Category: Tax

The power of BPO in facilitating overseas business growth

The power of BPO in facilitating overseas business growth

The power of BPO in facilitating overseas business growth

boardroomsuperadmin

Expanding a business overseas is a critical growth goal for many organisations. The appeal of new markets is enticing, but the challenges of moving into offshore territories can be overwhelming.

Understanding and complying with diverse, unfamiliar legal frameworks, tax structures and regulatory compliance standards in foreign territories is a complex process, and non-compliance can result in far-reaching consequences for any business. For owners, entrepreneurs and leaders keen to pursue overseas opportunities but needing an in-depth understanding of local issues, specialist business process outsourcing (BPO) services can be essential to safe and successful expansion.

Through a BPO partner, businesses gain insights into local compliance and strategic support in navigating the intricate process of establishing and growing your presence in new markets.

In this article, we explore what a BPO provider is, what they do for their clients, and how BPO can help clients navigate regulatory complexities when considering expansion into Asia.

What is BPO? Your key to successful international expansion

Running a business, especially one that is expanding globally, is complex and can be fraught with compliance risks. Missteps in unfamiliar areas can lead to significant consequences, demanding careful navigation, knowledge and skills. That is where business process outsourcing (BPO) comes in. BPO occurs when a business outsources critical backend functions to external entities.

However, it’s important to recognise that certain functions will come with an increased need to find a provider that specialises in regulatory compliance.

Some of these functions are:

When you engage an expert BPO service provider with specialised skills in regulatory compliance to outsource these critical functions to, your staff can concentrate on your business’s core competencies. By working with an expert provider and also being aware of how each function interplays with your company’s broader operations and expansion goals, risk can be mitigated, ensuring the integrity and continuity of your core business activities.

There are several fundamental advantages of partnering with a compliance focused BPO provider:

Access to specialised skills and local knowledge that may not be readily available within your organisation. This expertise ensures accuracy in compliance and allows easier navigation of in-country requirements and valuable insights into local markets.
Efficiently scale operations especially when expanding internationally, by tapping into vast pools of experienced professionals through the services provided.
Gain access to advanced technologies compliant with regulations, allowing optimisation of internal processes, guaranteeing streamlined operations, while mitigating the risk of non-compliance.
Benefit from a commitment to adapt to changing regulations while maintaining stringent compliance standards, mitigating risks, and ensuring continuous agility in navigating a dynamic regulatory environment.
Your key to successful international expansion

Navigating your expansion into Asia

Asia’s robust economic growth and diverse markets make it an increasingly attractive destination for business expansion. In this rapidly growing business environment, understanding the key factors crucial for successful business expansion is pivotal for tapping into the region’s unique opportunities.

Here are four important factors to look out for in selecting your BPO provider:

The complexity of local regulations

Business owners entering new markets in Asia must understand that the regulatory landscape in the region has evolved and continues to evolve rapidly. Hugo Walkinshaw, Group Chief Executive Officer of BoardRoom, has this advice for foreign investors entering Asia. “There’s some commonality among Commonwealth countries, but you cannot assume if you have a footprint in one country, you can easily take that elsewhere. We advise businesses to be aware that Asia’s not one place.”

Just as every country has a unique culture, language, time zone and climate, so too are its regulatory framework, laws, processes and ESG standards. Therefore, it is recommended you get advice from a BPO provider who has the experience in regulatory compliance and deep relationships with the regulators in the country you are planning to enter.

Owners and business leaders who fail to consider the complex regulations are putting their personal and business reputations at risk.

Compliance focused BPO provider

Leveraging technology in an evolving regulatory landscape

Technology is changing how businesses operate, and the regulations that govern technology are also evolving rapidly. This complexity is magnified in Asia due to the diverse legal and technological landscapes across different countries.

An example is data security, which has become increasingly complex in a rapidly-digitised world where data is valuable, and automation is commonplace. Businesses have a duty of care to themselves, their staff and their customers to protect data and information systems. A service provider with sound security systems in place is an essential layer of protection to your business, ensuring compliance with local data protection laws. This is especially crucial for functions like payroll, where sensitive employee data must be handled with care and accuracy across different legal frameworks.

Partnering with a compliance-focused service provider who understands these regulations and leverages the latest technology provides assurance that compliance requirements are consistently met.

Geopolitical and economic concerns

The Y2K scare, the 1997 Asian crisis, the 2007-08 Global Financial Crisis and COVID-19 – the past two decades have been punctuated by massive economic uncertainty and geopolitical volatility. These factors make for an increasingly complex environment for businesses. However, Hugo says economic opportunities in the region are still compelling.

A corporate services provider that offers an integrated suite of services across multiple countries can leverage regional expertise and serve as a single point of contact for businesses moving into Asia. Furthermore, businesses ought to seek a seasoned provider with a appropriate market presence that is aligned with your expansion goals. These providers will have first-hand experience navigating legislative changes and are better positioned to address the needs of businesses amidst volatile geopolitical and economic uncertainty.

Ensuring the right coverage

When choosing a BPO provider, it is important to understand their size and scale. What services do they provide, and which countries do they operate in?

