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Why Singapore

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Why Singapore?

Singapore is a strategic base to implement your growth strategies and to manage and integrate your operations for the region and beyond. Being one of the lowest income tax rate countries, Singapore has further announced a full and partial tax exemption for the newly incorporated company for the first 3 years consecutively.

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Malaysia Cold Chain Facilities

Cold Chain Facilities-cover

Malaysia Cold Chain Facilities

Investment in cold chain facilities or providing services for perishable agricultural produce such as fruits, vegetables, flowers, ferns, meat and aquatic products eligible for tax exemption up to 70% of statutory income or Investment Tax Allowance of 60% up to 5 years.

Tax Exemption for Companies Providing Cold Chain Facilities

Companies providing cold chain facilities and services for perishable agricultural products i.e. fruits, vegetables, flowers, ferns,
meat and aquatic products are eligible for:

Type of Company
Incentive
New Company
  • Pioneer Status with tax exemption of 70% of statutory income for a period of 5 years;
  • Unabsorbed pioneer losses after the end of pioneer period are allowed to be carried forward for 7 consecutive year of assessments;

    OR
  • Investment Tax Allowance (ITA) of 60% on the qualifying capital expenditure incurred for 5 years;
  • Unutilised allowances can be carried forward until fully absorbed.
Existing Company
(Company intend to reinvest in cold chain facilities for perishable agricultural produce)
  • Pioneer Status with tax exemption of 70% of increased statutory income for
    a period of 5 years;
  • Unabsorbed pioneer losses after the end of pioneer period are allowed to be
    carried forward for 7 consecutive year of assessments;

    OR
  • Investment Tax Allowance (ITA) of 60% on the additional qualifying capital
    expenditure for 5 years;
  • Unutilised allowances can be carried forward until fully absorbed.
Eligible Company
Eligible Activities
  • Must be Independent Service Provider (i.e the company conducts all of the cold chain activities on its own);
  • At least 60% of the company’s revenue must be derived from the provision of cold room facilities, refrigerated transportation and other related services for local agriculture produce.
  • Provision of cold room facilities or refrigerated transportation for local agricultural produce with or without other post-harvest activities including cleaning, washing, grading, freezing/chilling and packing;
  • Provision of cold room facilities or refrigerated transportation for local processed food products.

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Improving Transfer Pricing Compliance in Singapore

Improving transfer pricing internationally

Improving Transfer Pricing Compliance in Singapore

The Inland Revenue issued the 6th edition Transfer Pricing Guidelines on 10 August 2021. While it is not significantly different from the previous versions, it is focused on providing taxpayers with more clarity on compliance and the quality of the documentation prepared.

TP Guidelines (“TPG”)

Prior to 2019, Singapore taxpayers were not legally required to prepare and maintain Transfer Pricing documentation. The change is due to the strengthening of legislative requirements concerning Transfer Pricing which added Section 34F in the Singapore Income Tax Act (“SITA”) in October 2017. These were followed by the introduction of the Income Tax (Transfer Pricing Documentation) Rules 2018 (“Rules”) in February 2018 under powers conferred by Section 7(1) of the SITA. The Fifth edition of the IRAS e-tax guide on Transfer Pricing guidelines was also released concurrently with the Rules and the Sixth edition was released in August 2021.

 

Effective from year of assessment (“YA”) 2019 (i.e., fiscal year ended 2018), taxpayers who met either of the following conditions are required to prepare Transfer Pricing documentation no later than the filing due date unless exempted:

  • Gross revenue derived from their trade or business is more than 10 million for the basis period concerned; or
  • Transfer Pricing documentation was required to be prepared for the basis period immediately before the basis period concerned

From YA 2020 onwards, Singapore companies must also examine their Transfer Pricing status for the preceding year(s), which will further complicate the compliance process.

Exemptions for Preparation of TP Documentation

Taxpayers are exempt from preparing TP documentation if they meet either of the following conditions:

  • Related party domestic transaction subject to same tax rate or exempt from Singapore tax for both parties; or
  • Related party domestic loan where the lender is not in the business of borrowing and lending money; or
  • Related party loan not exceeding S$15million on which indicative margin is applied; or
  • Routine support services on which 5% cost mark-up is applied; or
  • Related party transaction covered by Advance Pricing Arrangement (“APA”); or
  • Related party transaction not exceeding certain value as shown in the table below:

Type of Transactions

Aggregated Value (S$)

Sales / Purchase of goods

Loan to / from related party

15 million

Provision / Receipt of service

Grant / Receipt of right to use property or lease

Guarantee provided / received

Any other transaction

1 million

TP Documentation Structure

The Transfer Pricing documentation consists of two-tiered structure with brief contents as follows:
i. Documentation at Group level

  • Group’s organizational structure
  • Group’s business
  • Group’s intangible assets
  • Group’s financial activities
  • Group’s financial statements
  • Group’s unilateral APA and others

ii. Documentation at Entity level

  • Management structure
  • Organizational structure
  • Entity’s business
  • Related party transactions
  • Transfer Pricing analysis

While the TP documentation has to be prepared, it does not need to be submitted unless requested.

Country-by-Country Reporting (“CbyCR”)

CbyCR is required for an MNE group in relation to a financial year beginning on or after 1 January 2017, where:

  • The MNE group’s ultimate parent entity is tax resident in Singapore ( “Singapore MNE group”); and
  • The consolidated group revenue in the preceding financial year is at least S$1,125 million; and
  • The MNE group has subsidiaries or operations in at least one foreign jurisdiction.

