of trade.

International Tax ServicesOur dedicated international tax professionals assist our clients with their cross-border tax structuring, planning, reporting and risk management. We work with you to build proactive and truly integrated global tax strategies that address the tax risks of today’s businesses and achieve sustainable growth.

GST ServicesGoods and Services Tax (GST) affects the supply chain and the financial system. Our network of dedicated indirect tax professionals combines technical knowledge with industry understanding and access to technologically advanced tools and methodologies. We identify risk areas and sustainable planning opportunities for indirect taxes throughout the tax life cycle, helping you meet your compliance obligations and your business goals around the world. Our globally integrated teams give you the perspective and support you need to manage indirect taxes effectively.

Human Capital ServicesOur global mobility team advises many of the world’s largest global employers — as well as those just venturing into their first foreign country. Our performance and reward professionals help you design compensation programs and equity incentives that really engage your key people. We help you meet your executive tax

compliance obligations, stay on top of regulatory change, manage your global talent effectively and improve your function’s strategic alignment.

Customs and International TradeWe bring you a global perspective on Customs and International Trade (CIT). Our CIT professionals can help you develop strategies to manage your costs, speed your supply chain and reduce the risks of international trade. We can help to increase trade compliance, improve import and export operations, reduce customs and excise duties and enhance supply chain security. We help you to address the challenges of doing business in today’s global environment to help your business achieve its potential.

Transaction TaxEvery transaction has tax implications, whether it’s an acquisition, disposal, refinancing, restructuring or initial public offering. Understanding and planning for these implications can mitigate transaction risk, enhance opportunity and provide crucial negotiation insights.

Our Transaction Tax services comprise a worldwide network of professional advisors who can help you do just that. By combining diverse cross-border transaction experience with local tax knowledge across a broad spectrum of industry sectors, we can help you make informed decisions and navigate the tax implications of your transaction.

Because every deal has a distinct profile, we mobilise wherever needed, assembling a personalised, integrated global team to work with you throughout the transaction life cycle, from initial due diligence through post-deal implementation.

Our local teams employ a consistent approach globally to provide you with a coordinated understanding of the relevant jurisdictional and multi-disciplinary tax issues. And we can suggest structuring alternatives to balance investor sensitivities, promote exit readiness and help improve prospective earnings or cash flows — raising opportunities for improved returns on your investment.

Our integrated approach means you gain access to high-quality, globally coordinated tax advice, wherever your transaction occurs.


Tax thought leadership

Ernst & Young Solutions LLP’s Tax practice aims to give you insights on the tax issues that matter in today’s fast-changing business environment. To find out how these tax issues impact your business, read You and the Taxman.

Past issues of You and the Taxman can be downloaded from http://www.ey.com/SG/en/Services/Tax/Library---You-and-the-taxman

You and the Taxman Issue 3, 2011

You and the Taxman July/August 2008

You and the Taxman May/June 2008

You and the Taxman September/October 2008

You and the Taxman November/December 2008

You and the Taxman January/February 2009

You and the Taxman March/April 2009





You and the Taxman January/February 2010

You and the Taxman March/April 2010





You and the Taxman Q1 2011

You and the Taxman Issue 2, 2011

Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

www.ey.com

© 2012 Ernst & Young Solutions LLP. All Rights Reserved.

FEA no. 12000253

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

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

You and the Taxman - Ernst & Young · 2014-04-28 · case of Li & Fung (Trading) Limited v CIR,...

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