Businesses entering Asia will find many providers that Hugo calls “single-service, single-country local players”. But these might not offer a comprehensive enough service for your business. Choosing a provider that operates in several countries with a range of services is often a better option, allowing your business to enter whichever country you decide to expand into.

Furthermore, a service provider with regional expertise and integrated services like corporate secretarial and tax advisory can also help optimise your business’s tax payouts. This starts at the incorporation stage with the advice on the most advantageous business structure. Different business structures have varying tax implications, and a knowledgeable service provider can navigate these intricacies to ensure that your business benefits from tax efficiency while remaining compliant.

Leveraging technology in an evolving regulatory landscape

BoardRoom: your compliance focused BPO partner

Successfully establishing a business in Asia requires a deep understanding of its laws and regulatory structures. Regulatory compliance-focused BPO service providers equipped with this expertise offer invaluable guidance to help businesses navigate the complexities of regional expansion. They take on the responsibility of a range of business processes, freeing up your time and resources to grow your business.

At BoardRoom, we have the regional expertise to help your business navigate the complex regulatory landscapes and technology integration in various Asian nations.

Our multi-service offering and our years of experience managing cross-border expansion means you get integrated, efficient solutions to help your business succeed:

Contact our team for your expansion needs now!

Related Business Insights

Singapore’s variable capital company: a guide to VCC benefits and setup

Singapore’s variable capital company a guide to VCC benefits and setup

Singapore’s variable capital company: a guide to VCC benefits and setup

boardroomsuperadmin

In the evolving landscape of Singapore’s financial sector, variable capital companies (VCCs) have emerged as a prominent and flexible solution for diverse investment needs.

Thanks to its innovative structure, the VCC has led an increase in investment flows into the city-state, and has helped to propel Singapore firmly onto the global stage as a destination of choice for fund managers and family offices. This has also led to opportunities for professionals through the creation of local jobs. In response to the high demand, the Singaporean government recently extended the Variable Capital Companies Grant Scheme to 15 January 2025.

This article provides an overview of the VCC to help you decide if it is the right investment vehicle for you. In consultation with multiple business experts, we explain what a variable capital company is and the benefits it offers. We will also explain the setup process and provide advice for giving your entity the best chance of success in the region.

The VCC structure and its unique benefits

The VCC is an innovative structure offering many benefits for investment managers in Singapore – particularly high-net-worth individuals and families.

“The introduction of the VCC Framework at the start of 2020 further strengthened Singapore’s value proposition as a leading full-service asset management hub,” explains Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore.

Like private limited companies, VCCs are governed by a board of directors and have shareholders who own shares in the fund. They also offer limited liability for shareholders and directors, as they are considered a separate legal personality (this means that shareholders and directors are protected in cases of litigation against the company).

However, VCCs have unique benefits that may make them a preferred structure for investment managers. In contrast to other investment structures, VCCs offer:

  • operational flexibility;
  • tax efficiency, and
  • privacy.
The VCC structure and its unique benefits
Operational flexibility
VCCs offer investors and fund managers a high level of flexibility across different fund strategies, investor and asset classes.

Importantly, fund managers can use VCCs for both open- and close-ended funds. Open-ended funds allow investors to freely invest, redeem or withdraw shares without shareholder approval, empowering them to respond swiftly to market changes. “VCCs can also pay dividends out of capital, giving fund managers the flexibility to meet their dividend payment obligations,” says Zhan Aijuan, Senior Manager of Corporate Secretarial for BoardRoom Singapore.

In addition, VCCs can incorporate new funds and re-domicile existing funds to a new location.
Tax efficiency
VCCs can access a variety of beneficial tax treatments. Even VCCs with sub-funds are recognised as a single entity at tax time. Distributions from VCCs in Singapore are usually tax-exempt, and the VCC itself may qualify for tax-exemption schemes such as the Singapore Resident Fund Scheme and Enhanced-Tier Fund Scheme.

“VCCs can also enjoy the extensive tax treaty network that the Singapore government has with over 85 countries,” Eunice adds.
Privacy
While VCCs must submit financial statements to regulatory authorities, they do not need to make these documents publicly available. They can also keep their list of shareholders confidential. This means they offer extra privacy and confidentiality for shareholders.

VCCs can be set up as:

  • a standalone fund or
  • an umbrella VCC with two or more sub-funds, each holding a portfolio of separate assets and liabilities.

Josephine Toh, Associate Director of Corporate Secretarial for BoardRoom Singapore, adds that umbrella VCCs can offer valuable economies of scale.

“VCCs need to appoint a variety of professionals, such as fund managers, company secretaries and auditors,” she says. “Umbrella VCCs enable investors to achieve economies of scale by splitting the cost of using the same professionals across all sub-funds.”

Further, the fund managers can claim a 30% reduction on qualifying VCC set-up costs paid to Singapore-based service providers through the Variable Capital Companies Grant Scheme.

Regulatory requirements for VCCs

Compliance requirements for VCCs encompass stringent reporting standards and governance mechanisms to promote transparency and accountability.

The Variable Capital Companies Act governing VCCs in Singapore is relatively new, and therefore will continue to develop. Fund managers must ensure their VCC complies with this legislation as it evolves.