If the Singapore MNE group is required to file a CbyCR for a financial year, the Reporting Entity (i.e. ultimate parent entity) will be required to submit a CbyCR to the Comptroller within 12 months from the end of that financial year (i.e. 31 December 2020 if the taxpayer’s year end is 31 December 2019). There is no CbyCR notification requirement in Singapore. Nonetheless, Singapore-headquartered MNEs which have a filing obligation in Singapore will be required to provide the following information to the IRAS at least three months before the filing deadline via email:

  • Name and UEN of the Reporting Entity (i.e. ultimate parent entity)
  • Financial reporting period of the Reporting Entity (i.e. ultimate parent entity)
  • Contact person’s name and contact number
  • Email of contact person (if different from that used to provide your reply)
  • CbyCR preparation and submission

CbyCR (cont’d)

Contents of CbyCR:
i. Overview of income, taxes, employees and assets of the MNE group in different tax jurisdictions
ii. Overview of the entities (including permanent establishments) of the MNE group in different tax jurisdictions
iii. Additional information which provides further clarification regarding the data provided in the Country-by-Country
Report

Penalties Imposed for Non-Compliance

1. Transfer Pricing Documentation
Under Section 34F(8) of the SITA, failure to prepare the required Transfer Pricing documentation constitutes an offence, and the taxpayer is liable to a fine/penalty of up to S$10,000 per offence. More specifically, a taxpayer can be liable to the fine for the following non-compliance:

  • Not preparing or maintaining transfer pricing documentation based on the requirements under the rules;
  • Not preparing transfer pricing documentation by the time for the making of the tax return;
  • Not retaining the transfer pricing documentation for a period of 5 years;
  • Not submitting the transfer pricing documentation within 30 days from written request by the IRAS; or
  • Providing any documentation or information that the taxpayer knows to be false or misleading.

Moreover, Section 34E empowers the Comptroller to impose a 5% surcharge on any Transfer Pricing adjustments made by the Comptroller for non-compliance with the arm length principle after an assessment. This surcharge applies even if the taxpayer has prepared contemporaneous documentation.

 

2. CbyCR
Failure to file the CbyCR by due date will be imposed a penalty up to S$ 1,000. If the penalty is not paid, the person responsible for the offence may be imprisoned for up to six months. An additional penalty of up to $50 per day during will be imposed during which the offence continues after conviction.

 

A penalty of up to S$ 10,000 applies to taxpayer which provides false or misleading information in the CbyCR. The person responsible for the offence may be imprisoned for up to two years.

Transfer Pricing Penalties

Transfer Pricing Penalties

Corporate Income Tax Return Form and Form for Reporting of Related Party Transactions

Effective from YA 2018, the income tax return form (i.e. Form C) includes a disclosure on whether the value of the company’s related party transactions disclosed in the audited financial statements for the financial year exceed S$15 million. If it does, the taxpayer has to complete the Form for Reporting of Related Party Transactions and submit it together with Form C.

 

The form consists of the following relevant information:
i. Particulars of Company and Ultimate Holding Company
ii. Details of related party transactions

  • Sales and purchases of goods
  • Services income and expense
  • Royalty and licence fee income and expense
  • Interest income and expense
  • Other income and expense

iii. Information on sale / purchase of goods and provision of services
iv. Information on loans and non-trade amounts

How We Can Help

Our dedicated team of professionals has experience in various disciplines to respond effectively and efficiently to our clients’ individual requirements. This professional capability allows us to advise and plan strategies critical to our clients’ needs and success within the challenges of the present business environment.

 

Our service includes a total approach to our clients’ problems and needs. Using a team approach, our services are tailored to meet our clients’ individual requirements. We stress on a high degree of competence, professionalism and commitment among our team members.

 

We offer the following services with a clear focus on the business issues and regulatory requirements of the client’s industry:

  • Audit and Assurance
  • Tax & Transfer Pricing Advisory and Compliance
  • Business Advisory
  • China Desk
  • Financial and Transaction Advisory
  • Risk, Governance and Sustainability Advisory
  • Valuation Advisory
  • Migration Advisory
  • Offshore Advisory

Should you have any questions or require any assistance on the above, please do not hesitate to drop us an email or call us.

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Why Dubai

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Why Dubai

The UAE’s 0% corporate tax policy transcends numbers; it’s an invitation to transform your business aspirations into reality. With a robust infrastructure, a strategic location, and a welcoming environment, the UAE beckons entrepreneurs and visionaries to harness its potential.

One of the LOWEST TAX RATES in the world, embracing 0% Corporate Tax in the UAE

The United Arab Emirates (UAE) stands as a global beacon of business innovation and prosperity. In the heart of this thriving economic landscape, the UAE offers an array of incentives and advantages to both local and international companies. At the core of this allure is the UAE’s corporate tax policy, a game-changer that propels businesses towards uncharted heights.

Tax Exemptions for Companies in Dubai vs Malaysia

Why Dubai-Tax Exemption.jpg
Tax
Rate
Conditions
Value-Added Tax (VAT)
While the UAE champions business freedom, it maintains a balanced approach with a 5% VAT rate, obliging businesses with revenue exceeding AED 375,000 Yet, the UAE’s commitment to global trade is evident as exports of goods remain untaxed, fostering an environment ripe for international commerce.
5%
0%
Businesses with revenue > AED 375,000 (USD 102,000)
Export of goods
Value-Added Tax (VAT)
In the UAE, the benefits extend beyond corporate tax. Dividends, capital gains, intragroup transactions, and reorganizations all enjoy a tax rate of 0%, fostering an ecosystem where business can flourish without restraint.
0%
Dividend and Capital gain, as well as intragroup transaction and reorganisations.

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Servicing Singapore from Outsourcing Office in Malaysia

Servicing Singapore from Outsourcing Office in Malaysia

Servicing Singapore from Outsourcing Office in Malaysia

In today’s global economy, working from home is no longer a foreign concept. However, employees may feel isolated when working alone. We have a solution for Companies who are interested in establishing an outsourcing office in Malaysia for their Singapore work. Let us help you in managing payroll, leave records, utilities supply, furnishing the office and compliance matters.