VCCs also have obligations to the Monetary Authority of Singapore (MAS), such as the implementation of processes for anti-money laundering and countering the financing of terrorism.

Key requirements for the setting up of VCCs include:

  • at least one ordinarily resident director in Singapore;
  • one qualified MAS licensee as a fund manager (this can be the same person as the local resident director);
  • a registered office in Singapore;
  • a Singapore-based company secretary; and
  • an auditor and annual audits.

Setting up a Singapore VCC

A prominent feature of the VCC framework is the option for fund managers to either set up a new VCC or re-domicile their existing investment funds with comparable structures to Singapore. This flexibility offers a range of advantages and can significantly enhance the fund manager’s operations. Below are the steps in incorporating a new VCC or re-domiciling existing investment funds.

Incorporating a new VCC

Companies seeking to expand their presence in Singapore or tap into the benefits of the VCC structure can set up a new VCC. Here are the key steps involved:

INCORPORATING A NEW VCC

Register a name

Register a VCC name via the VCC Portal. Once approved, the VCC must be incorporated within 120 days and adhere to any potential reviews by Referral Authorities.

Determine the VCC type

Decide between establishing a non-umbrella VCC or an umbrella VCC that contains multiple sub-funds with segregated assets and liabilities.

Appoint key personnel

Appoint VCC officers, including director, company secretary, auditor and fund manager. At this point, you will also need to decide on the VCC's first financial year end (FYE) and determine the accounting period length.

Register the office address and constitution

Provide a publicly accessible registered office address for the VCC and submit a constitution detailing the VCC's governance, operations and key stakeholder rights and responsibilities.

Incorporate the new VCC

This can be done directly through the VCC Portal or via a registered filing agent or corporate service provider. The processing time can range from 14 to 60 days, depending on any additional governmental reviews.

Register any sub-funds for an umbrella VCC

Register individual sub-funds under an umbrella structure of a VCC.

Re-domiciling existing investment funds

Re-domiciling existing investment funds

For fund managers with existing overseas investment funds that align with the VCC framework’s criteria, the option to re-domicile these funds to Singapore can be an efficient and cost-effective strategy. This process involves transferring the registration and legal domicile of an existing fund to Singapore while retaining its existing structure. Here are the key requirements needed for re-domiciling existing investment funds:

Eligibility assessment: Fund managers must first determine whether their existing investment funds meet the criteria for re-domiciliation to a Singapore VCC. The existing fund should have a similar structure and characteristics to that of a VCC, making it a suitable candidate for re-domiciliation.

Approval from shareholders: In most cases, the existing fund’s shareholders must approve the re-domiciliation. This process may require a special resolution or a majority vote, per the fund’s existing legal structure.

Regulatory compliance: Fund managers should ensure that the re-domiciliation process aligns with the regulatory requirements of both the fund’s current jurisdiction and Singapore.

Transfer of assets and liabilities: As part of the re-domiciliation process, assets and liabilities of the existing fund must be appropriately transferred to the newly incorporated Singapore VCC. If applicable, this transfer process should ensure the segregation of assets and liabilities for each sub-fund.

Appointment of local service providers: Engage local service providers, including a permissible fund manager, company secretary, and auditor, to ensure compliance with the VCC Act’s requirements. The engagement of these professionals is crucial for ongoing compliance.

Re-domiciliation application: Submit the necessary documentation to the Monetary Authority of Singapore (MAS) for approval of the re-domiciliation. The application should include details of the existing fund, the proposed Singapore VCC structure, and other relevant information.

Tax implications: Consider the tax implications of re-domiciling the fund to Singapore. Collaborate with tax advisors to maximise the benefits available under Singapore’s tax incentive schemes, such as the Singapore Resident Fund Scheme or the Enhanced-Tier Fund Scheme.

A trusted partner in Singapore VCC incorporation

A trusted partner in Singapore VCC incorporation

The VCC in Singapore is transforming the investment landscape, offering flexibility, tax benefits and privacy. It attracts wealth, creates jobs and solidifies Singapore’s position as a global financial hub. Setting up a VCC in Singapore involves navigating a complex landscape of legal, financial, and regulatory requirements.

BoardRoom, as a trusted partner with more than 50 years of experience in corporate services, can guide you through each step of the process, from registering your company to corporate secretarial services and setting up an efficient tax structure. BoardRoom can also ensure your accounting and tax compliance meet local and APAC-wide standards for your VCC in Singapore.

Contact us today to discuss how we can help set up your VCC and optimise the tax incentives.

Eunice

Contact BoardRoom for more information:

Eunice Hooi

Managing Director Asia, Tax

E: [email protected]

T: +65 6536 5355

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Liquidation of company in Singapore: Guide to Compliance and Tax

Liquidation of company in Singapore Guide to Compliance and Tax Banner

Liquidation of company in Singapore: Guide to Compliance and Tax

boardroomsuperadmin

The cessation of a Singapore company can occur for a range of reasons, such as changes in strategic direction, lack of profitability or legal issues. Factors like your company’s state of affairs, debt level, business goals and tax status can determine the method of closure.

Especially in the case of voluntary liquidation, having a good understanding of the tax implications of company closure can help business leaders to streamline the process, optimise the tax position of stakeholders and minimise compliance risk.