Servicing Singapore from Outsourcing Office in Malaysia

Let us be your partner to manage your work from Malaysia home employees, from payroll, leave records, utilities supply, fully furnished outsourcing office, compliances to law and regulations.
Servicing Singapore from Outsourcing Office in Malaysia
Work from Malaysia Home
Work from Outsourcing Office (WFOO) in Malaysia
  • Legality of work from Malaysia home is in doubt as Employee is not entitle to Employee Private Fund contribution (EPF) and Social Security Organization (SOCSO) governance in Malaysia unless Singapore Company register in Malaysia as Foreign branch which compliance cost is increased.
  • Employee may not hold a valid Singapore working permit while working in Malaysia therefore Contribution Private Fund (CPF) requirement for employee in doubt.
  • Employment dispute whether is subject to Malaysia or Singapore law?
  • Employee feel isolated and loneliness as working from home often lack the social interactions and sense of disconnected, which caused employee instability.
  • Home environment be filled with distractions such as household chores, family members and home environment condition, which leading to work inefficiency and ineffectiveness.
  • Inadequate of working equipment and facilities like internet outages, printer and photocopier, which caused work disrupted.
  • Challenges for employee income tax declaration in Malaysia.
  • Employee’s employment under outsourcing company comply with Malaysia labour law such as EPF, SOCSO, EIS contributions and Income Tax declaration. Outsourcing Company will bill Singapore Company a service fee.
  • The staff is fully dedicated to you as if your staffs.
  • Outsourcing office manages employee’s disciplinary and work related issue by using Malaysia law.
  • WFOO provide a social environment where employee can interact with colleagues, building relationship in Outsourcing office and monthly sport activities, employee be more motivated.
  • Provide fully furnished and comfort outsourcing working office with full facilities such as meeting room, pantry, printer, photocopier and internet etc.
  • WFOO plays as employer role to reduce the Singapore employer’s recruitment works and payroll and compliance costs.
BPO contains

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Why Singapore?

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Why Singapore?

Singapore is a strategic base to implement your growth strategies and to manage and integrate your operations for the region and beyond. Being one of the lowest income tax rate countries, Singapore has further announced a full and partial tax exemption for the newly incorporated company for the first 3 years consecutively.

1) One of the LOWEST TAX RATES in the world

With effect from 2010, Singapore corporate income tax rate has further reduced from 18% to 17%, being one of the lowest tax rates in the world.
Singapore Government has declared a new start-up tax exemption for newly incorporated and partial tax exemption for existing companies:

Tax Exemptions for Newly Start-up Companies in Singapore
why singapore-01

4.25% tax on first S$100K chargeable income

For a newly incorporated company (1), the corporate income tax rate is 4.25% on the first S$100k of chargeable income for the first 3 years of assessment consecutively.

8.50% tax on chargeable income of above S$100K up to S$200K

The newly incorporated companies are continued to enjoy for the partial tax exemption which effectively translates to about 8.50% tax rate on chargeable income of above S$100,000 up to S$200,000 per annum. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.
Tax Exemptions for Existing Companies in Singapore
why singapore
The 4th years of assessment and onwards, the companies pay only 4.25% tax on their first S$10,000 of chargeable Income and 8.50% for the next S$190,000. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.

2) Engage in TRIANGULAR or TETRAGONAL trade

The companies engaged in international transactions among two or more countries, for instance, the companies purchase goods from e.g. China, and then sell them to e.g. America or trade domestically, Malaysia. This is when the companies need a lower tax trading company (2) to act as the intermediary to issue invoice and packing list in order to strengthen their competitive power in the international or local market.

3) Government Incentives

Overview of government incentives

Depending on your company’s business plans, you may consider various tax incentives and grants as follows:
Internationalisation
Incentives available
Benefits
International Headquarters (IHQ) Award
Concessionary corporate tax rates of 5% or 10% for companies that commit to anchor substantive HQ activities in Singapore to manage, coordinate and control regional business operations. The award is accompanied with the award of Development and Expansion Incentive governed by Singapore Economic Development Board (EDB).
Mergers & Acquisitions (M&A) Scheme
The acquiring company is entitled to the following benefits:
  • 25% of M&A allowance (capped at S$10 million) of the total acquisition value capped at S$40 million per YA.
  • Double Tax Deduction (DTD) on the transaction cost capped at S$100,000 incurred during the share acquisition process.
Double Tax Deduction (DTD) for Internationalisation Scheme
Enjoy up to 200% tax deduction on qualifying expenditure incurred on market expansion and investment development activities.

The qualifying expenditures include:
  • Qualifying salary expenses incurred for employees posted overseas in an overseas entity
  • Overseas business development trips and missions
  • Overseas investment study trips and missions
  • Overseas trade fairs
  • Local trade fairs approved by Enterprise Singapore or STB
Market Readiness Assistance (MRA) grant
Funding support of 50% of eligible costs, capped at S$100,000 per company per new market by Enterprise Singapore. The eligible costs for marketing activities including overseas market set-up, business development and market promotion.
Trading
Incentives Available
Benefits
Global Trader Programme
A concessionary corporate tax rate of 5% or 10% for a renewable 3 or 5-year period on qualifying trading income granted by Enterprise Singapore, which includes income from physical trading, brokering of physical trades, derivative trading income, and income from structured commodity financing activities, treasury activities and advisory services in relation to mergers and acquisitions.
Manufacturing and Services
Incentives Available
Benefits
Pioneer Incentive
Tax exemption on income from qualifying activities for a period of not exceeding 15 years, administered by Economic and Development Board (EDB).
Development & Expansion Incentive (DEI)
Reduced tax rate of 5% or 10% on incremental income from qualifying activities, limited to 5 years. The incentive is governed by Economic and Development Board (EDB).
Investment Allowance (IA)
Allowance of up to 100% (on top of normal capital allowance) on approved fixed capital expenditure. This incentive is administered by Economic and Development Board (EDB).
Integrated Investment Allowance (IIA)
Additional allowance on fixed capital expenditure incurred on qualifying productive equipment placed with an overseas company for an approved project. This scheme is administered by Economic and Development Board (EDB).
Land Intensification Allowance (LIA)
Initial allowance of 25% and annual allowance of 5% on qualifying capital expenditure incurred for the construction or renovation/extension of a qualifying building or structure. Annual allowances of 5% are granted until total allowance amounts to 100% of qualifying capital expenditure. Approvals for the incentive will be granted by the Economic Development Board (EDB).
Automation Support Package(under Enterprise Singapore)
  • Capability Development Grant (CDG)
  • Investment Allowance (IA)
  • Enhanced SME Equipment Loan
Grant support up to 70% of qualifying project costs such as equipment, training and consultancy.

Qualifying projects may be eligible for an IA of 100% on the amount of approved capital expenditure, net of grants. The approved capital expenditure is capped at S$10 million per project.

Under Enterprise Financing Scheme (EFS), qualifying SMEs may receive up to 70% government’s risk-share with participating financial institutions for qualifying projects. SMEs can apply for fixed asset loans of up to S$30 million.
Financial and Treasury
Incentives Available
Benefits
Finance & Treasury Centre (FTC) Incentive
Enjoy concessionary corporate tax rate of 8% for five years on income derived from qualifying services/ activities as well as withholding tax exemption on interest payments on loans from banks and approved network companies for FTC activities. This incentive is administered by Economic and Development Board (EDB).
Financial Sector Incentive (FSI)
Concessionary tax rate of 10% or 13.5% for licensed financial institutions, from large universal banks, fund managers to capital market players. This incentive is governed by Monetary Authority of Singapore (MAS).
Research and Development (R&D) and intellectual property (IP) management
Incentives Available
Benefits
Research Incentive Scheme for Companies (RISC)
Co-funding to encourage and assist businesses companies in Singapore to conduct or expand their research and development (R&D) activities in science and technology. This scheme is administered by Economic and Development Board (EDB).

Supportable project costs include expenditure in the following:
  • Manpower cost (up to 50% support)
  • Equipment, materials, consumables and software (up to 30% support)
  • Singapore-based professional services (up to 30% support)
  • IPRs, e.g. licensing, royalties, technology acquisition (up to 30% support)
Intellectual Property Development Incentive (IDI)
Reduced tax rate of 5% or 10% on a percentage of qualifying IP income for an initial period of not exceeding 10 years, and may be further extended for a period or periods not exceeding ten years each. This incentive is administered by Economic and Development Board (EDB).
Approved Foreign Loan Incentive (AFL)
Reduced or nil withholding tax rate on interest payments on loans with minimum amount of S$20 million taken to purchase productive equipment. This incentive is administered by Economic and Development Board (EDB).
Approved royalties incentive (ARI)
Reduced or nil withholding tax rate on approved royalties, fees or contributions to research and development costs made to a non-tax resident.. This incentive is administered by Economic and Development Board (EDB).
Writing-down allowances for IP acquisition (S19B)
Automatic 5/10/15-year writing-down allowances on capital expenditure incurred for IPR acquisitions with legal and economic ownership. EDB’s approval is required if only economic ownership of IP rights is acquired.
Maritime, shipping and logistics
Incentives Available
Benefits
Maritime Sector Incentive (MSI) – Singapore Registry of Ships (MSI-SRS) and Approved International Shipping (MSI-AIS)
Tax exemption on qualifying shipping income from operating Singapore and foreign- flagged ships, provision of specified ship management services, and income from foreign exchange and risk management activities which are carried out in connection with or incidental to the operations of ships for either a 10-year renewable period; or a 5-year non-renewable period, with the option of graduating to the 10-year renewable award at the end of the 5-year period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).
MSI – Shipping Related Support Services (MSI-SSS) Award
Concessionary tax rate of 10% on the incremental income derived from carrying out approved shipping-related support services for a 5-year renewable period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).
  • Ship broking;
  • Forward freight agreement (FFA) trading;
  • Ship management;
  • Ship agency;
  • Freight forwarding and logistics services; and
  • Corporate services rendered to qualifying approved related parties who are carrying on business of shipping – related activities.
MSI – Maritime Leasing (MSI-ML) Award
Concessionary tax rate of 10% for up to 5 years on qualifying leasing or management income. This incentive is administered by Maritime and Port Authority of Singapore (MPA). This incentive is administered by Maritime and Port Authority of Singapore (MPA).
Maritime Innovation & Technology (MINT) Fund
To promotes and encourages upstream research, product and solution development relevant to the maritime industry in Singapore. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

Grant of up to 70% of the total qualifying project costs (inclusive of input GST), comprising of manpower and equipment either engaged or acquired for the purposes of the project, and other operating expenditure incurred for the purposes of the project.

4) TAX EXEMPTION ON DIVIDEND DECLARED FROM SINGAPORE

Dividend declared out of the profit derived from Singapore Company and received in Malaysia is exempted from tax(3).

5) TAX TREATIES

Singapore has entered into Double Taxation Agreement (“DTA”) with 88 countries. Please refer to APPENDIX I.

6) AUDIT EXEMPTION of a Singapore Company

A company incorporated on or after 1 July 2015, if a private company that fulfils at least two of the following three quantitative criteria in each of the immediate past two financial years is exempted from audit (4) : (a) Total annual revenue of not more than SGD 10 million; (b) Total assets of not more than SGD 10 million; (c) Number of employee of not more than 50.
1. a) It is incorporated in Singapore and a tax resident of Singapore for that Year of Assessment. b) It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment and all its shareholders are individuals throughout the basis period relating to that Year of Assessment; or there is at least one individual shareholder with a minimum of 10% shareholding. c) Its principal activity is not related to (i) investment holding, or (ii) property developer for sales, investment, or both.