This article sheds light on the compliance and tax issues surrounding the liquidation of a company and provides valuable insights to help you optimise the process and safeguard the interests of all stakeholders.

What to know about closing a company in Singapore

The two main methods of closing a company in Singapore are striking off and liquidation (also referred to as winding up):

  • Striking off – Private companies that are not actively in business and do not have any assets or liabilities may apply to the Accounting and Corporate Regulatory Authority (ACRA) to be struck off the register. Striking off is a relatively easy, fast and inexpensive process.
  • Liquidation – This formal closure process involves an appointed liquidator who takes control of the company’s assets, business operations, and financial affairs. All bank accounts and assets are under the liquidator’s custody and the liquidator has the power to sell off (realise) the company’s assets, with the net proceeds used to pay off debts and liabilities. Any surplus cash is distributed to shareholders according to their rights and interests under the company’s constitution and Companies Act 1967.

The winding of a company may be either by Order of the Court or voluntary.

There are two types of voluntary winding up which are:

  • a members’ voluntary winding up; or
  • a creditors’ voluntary winding up.

A company’s solvency (its ability to pay its debts and liabilities within 12 months from winding up) will qualify for a members’ voluntary winding up.

Winding of a company

The process of voluntary liquidation in Singapore

To comply with local regulations, Singapore businesses entering members’ voluntary liquidation will generally need to:

  1. Prepare a Declaration of Solvency – A majority of the directors must make a statutory Declaration of Solvency.
  2. Hold an extraordinary general meeting (EGM) – Shareholders need to pass a special resolution to wind up the company and approve a liquidator.
  3. Realise assets and distribute cash – The liquidator will take over the winding up process, using proceeds from the sale of assets to repay creditors in order of priority. Any excess money may be paid to shareholders and employees.
  4. Hold a final EGM – The EGM must be called by giving at least 30 days’ notice and the notice of EGM published in one English local newspaper and in the eGazette.
Prepare a Declaration of Solvency
A majority of the directors must make a statutory Declaration of Solvency.
Hold an extraordinary general meeting (EGM)
Shareholders need to pass a special resolution to wind up the company and approve a liquidator.
Realise assets and distribute cash
The liquidator will take over the winding up process, using proceeds from the sale of assets to repay creditors in order of priority. Any excess money may be paid to shareholders and employees.
Hold a final EGM
The EGM must be called by giving at least 30 days’ notice and the notice of EGM published in one English local newspaper and in the eGazette.

Please refer to the infographic “The process of voluntary liquidation in Singapore“ below for more details.

THE PROCESS OF VOLUNTARY LIQUIDATION IN SINGAPORE

Prepare a Declaration of Solvency

A majority of the directors must make a statutory Declaration of Solvency, which annexes a statement of the estimated assets and liabilities of the company. The declaration must also show that as at the latest practicable date, at a meeting of the directors, in their opinion, the company shall be able to pay its debts in full within 12 months from the commencement of the winding up. The declaration has to be made within 5 weeks preceding the resolution to wind up and the declaration is filed with ACRA before the notice of the meeting to pass the winding up resolution is sent out.

Hold an extraordinary general meeting (EGM)

Shareholders need to pass a special resolution to wind up the company and approve a liquidator. A copy of the resolution to wind up must be filed with ACRA within 7 days after it is passed and advertised in a local English newspaper within 10 days. The liquidator must, within 14 days after his appointment, file a notice of appointment with ACRA and the Official Receiver. The fact that the company is being wound up must be stated on every invoice, business letter or other correspondence of the Company. Then, directors’ powers will cease on the appointment of liquidator and the liquidator takes charge.

Realise assets and distribute cash

The liquidator will take over the winding up process, using proceeds from the sale of assets to repay creditors in order of priority. Any excess money may be paid to shareholders and employees.

Hold a final EGM

The EGM must be called by giving at least 30 days’ notice and the notice of EGM published in one English local newspaper and in the eGazette. The liquidator will present to shareholders its final account of how the liquidation was conducted and payments were made. It must also lodge the account of the liquidator’s receipts and payments, and a statement of the position in the winding up with the Official Receiver. Within 7 days after filing the account and statement with the Official Receiver, the liquidator must file the account and statement with ACRA.

On the expiration of 3 months from lodgement of the accounts and the final return, the company is deemed dissolved. The books and documents of the company and of the liquidator shall be retained for a period of 5 years after the date of dissolution and may be destroyed at the expiration of the period.

The tax implications of liquidation of a company

Understanding the tax issues involved in company liquidation can help ensure a smooth winding up process that optimises financial outcomes and reduces compliance risk.

In the case of voluntary liquidation, key tax considerations include:

  • Goods and services tax (GST) – Companies must fulfill all GST obligations, including settling any outstanding liabilities, claiming refunds, filing a final return and cancelling its GST registration.
  • Corporate income tax – Companies must ensure all outstanding tax obligations are filed up to the date of liquidation and there are no outstanding tax liabilities. Any outstanding tax matters must be settled before completion of liquidation process.
  • Tax losses and carry-forward – To utilise any unabsorbed tax losses brought forward, the company’s ultimate shareholders must remain substantially (50% or more) the same as at the relevant dates. Any remaining unabsorbed tax losses carried forward in the year of liquidation will be disregarded.