2. To consider a company as resident in Singapore, the control and management of the business must be exercised in Singapore. Though the term “control and management” is not clearly defined by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.

3. Section 127 (1) – Exemptions from tax. Any income specified in Part 1 of Schedule 6 shall be exempt from tax. Part 1 Schedule 6, para 28 (1), Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia Part 1 schedule 6, para 28(1), exempt income of any person derive from sources outside Malaysia and received in Malaysia (See also exception).

4. Existing safeguards will however be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.

Double Taxation Agreement

APPENDIX I

Albania Jersey Slovak Republic
Australia Kazakhstan Slovenia
Austria South Korea South Africa
Bahrain Kuwait Spain
Bangladesh Laos Sri Lanka
Barbados Latvia Sweden
Belarus Libya Switzerland
Belgium Liechtenstein Taiwan
Brunei Lithuania Thailand
Bulgaria Luxembourg Tunisia
Cambodia Malaysia Turkey
Canada Malta Turkmenistan
China Mauritius Ukraine
Cyprus Mexico United Arab Emirates
Czech Republic Mongolia United Kingdom
Denmark Morocco Uruguay
Ecuador Myanmar Uzbekistan
Egypt Netherlands Vietnam
Estonia New Zealand Bahrain*
Ethiopia Nigeria Brazil*
Fiji Norway Chile*
Finland Oman Hong Kong*
France Pakistan Oman*
Georgia Panama Saudi Arabia*
Germany Papua New Guinea United Arab Emirates*
Ghana Philippines United States of America*
Guernsey Poland Bermuda**
Hungary Portugal United States of America**
India Qatar Armenia***
Indonesia Romania Brazil***
Ireland Russian Federation Gabon***
Isle of Man Rwanda Germany***
Israel San Marino Greece***
Italy Saudi Arabia Indonesia***
Japan Seychelles Kenya***

Note:
* Limited Treaties
** Exchange of Information Arrangements
*** Agreements Which Are Signed But Not Ratified

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Japan Desk ジャパンデスク

Japan Desk-featured

JAPAN DESK
ジャパンデスク

当事務所のジャパンデスクは、長年マレーシアに在住し、日マ双 方のビジネス環境、文化、習慣を熟知したディレクターが担当して います。包括的な業界知識と、クライアントサービス経験を活か し、ローカルのプロフェッショナルチームと連携し、日系企業の皆 様にきめ細かなサービスをご提供しています。そして法令順守、業 務課題の解決、ビジネス機会の抽出と最大化、効率の向上、その成 果としての事業目標の達成に貢献いたします。
Japan has been consistently remained as one of top investors in the South East Asia region, and recognising the distinct needs of Japanese businesses, our Japan Desk is led by native Japanese who is fluent in Japanese-English and has stayed locally for a number of years, thus he understand both local and Japanese business environment, culture and customs well and is able to leverage our extensive industry knowledge and client services experiences and lead our local professional teams to work closely with Japanese companies to meet the local statutory compliances, resolve business issues, identify and maximum business opportunities, improve efficiency and eventually to achieve your business goals.
日本は、東南アジア地域において、常にトップインベスターの地位を占めています。そして、日本ビジネス特有のニーズには個別対応が必要な ことから、当事務所では日本語と英語に熟達し、かつマレーシアにて長期の実務経験を有する、日本人コンサルタントを配置しています。そし て、日本とマレーシア双方のビジネス環境、文化的特性、商習慣に対する十分な理解のもと、広範囲な業界知識と業務経験を活かし、当事務所 のローカルスタッフと連携し、日本企業向けにプロフェッショナルサービスを提供しています。そのスコープには、法令順守、業務課題の解決、 ビジネス機会の抽出と最大化、効率性改善、そしてその成果としての事業目標の達成に貢献いたします。

In addition, we organises Japanese seminars and publishes Japanese publications and newsletters regularly to ensure Japanese companies stay tune with the updated information which is essential to them to make any business decision promptly.
さらに当事務所では、日本語でのビジネスセミナーや書籍・ビジネスレターなどの定期的な発行を通して、日本企業に最新情報をお届けするこ とで、迅速かつ臨機応変な意思決定をサポートしています。

What We Do 当事務所のサービス

Our Japan Desk provides a diverse spectrum of business solutions and consulting services to Japanese client including:
ジャパンデスクでは、多岐に渡るビジネスソリューションとコンサルティングサービスを提供しています。
Audit and Assurance
監査・保証業務 アシュアランス
Offshore Advisory
オフショアアドバイス
BPO & Business Advisory
アウトソーシング(BPO)・ビジネスアドバイス
Risk & Governance Advisory
リスク・ガバナンスアドバイス
Digital Transformation & Data Analytic
デジタルトランスフォーメーション・データアナリティクス
Tax & GST Advisory
税務・GST税アドバイス
Family Office & Private Client Services
ファミリーオフィス・プライベートサービス
Transfer Pricing Advisory
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US Desk

US Desk featured

US Desk

Thinking of going listed aboard on US Stock Exchange for either a better valuation and liquidity or gateway to international market to leverage global growth?
Thinking of going listed aboard on US Stock Exchange for either a better valuation and liquidity or gateway to international market to leverage global growth?

Our US Desk has been setup to support and facilitate those Asia-based companies interested in going listed aboard on US Stock Exchange.

Our US Desk is well connected with our member firms or strategic partners throughout the US to act as a single point of contact to manage your cross-border projects in direct coordination with your team and assist your IPO path to success in US.