Updated rules for financial reporting during liquidation

Inland Revenue Authority of Singapore (IRAS) has recently updated its guidelines for financial reporting during the winding up of a company.

The Insolvency, Restructuring and Dissolution Act 2018 requires liquidators to prepare a declaration detailing the company’s receipts and payments for a period of 12 months after the date of liquidator’s appointment, and every subsequent period of 12 months.

With effect from 1 May 2021, liquidators can use the same 12-month period as their reporting period when preparing these declaration of receipts and payments. This means liquidators no longer need to split receipts and payments based on the calendar year when filing declaration with the IRAS, making for easier reporting.

Common tax pitfalls during liquidation

According to Ade Teo, Senior Manager of Regional Tax Services for BoardRoom Singapore, a common tax pitfall seen in company liquidation is inaccurate record keeping.

“Some companies do not maintain proper records,” she says.

“Companies without these documents may face challenges in substantiating deduction claims and revenue reporting during liquidation.”

This is why good record-keeping is important in every phase of the business lifecycle, from company incorporation to the end.

Companies with a history of non-compliance with tax filing obligations may face scrutiny from IRAS during liquidation. For companies that have failed to meet tax filing requirements, IRAS may issue chaser letters or impose late filing penalties.

Taking proactive steps to settle outstanding tax obligations will help ensure a seamless liquidation process.

Common tax pitfalls during liquidation

How to optimise company liquidation in Singapore

Given the complex, time-consuming nature of members’ voluntary liquidation in Singapore, engaging a qualified corporate services team to act as your liquidator can be immensely beneficial. If you are unsure how to close a company in Singapore, a reputable firm specialising in corporate secretarial and tax services can help ensure a smooth, compliant process.

“At BoardRoom, our company secretarial and tax teams work closely together to ensure we obtain tax clearance in the shortest time frame,” says Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore.

The company secretary’s role in Singapore liquidation includes supporting you with the following activities:

Navigating the entire process of liquidation
Preparing for liquidation by ensuring your documents are in order and debts are paid
Filing necessary returns to local authorities (e.g. ACRA, Official Receiver)
Sending letters to directors regarding cessation of their power
Correspondences with the statutory boards (e.g. IRAS, CPF Board) and banks on the commencement of the company’s liquidation and appointment of liquidator
Informing stakeholders of the liquidation by placing notices in a local English newspaper and on the eGazette

Meanwhile, tax professionals can help you navigate financial complexities and obtain any tax benefits you’re entitled to.

“It is very important to engage a liquidator who has a wealth of knowledge and knows what steps need to be taken at what point in time,” adds Eunice, who has been appointed as liquidator to support the clients’ members voluntary liquidations.

Having the support of a skilled, experienced corporate services team is especially important for the liquidation of a parent company, where multiple entities are involved.

Streamline the liquidation of your company

In the event that your business needs to close down, confidently navigating the tax issues and process of the liquidation of a company is of utmost importance.

For more than 60 years, BoardRoom has been providing expert liquidation guidance for Asia-Pacific companies of all sizes and industries. We can advise you on the members’ voluntary winding up and help ensure a tax-efficient closure that fully complies with local regulations.

To find out how our local business experts can assist with the liquidation of your company, please contact us.

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The Accounting and Tax Trends that are strengthening Singapore’s Economic Growth Prospects

The Accounting and Tax Trends that are strengthening Singapore’s Economic Growth Prospects Banner

The Accounting and Tax Trends that are strengthening Singapore’s Economic Growth Prospects

boardroomsuperadmin

As a global hub for trade, finance and technology, Singapore presents a wealth of growth prospects for businesses looking to expand throughout Asia. Its high-income economy, low corporate tax rate and abundance of business incentive programs (such as the tax exemption scheme for new companies) further enhance its appeal in the eyes of foreign investors.

The Monetary Authority of Singapore has predicted that Singapore’s economic growth will slow down in 2023, which means your organisation’s resilience is now vital. Building this required resilience necessitates a robust understanding of the latest trends in tax and accounting.

Particularly in the face of increasing expectations for environmental, social and governance (ESG) action – bolstered by the government’s newly shortened timeline for achieving net zero emissions – prompting finance teams to elevate their sustainability reporting.

BoardRoom Singapore’s Director of Accounting, Yang Shuzhen, discusses the most significant tax and accounting trends in 2023 and the strategies you can use to prepare for economic change.

Singapore business tax trends

Singapore business tax trends

The 2023 Budget contained several significant tax updates that will impact the corporate sphere. Notably, the government announced its plans to implement the Global Anti-Base Erosion rules of the OECD/BEPS two-pillar plan.

Developing tax trends in Singapore businesses therefore include:

The introduction of a domestic top-up tax
Preparation by businesses for Pillar Two
Fresh tax incentives
The Singapore GST increase, now already in effect

1. The introduction of a domestic top-up tax

Under Pillar Two, the new minimum Singapore corporate tax rate will be 15% for multinational companies with revenues of at least EUR 750 million. These group entities will need to redress their profits so they are paying a minimum effective tax rate of 15%.

Countries involved in the OECD/BEPS collaboration are still deciding on their approach to implementing Pillar Two. Once the government of each country that your organisation has a presence in has announced how it will implement Pillar Two, you can decide in which country you will pay the top-up tax.

2. Preparation for Pillar Two

The best thing businesses in Singapore can do right now is to undertake an audit to identify where they are conducting their value-creation activities. It is a good time to tidy up your operations and ensure that both your value creation activities and your revenue and profits are recognised in the same country.

In Singapore, the new top-up tax is scheduled for implementation from 2025. Preparing for this change may require major adjustments to business operations, so organisations should begin the process now to ensure a smooth and successful transition.

3. Fresh tax incentives

The 2023 budget announced the following tax incentives to encourage foreign investment and economic growth:

  • Corporate Income Tax rate remains the same, with the partial tax exemption on the first $200,000 of a company’s chargeable income;
  • a 200% tax deduction on qualifying market expansion and investment development expenses under the DTDi scheme;
  • an additional tax allowance for businesses that incur qualifying fixed capital expenditure on approved projects under the IA scheme;
  • 100% IA support on the amount of approved capital expenditure and net of grants for approved automation projects;
  • concessionary tax rates of 5%, 10%, 12%, and 13.5% on income from qualifying banking and financial activities, and corporate and advisory services under the FSI scheme;
  • the introduction of a new Enterprise Innovation Scheme to raise tax deductions to 400% on qualifying expenditure incurred from the YA 2024 to YA 2028 on various innovation boosting activities; and
  • enhancements to the double tax deduction for internationalisation DTDi Scheme.

The budget also announced extensions for a range of incentive schemes across various industries.

View our Singapore 2023 Budget Tax Highlights for a complete list of announced tax updates.

4. The Singapore GST increase

Singapore’s goods and services tax (GST) rate rose from 7% to 8% in 2023. This rise has impacted businesses in various ways, with many organisations facing increased costs across core expenses such as materials, labour, rent and utilities.

Some businesses are choosing to register for GST to claim on the GST paid for purchases. However, there are a few factors to consider to determine whether this is worthwhile for your organisation. For example, you should decide whether the associated compliance costs outweigh the benefits of claiming on taxes paid. Additionally, you must be mindful when fulfilling your compliance requirements for quarterly GST returns to avoid making an error and being penalised for it.

The GST rate is set to rise another percentage point from 2024, which means your decision to register for GST will only become more important.

Singapore accounting trends

Singapore accounting trends

The accounting function is quickly evolving in response to changes in economic growth and environmental sustainability matters, as well as technological advancement.

In Singapore, this transformation is largely characterised by the following three trends:

  • the digitisation and digitalisation of financial management;
  • the provision of meaningful corporate disclosures; and
  • the rise of sustainability reporting.

1. The digitisation and digitalisation of financial management

The COVID-19 pandemic accelerated digital transformation of many vital business functions, including accounting. Now, businesses have the opportunity to use innovative digital technologies to promote efficiency, productivity and stability in volatile times.

For the best results, consider breaking the digital transformation of your accounting function down into three parts:

  • managing your human resources, including the training your people need to utilise new software and follow new processes;
  • selecting the right accounting software depending on your business needs and implementing it effectively; and
  • refining your processes post-implementation for improved results and reduced risk.

2. The provision of meaningful corporate disclosures

Singapore’s Financial Reporting Standards are updated every year, meaning businesses must constantly elevate the quality of their corporate disclosures to maintain compliance. Fortunately, digital advancement is creating opportunities for improved data collection and analysis.

Beyond standard facts and figures, regulators are now demanding more qualitative information in business reports.

“Businesses need to ask themselves, ‘Through our processes, how do we keep track of the narratives and qualitative information we need to satisfy compliance requirements?’” Shuzhen says.

In addition to reducing your business’s compliance risk and improving its reputation, strengthening your disclosures with data-driven insights will also enhance your understanding of your business’s health and outlook.

Business leaders who facilitate strong financial forecasting are empowered to:

  • make informed decisions about the strategic direction of the business; and
  • bolster the confidence of stakeholders by advising them of what is to come.

3. The rise of sustainability reporting

Businesses in Singapore are under pressure from regulators, consumers, shareholders and workers to produce insightful ESG reports. Most accounting teams are already publishing valuable ESG-related information in their financial reports, so they are well positioned to help demonstrate the ESG efforts of businesses through sustainability reporting.

Business leaders can empower their accounting teams to deliver timely, high-quality sustainability reports by implementing procedures for collecting specific ESG data that aligns with stakeholder expectations.

Remember that upgrading your data collection processes can be a complex, time-consuming endeavour, especially amid shifting regulatory demands. The earlier you establish procedures to capture the right data, the easier it will be to file your reports at the end of the financial year.

Skills finance professionals need in 2023

Skills finance professionals need in 2023

This year, tax and accounting professionals can support businesses to prepare for uncertainties in Singapore’s economic growth by embracing innovation and expanding their skill set. The key competencies finance teams now require are twofold.

1. An open and adaptive mindset

“Accounting teams need to be open to exploring new software and using the built-in functionality to understand how it could help them generate financial statements,” Shuzhen says.