What We Do

Our expertise include:
  • US GAAP Reporting including the Preparation of SEC Form, Quarterly Announcement and Annual Financial Statement in accordance with US GAAP Financial Reporting Framework;
  • Identifying Key Differences Between IFRS and US GAAP and Converting IFRS to US GAAP and Assisting in the Calculation of Necessary Adjustments;
  • Preparing Interim or Annual US GAAP and SEC Disclosure Checklist and Management Analysis and Discussions;
  • US GAAP Technical Accounting Memorandum on Complex and Unusual Accounting Transactions;
  • SOX (Sarbanes Oxley) Reporting including the setting up of COSO Framework to Address Major Elements of Internal Controls such as the Control Environment, Risk Assessment, Control Activities, Information/Communication, and Monitoring Activities to meet the requirements of 404a – Management’s Responsibility for Establishing and Maintaining Adequate Internal Control For Financial Reporting or 404b – Independent Auditor’s Responsibility for Attesting to and Reporting on Management’s Assessment of Internal Control.
  • Introducing and Pitching a Target Companies to Potentially Match with a Right SPACs (Special Purpose Acquisitions Companies) for Acquisition and Merger.
  • American National Standard Business Valuation by Certified Valuation Analyst (CVA) of National Association of Certified Valuators and Analysts (NACVA) for the purpose of Financial Reporting, Initial Public Offering (IPO), Mergers & Acquisitions (M&A) and SPACs.

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Singapore Budget 2022 Highlights

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Singapore Budget 2022 Highlights

Key Takeaway

  • Increase in the top marginal personal income tax rate for resident individual tax payers;
  • GST increase will be delayed to 2023;
  • Increase in property tax rate for residential properties starting from 2023;
  • Possibility of introduction of Minimum Effective Tax Rate (METR) in future years;
On 18th February 2022, the Minister of Finance, Lawrence Wong delivered the Budget Statement for Budget 2022. We set out below some of the key tax highlights of the Budget.

Key Tax Changes

Affecting Individuals

1. Enhance the progressivity of Personal Income Tax (“PIT”) of tax- resident individual taxpayers

With effective from Year of Assessment (YA) 2024, individual with chargeable income in excess of $500,000 up to $1 million will be taxed at 23% while that in excess of $1 million will be taxed at 24%.

2. Extension the withholding tax (WHT) exemption for non-tax resident mediators

The existing WHT exemption will be extended until 31 March 2023.

From 1 April 2023 to 31 Dec 2027, gross income derived by non-tax- resident mediators from mediation work carried out in Singapore will be subject to a concessionary WHT tax rate of 10%, subject to conditions or alternatively, non resident mediators may elect to be taxed at 24% on the net income, instead of 10% on gross income.

3. Extension the WHT tax exemption for non-tax resident arbitrators

The existing WHT exemption will be extended until 31 March 2023.
From 1 April 2023 to 31 Dec 2027, gross income derived by non-tax-resident arbitrators from arbitration work carried out in Singapore will be subject to a concessionary WHT tax rate of 10%, subject to conditions or alternatively, non-tax resident arbitrators may elect to be taxed at 24% on the net income, instead of 10% on gross income.

Goods and Service Tax (“GST”)

1. Increase the GST rate

The GST rate will be increased in two steps:
a) from 7% to 8% with effect from 1 January 2023; and
b) from 8% to 9% with effect from 1 January 2024.

2. GST treatment for travel arranging services

With effective from 1 January 2023, the basis for determining whether zero-rating applies to a supply of travel arranging services will be updated, to be based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:
a) If the customer of the service belongs in Singapore, the travel arranging service will be standard- rated; or
b) If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the travel arranging service will be zero-rated.

Property Tax

1. Enhance the progressivity of property tax for owner-occupied residential properties

The progressive property tax rates for owner-occupied residential properties are being revised upward as shown below:-
Annual Value
Property Tax Rate for Owner-occupied Residential Properties
Effective 1 Jan 2023
Effective 1 Jan 2024
First $8,000
0%
0%
Next $22,000

4%

4%
Next $10,000
5%
6%
Next $15,000
7%
10%
Next $15,000
10%
14%
Next $15,000
14%
20%
Next $15,000
18%
26%
Above $100,000
23%
32%
This change will take effect from 1 January 2024.

2. Enhance the progressivity of property tax for non-owner occupied residential properties

The progressive property tax rate schedule for non-owner-occupied residential properties are being revised upward as shown below:-
Annual Value
Property Tax Rate for Non-owner-occupied Residential Properties
Effective 1 Jan 2023
Effective 1 Jan 2024
First $30,000
11%
12%
Next $15,000

16%

20%
Next $15,000
21%
28%
Above $60,000

27%

36%
This change will take effect from 1 January 2024.

Business

1. Introduction of the Minimum Effective Tax Rate (“METR”) Regime

The Inland Revenue Authority of Singapore is exploring a top-up tax called the Minimum Effective Tax Rate (“METR”) which will top up the MNE group’s effective tax rate in Singapore to 15%. The METR will apply to MNE groups operating in Singapore that have annual revenues of at least 750 million euros as reflected in the consolidated financial statements of the ultimate parent entity.

2. Extension and enhance the Approved Royalties Incentive (“ARI”)

The existing ARI will be extended until 31 December 2028 and will be simplified to cover classes of royalty agreements based on an activity-set-based approach.

3. Extend the Approved Foreign Loan (“AFL”) scheme

The existing AFL scheme will be extended until 31 December 2028.

4. Extend the Tax Framework for Facilitating Corporate Amalgamations under Section 34C of the ITA to Licensed Insurer

Extension of the tax framework to cover amalgamation of Singapore-incorporated licensed insurers where the court order for confirmation of a scheme for the transfer of an insurance business is made on or after 1 November 2021.