“Gone are the days when accountants would merely key in numbers. Modern systems such as Xero can now take care of much of the groundwork traditionally done by accountants, such as capturing and generating data.”

Numerous accounting software options are available to businesses today, so it is important to consider which programs will best serve your needs. Understanding the types of data you need to collect will help you determine which systems are strong enough to generate the information you need.

Business leaders who are hesitant to explore new functionalities serve to limit the possibilities for what their teams can achieve and may struggle to navigate shifts in Singapore’s economic growth trajectory.

2. Well-developed analytical skills

Now that many transactional and data-collection tasks can be automated, modern finance professionals are able – and expected – to take a more strategic role within businesses. “They now have more time to spend on analytical work and quality reporting,” Shuzhen says.

A recent global survey showed that, in 2023, just under half of C-suite and finance professionals in Singapore plan to invest in data analytics capabilities to make better decisions using data. Accounting teams with data analytics skills can make strategic recommendations for optimising operations to minimise the impact of external disruptions and promote business recovery.

Finance professionals should also be able to present data in meaningful ways to specific stakeholder groups – thus maximising the value of the available data.

“For example, if I report to a Finance Manager, they will want to go through all the details, line by line,” Shuzhen explains. “But if I present the information to a Chief Financial Officer, I will do this in the form of a flash report that shows EBITDA and provides some analysis on the ratios important to the business.”

Drive business success in Singapore

For over 50 years, BoardRoom has been helping businesses achieve their expansion goals with our holistic approach to corporate services. Our teams possess in-depth knowledge of local business environments throughout the Asia-Pacific region, which means we can help you consolidate multinational taxes and manage cross-border accounting to ensure strong local compliance, reduce risk and enhance efficiency.

When you engage our expert tax advisory and filing and accounting services, you will also start saving time and money that can be redirected to progress core business objectives.

To find out more, please contact us today.

Contact BoardRoom for more information:

ShuZhen

Yang Shuzhen

Director, Accounting & Tax

E: [email protected]

T: +65 6536 5355

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Benefits of consolidating multinational taxes with one firm

Benefits of consolidating multinational taxes with one firm banner

Benefits of consolidating multinational taxes with one firm

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Managing accounting and tax in your company is a complex task. It is one of the most critical business processes to manage, so there is simply no room for error. For organisations that operate in multiple countries within the region, regulations and compliance requirements can be even more involved.

According to Deloitte’s 2021 Asia Pacific Tax Complexity Survey, 80% of respondents believe tax regimes in the region have become more complex over the last three years.

For many tax and accounting executives, finding an international tax advisor in Singapore, Malaysia, Hong Kong or China, who can handle all your accounts at a local level is ideal. But this doesn’t happen for most organisations. At least, not from the start.

Instead, as companies grow organically, they might add offices across the Asia-Pacific region, each with different tax specialists to deal with their country’s specific needs. Perhaps this seems like a smart idea – after all, these specialists will have a deep understanding of the local tax regulations. But managing multiple specialists can quickly raise its own set of problems.

This is why many tax leaders in multinational firms find themselves grappling with:

  • Communication siloes: getting multiple tax specialists to coordinate their operations can be challenging, especially with language and cultural differences at play.
  • Staff turnover: the great resignation is upon us, which means as more employees are leaving, there are more people to train.
  • Technology challenges: each country has its own system and method of communication, which may not feed into each other.

If you are facing similar challenges, it might be a good time to think about consolidating your tax operations with an international tax advisor in Singapore, Malaysia, Hong Kong or China. This advisor can then help coordinate your tax efforts across the region while having one single point of contact, regardless of your base location.

Here is what you need to know about why to consolidate your taxes with one company, and how to choose the right provider for your business.

Do not underestimate the power of local expertise

The tax landscape in Asia-Pacific is constantly changing, with governments regularly introducing new regulations and laws.

This means partnering with a trusted tax advisor to help you navigate the complexities of local tax regulations is crucial for successful operations. Singapore itself has many complicated tax regulations, such as Goods and Services Tax (GST), which need expert local knowledge to understand. Also having a partner that can help you with certified tax planning, financial accounting, and compliance services will help during reporting season, allowing you to maximise tax incentives and benefits.

Choosing a global provider with local offices will give you a premium service at a regional level.

A reliable tax advisory service can also help you drive long-term success in your business by maximising your tax incentives and benefits. Without expert local knowledge, it can be easy to miss out on tax breaks and exemptions that your business is entitled to.

If you’re purely a Singapore-based business, managing all this in-house may be achievable. But multinational organisations need to deal with cross-border issues and any complexities regarding tax compliance that may arise. This can quickly become unmanageable if you don’t have the right partner to help you navigate through it.

So choosing an international tax advisor in Singapore who has connections in other countries, can significantly streamline this process and ensure the business continues to operate safely across the region.

One contact, or many?

When selecting a tax partner, check whether you’ll have a single point of contact or deal with different individuals in each country. If the latter is true, you may be no better off than you would with managing your teams.

Ideally, you want access to a connected ecosystem of tax advisors while only dealing with a single point of contact. That way, you get all the benefits of local tax expertise without the headaches that come with managing in-house teams.