The extension of the framework is subject to conditions, which include the following:
  1. The amalgamated company takes over all property, rights, privileges, liabilities, and obligations, etc. of the amalgamating company on the date of amalgamation; and
  2. The amalgamating company becomes dormant (i.e. ceases to conduct any business or any other activities, and does not derive any income) on the date of amalgamation and remains so until it is dissolved or wound up; and
The amalgamating company is dissolved or wound up before the filing due date of the income tax return for the Year of Assessment (“YA”) related to the basis period in which the scheme of transfer was effected.

5. The Integrated Investment Allowance (“IIA”) scheme will be allowed to lapse after 31 December 2022.

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Why Labuan?

Why Labuan

Why Labuan?

If your business model may optimise use of offshore structure, so why might an onshore investment if it carries lesser advantages as compared to offshore investment? The Labuan  company is only taxed at 3% on its audited profit.

TAX BENEFITS

1. Corporate Tax 3%

A. The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 has been gazetted on 22 November 2021 and are deemed to have come into operation on 1 January 2019, a Labuan company carrying on a Labuan business activity is only subject to tax at the rate of 3% of net profit PROVIDED that it has fulfilled the requirement of the number of full time employees and an amount of annual operating expenditure as specified in the Schedule below:

Labuan Company Carrying on a Labuan Business Activity

Minimum Number of Full Time Employees in Labuan

Minimum Amount of Annual Operating Expenditure in Labuan (RM)

Labuan Insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator

3

200,000

Labuan underwriting manager or Labuan underwriting takaful manage

4

100,000

Labuan insurance manager or Labuan takaful manager

4
100,000

Labuan insurance broker or Labuan takaful broker

2

100,000

Labuan captive insurer or Labuan captive takaful –
  1. Labuan first party captive insurer or Labuan first party captive takaful; or
  2. Labuan third party captive insurer or Labuan third party captive takaful.
2
2

100,000

100,000

Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank

3

200,000

Labuan trust company

3

120,000

Labuan leasing company or Labuan Islamic leasing company

  1. 10 or less related Labuan leasing companies or Labuan Islamic leasing companies;
2 per group
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. 11 to 20 related Labuan leasing companies or Labuan Islamic leasing companies;
3 per group
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. 21 to 30 related leasing companies or Labuan Islamic leasing companies;

4 per group

100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. More than 30 related Labuan leasing companies or Labuan Islamic leasing companies
Increase of 1 employee for every additional 10 related companies or Labuan Islamic leasing companies;
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;

Labuan credit token company or Labuan Islamic credit token company

2

100,000

Labuan development finance company or Labuan Islamic development finance company

2

100,000

Labuan building credit company or Labuan Islamic factoring company

2

100,000

Labuan factoring company or Labuan Islamic factoring company

2

100,000

Labuan money broker or Labuan Islamic factoring company

2

100,000

Labuan fund manager

2

100,000

Labuan securities license or Labuan Islamic securities license

2

100,000

Labuan fund administrator

2

100,000

Labuan company management

Provision of treasury processing services and such other services as defined in Section 129 of the Labuan Financial Services and Securities Act 2010.

2

100,000

Labuan International Financial Exchange

2

120,000

Self-regulatory organisation or Islamic self-regulation organisation

2

120,000
Labuan entity that carries on any one or more of the following business activity:
  1. Administrative services
    • Services pertaining to employee management, payroll management, property management, human resource management, financial planning, contract or subcontract management, facilities management or proposal management.*
  2. Accounting services
    • Services pertaining to recording, analysing, summarizing or classifying financial, commercial and business transactions and information of a person or business.*
  3. Legal services
    • conveyancing services ;*
    • legal advisory services ;*
    • litigation or legal representation services in any proceedings before any court, tribunal or other authority ;or *
    • legal dispute resolution services including alternative dispute resolution. *
  4. Backroom processing services
    • services relating to settlements of receivables and payables, clearance, record maintenance, regulatory compliance or information technology (IT) related services which are usually performed by administration and support personnel who do not deal directly with client. *
  5. Payroll services
    • services relating to:- processing, calculation, payment and deduction of remuneration, benefits, tax and statutory payment ; or
    • issuance of payslip and tax statement *
  6. Talent management services;
    • services relating to the provision of human resource services to attract, onboard, develop, motivate, and retain employees.*
  7. Agency services ;
    • services relating to the provision of specific services on behalf of another group, business, or person pursuant to an agency agreement between the agent and its client.*
  8. Insolvency related services;
    • services related to administering company liquidations or winding up or personal bankruptcy.*
  9. Management services other than Labuan company management under item 17
    • organization and coordination of activities of a business in order to provide services to the clients and usually consist of organizing, supervising, monitoring, planning, controlling and directing business’s resources such as human, financial and technology*
*As per Frequently-Asked Questions (FAQ) on Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021 [P.U. (A) 423/2021] issued by Labuan Financial Services Authority (LOFSA) dated 14 December 2021.*
2

50,000

Labuan entity that undertakes investment holding activities other than pure equity holding activities
1

20,000

Labuan entity that undertakes pure equity holding activities
Exempted under the Labuan Business Activity Tax (Exemption) Order 2020 [P.U (A) 177/2020]

20,000

B. Management And Control Requirement For Labuan Entity That Undertakes Pure Equity Holding Activities

Regulation 3, The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 which is deemed to have come into operation on 1 January 2021, requires the above mentioned company to comply with the following:

  1. meeting of the board of directors is convened in Labuan at least once a year;
  2. the registered office of the Labuan entity shall be situated in Labuan;
  3. the secretary of the Labuan entity appointed under the Labuan Companies Act 1990 shall be resident in Labuan; and
  4. the accounting and business records including the minutes of meeting of the Labuan entity’s board of directors shall be kept in Labuan.

C. Income derived from intellectual property rights is subject to tax at the rate of 17% or 24% under Income Tax Acts 1967(“ITA”) .