Another important factor to consider when managing tax in multiple countries is dealing with cultural nuances. The Asia-Pacific region is home to a diverse mix of cultures, religions, languages and customs.

woman standing in front of her business team discussing tax compliance

Having people who understand, and can sensitively navigate, cultural complexities is an important part of doing business and maintaining a well-functioning team.

A dedicated international tax advisor in Singapore, Malaysia, Hong Kong or China, can help you to navigate all of these issues, and advise you on the best approach for each country in which you operate.

Tax compliance matters more than ever

As regulations tighten, tax activities are attracting more and more attention from authorities. No executive wants their company to be the subject of a tax compliance audit. At the same time, however, finance and accounting teams are under pressure to do more with less, as budgets and teams are scaled back.

Organisations are also dealing with a workforce in transition. Many employees are seeking a ‘next role’ that offers higher pay or better working conditions – reducing available resources and stretching teams beyond capacity.

Nevertheless, businesses cannot ignore compliance requirements. Singapore has some very strict tax laws, it’s critical that your company does everything it can to follow them by paying taxes correctly and on time. Any business that does not follow tax compliance is doing so at the risk of breaking the law.

Even something as small as overlooking a detail in tax law or inaccurately calculating taxes owed can result in non-compliance.

And maintaining compliance with changing tax laws can be particularly challenging for multinational organisations with business partners all over the world.

business meeting with six colleagues discussing tax notes international

Having a team of professionals that understands not only the tax laws in Singapore, Malaysia, Hong Kong and China but also those across the entire Asia-Pacific region, can free your business to focus on its core business. The team can help you to navigate the changing tax laws across the region, and assist you in adjusting your tax reporting processes accordingly.

And of course, if tax compliance issues arise, the team can deal with them swiftly and accurately.

But most importantly, having a trusted team to manage tax compliance services can ensure in-depth analysis of your business structure, before providing industry-leading advice on the best long-term tax solutions. After all, it takes skilled knowledge to structure your business divisions to understand and be able to take advantage of tax benefits.

Seek value with service

One of the biggest benefits of outsourcing your tax function is cost savings. ‘Time is money’, and increased efficiency can substantially improve your bottom line.

However, simply going with the cheapest option may be a false economy. When looking for a business tax advisory service, carefully consider their reputation in the market.

Here are some questions to ask:

  • How long have they been operating?
  • What is their client footprint?
  • How many staff do they have? And more importantly, how well do they retain their employees in the long term?
  • How solid is their track record? Do they have measurable results they can share?
  • How big is their regional and international footprint? Can they support your growing business?

To find an international tax advisor who satisfactorily answers all these questions, you will likely need to choose a premium provider.

The good news? Partnering with an established business tax advisory service gives you complete peace of mind that they will handle your tax matters efficiently, accurately and professionally.

Choosing a premium provider such as BoardRoom also means:

  • Low error rates: we have over 50 years of experience in the Asia-Pacific region and a proven track record of performance.
  • Fast service: we maintain high staff retention rates, so we always have the right amount of people to efficiently handle our clients’ needs.
  • Skilled staff: our staff are highly trained and keep up to date with changes in local regulations.

Think beyond where you are today

While planning for your current tax activities is crucial, any smart leader knows that planning for tomorrow is just as important.

If your business already operates in multiple countries within the Asia-Pacific region, you may be considering expanding even further. This means, of course, even more legal, compliance and cultural differences to navigate.

Therefore, it is essential to check with potential providers about their global capabilities.

For example, BoardRoom is part of Andersen Global, a worldwide network of tax and legal professionals operating in 315 locations. As such, we are well-versed in a range of international company taxation and tax planning issues.

In short, partnering with an international tax advisor ensures that wherever you grow your business, they have people on the ground to deal with the local tax regulations.

Look beyond just tax

When choosing a tax advisory service, it is also worth checking whether they handle other aspects of corporate advisory and management.

As your company expands, you will need to navigate the issues that lead back to the important issue of tax and tax compliance. You will also need to consider company incorporation and corporate secretarial services.

Partnering with a corporate advisory service that offers a full spectrum of corporate services, can help make expanding simpler. It is also more efficient, cost-effective and allows the business to focus on its core operations.

man with calculator tax compliance meaning

Streamlining your operations often becomes more important the bigger you get. Once you start to see the benefits of outsourcing your tax to a trusted firm, you may consider other areas in which they could help, such as:

If you decide to engage a full-service firm to handle your tax, they will already be familiar with your business structure, operations and working style. This will enable them to seamlessly move to support you in other areas of your business.

Cut the complexity by consolidating

When you consider the cost and effort of coordinating individual tax specialists across the region, the benefits of consolidating with one partner quickly add up. Having people with an in-depth understanding of the local tax incentives and benefits your company is entitled to can create significant savings each financial year.

But the benefits extend far beyond mere cost savings into making business simpler.

There is no doubt that tax complexity is on the rise. Having a trusted tax advisor to help you coordinate your growing operations within the Asia-Pacific region while navigating the changing regulations can reduce this complexity.

Speak to our tax experts today about how your company could benefit from consolidating your taxes with one partner, as well as for your international tax services needs.

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