With effect from 1 Jan 2019, under Income Tax (Deductions Not Allowed for Payment Made to Labuan Company by Resident) Rules 2018 (Amendment) 2020, the following type of payments made to a Labuan Entity by a company resident in Malaysia are not entitled to a tax deduction:

Type of payment

Amount not allowed for deduction

Interest payment

25%

Lease rental

25%

Other payments

97%

2) 0% ON SERVICE TAX AND 6 % ON IMPORTED SERVICE

No service tax shall be charged on any taxable service provided within or between Special Areas and Designated Areas unless on the taxable services prescribed in the Service Tax (Imposition of Tax for Taxable Service in Respect of Designated Areas and Special Areas) Order 2018.

3) 0% ON WITHHOLDING TAX

There is no withholding tax on dividends paid by a Labuan Company in respect of dividends distributed out of income derived from Labuan business activities or income exempt from income tax. Interest, royalties, lease rental, technical fee and management fees paid to a non-resident are not subject to withholding tax.

4) 0% ON STAMP DUTY

This may include but not limited to transfer of share, etc.

5) 100% EXEMPTION OF DIRECTOR’S FEE RECEIVED BY NON-CITIZENS INDIVIDUAL

6) DOUBLE TAXATION AGREEMENT (DTA) WITH MORE THAN 70 COUNTRIES

Labuan Company enjoys the benefits of more double taxation treaties than any other offshore company as it almost enjoys same full double taxation benefit as Malaysia company except for fourteen (14) of those 78 countries, and it can enjoy full treaty benefit even with those fourteen (14) countries by incorporating a Malaysian domestic subsidiary company.

Malaysia has entered into Double Taxation Agreements with various countries as follows:-
Double Taxation Agreements
^ Limited Agreements
# Income Tax Exemption Order
@ Synthesized text
Currently, Labuan has been specifically excluded from Double Taxation Agreement with the countries as follows:-
Double Taxation Agreements

7) LIBERAL LABUAN EXCHANGE CONTROL ENVIRONMENT – FREE FLOW OF FUNDS

8) INVESTMENT PROTECTION AGREEMENT (IGA) WITH MORE THAN 60 COUNTRIES

9) THE CONFIDENTIALITY OF COMPANY, SHAREHOLDER AND DIRECTORS’ INFORMATION IS ENSURED

10) LABUAN COMPANY VS BVI COMPANY

Labuan Company

BVI Company

Labuan is low-tax jurisdiction country.

BVI is tax-free jurisdiction country.

Comparison

Certain home country may impose the income tax law on incomes deriving from offshore, if they have not been taxed offshore, particularly, when they are remitted back, this may appy to BVI Co but not Labuan Co as it pays minimum tax.

Labuan Co enjoys more than 70 countries’ double tax treaties (DTAs).

BVI enjoys only 2 countries’ (Japan and Switzerland) double tax treaties (DTAs), and these treaties are not used in practise.

Dividend declared from Labuan Co to Malaysia is free of tax.

Dividend declared from BVI co may subject to income tax.

Note: If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.

No withholding tax on interest payment.

BVI has applied the European Union (EU) Savings Directive since 1 July 2005. A withholding tax (initially 15%, rising to 20% from 1 July 2008) has been applied to interest payments to natural persons resident within the EU.

Labuan has its registered auditor under its jurisdiction. The income tax payable is allowed to base on the audited profit, the source of income is cleared for reinvestment or dividend purpose, once it is paid.

BVI has no registered auditor under its jurisdiction.

ILLUSTRATIONS ON LABUAN COMPANY STRUCTURE

1) Labuan Leasing Company or Labuan Islamic Leasing Company

Suitable Industries
  • Vessel, aircraft, shipping, oil & gas, high value assets co.
Tax Advantages
  • Income tax is only 3% of net profit
  • Dividend income received by Labuan Co is exempted from tax.
  • No withholding tax on dividend declared And lease rental made by Malaysian subsidiaries or 3rd Party Malaysian Co.(2)
(1) A licence fee of RM60,000 (USD15,000) per year is only applicable in respect of leasing arrangements with Malaysian residents; no licence fee is payable if the Labuan Company is only carrying out leasing activities with non-Malaysian residents.

(2) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.
why labuan graph

2) Investment Holding Company

Suitable Industries :

  • Investment holding or offshore investment.

Tax Advantages

  • Dividend income received by Malaysian Parent Co(1)  or Labuan Co is exempted from tax.
  • No withholding tax on dividend declared by Labuan Co to either Malaysian or Foreign Parent Co.
  • No withholding tax on interest charged by Malaysian or Foreign Parent Co to Labuan Co.
  • No Capital Gain Tax and stamp duty for the transfer of shares in Labuan Co, e.g. dispose the investment in Foreign Manufacturing Co by selling Labuan Co.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.
(1) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.
why labuan graph

3) Captive Insurance

Suitable Industries :

  • Captive Insurance

Tax Advantages

Income tax is only 3% of net profit

  • Dividend income received by Malaysian Parent Co(1) is exempted from tax.
  • No withholding tax on dividend declared by Labuan Captive Insurance Co.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.
(1) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.
why labuan graph

4) Offshore Financing

Suitable Industries :

  • Fund managers

Tax Advantages

  • Income from investment is exempted from tax for Labuan Co.
  • Dividend from Labuan Co is exempted from tax.
  • No withholding tax either on dividend declared by or interest charged from Labuan Co to Labuan Funds.
  • Distribution from Labuan Funds to investors is not subject to withholding tax.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.

Other Advantages

  • Lower cost of funds.
  • Liberal Labuan exchange control environment.
  • Debt instruments of Labuan Co may be listed.
Investment Funds 投资基金
why labuan graph
Islamic Financing 伊斯兰融资
why labuan graph

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