Category: Tax

Ultimate Guide to E-invoicing in Singapore

Ultimate Guide to E-invoicing in Singapore

Ultimate Guide to E-invoicing in Singapore

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As Singapore move towards a digital economy, one of the most impactful shifts for businesses is the move toward e-invoicing While it is not yet required for all businesses, the government actively encourages adoption through InvoiceNow, a national e-invoicing system. Integrating e-invoicing helps companies streamline their financial operations, stay ahead of evolving regulations, and reduce operational costs. This guide explains what e-invoicing is, how InvoiceNow is transforming the digital invoicing process in Singapore, and why adopting e-invoicing can provide your business with a competitive edge.

What Is E-Invoicing?

E-invoicing (electronic invoicing) is the process of generating, sending and receiving invoices in a structured digital format. Unlike traditional methods of printing or emailing a PDF invoice, e-invoicing enables businesses to transmit invoice data directly from one accounting system to another through a secure network. This ensures greater accuracy, shorter processing time and helps reduce manual administrative work.

In Singapore, the national e-invoicing system is known as InvoiceNow. It operates on the PEPPOL (Pan-European Public Procurement Online) network, a globally adopted infrastructure that enables businesses to exchange e-invoices and other documents securely and efficiently.

What Is E-Invoicing

Why E-invoicing Matters in Singapore

The Singapore government is actively driving digital transformation amongst businesses and e-invoicing in Singapore is a key part of the digital initiative.

With e-invoicing, companies can:

  • Ensure compliance with local accounting and tax regulations
  • Reduce manual data entry work and minimise human errors
  • Improve cash flow with quicker payment cycles
  • Lower operational costs such as printing, postage, and storage
  • Support sustainability through a paperless process

Although e-invoicing is not yet mandatory for all businesses, the Infocomm Media Development Authority (IMDA) and the Inland Revenue Authority of Singapore (IRAS) have set a roadmap for future GST InvoiceNow requirements. Adopting InvoiceNow early can help you stay ahead of the compliance curve and avoid last-minute implementation challenges.

InvoiceNow and How It Works

InvoiceNow enables invoices to be transmitted directly from seller to buyer, from one business system to another without manual intervention. Businesses can send and receive e-invoices using their current accounting or ERP systems. It runs on the PEPPOL network, using Access Points, which act like secure digital post-boxes that routes the e-invoices. These Access Points ensure your e-invoice gets to the correct recipient in the right format.

Here is a simple overview of how e-invoicing with InvoiceNow works:

  1. The seller generates an invoice using their InvoiceNow-ready accounting or ERP software.
  2. The invoice is automatically converted into a standard format used by the PEPPOL network.
  3. The invoice is sent via the PEPPOL Access Point to the buyer’s system.
  4. The buyer receives the invoice directly within their software.

This seamless process is fast, accurate, and secure, making it a superior alternative to traditional paper invoicing methods.

Requirements for Using InvoiceNow

To start using InvoiceNow in Singapore, businesses must meet the following criteria:

  • Have a valid Unique Entity Number (UEN)
  • Register for a PEPPOL ID via Corppass
  • Engage an IMDA-accredited Access Point provider
  • Ensure their accounting system can generate structured e-invoices in the PEPPOL BIS format

Most popular cloud accounting platforms today offer InvoiceNow-ready solutions. Businesses can also refer to IMDA’s list of Peppol-ready solution providers.

Key Dates You Should Know

Singapore is rolling out e-invoicing requirements in phases.

Here are the key milestones:

  • 1 May 2025: All GST-registered businesses can start transmitting e-invoices through InvoiceNow
  • 1 November 2025: Newly incorporated companies that apply for voluntary GST registration are required to start submitting invoice data to IRAS using InvoiceNow
  • 1 April 2026: All new voluntary GST registrants are required to start submitting invoice data to IRAS using InvoiceNow

The Inland Revenue Authority of Singapore (IRAS) has announced plans to progressively extend mandatory participation in e-invoicing to more businesses in future phases. Hence getting started early ensures your systems are compliant and your business operations do not get disrupted.

Benefits of E-invoicing for Businesses

Benefits of E-invoicing for Businesses

E-invoicing offers significant advantages for businesses in Singapore.

Saves Time

E-invoicing automates the entire invoicing process; no more printing, scanning, or manually typing in invoice details. E-invoicing does it all digitally and faster, freeing up staff for more value-added tasks.

Fewer Mistakes

With e-invoicing, data are sent in a standardised format from system to system. This reduces manual input and errors, such as missing line items or incorrect amounts.

Faster Payments

E-invoices are delivered instantly to your clients’ systems, speeding up processing ad approval times. This leads to quicker payments and improved cash flow.

Helps with Compliance

Using InvoiceNow helps ensure GST compliance through structured, traceable records. This simplifies audit readiness and facilitates accurate GST reporting.

Easier Global Invoicing

As PEPPOL is a global standard, e-invoicing in Singapore allows your business to seamlessly exchange e-invoices with international clients who are also on the same network, making cross-border transactions more efficient.

More Sustainable

Going digital means less paper and physical storage, aligning your company’s ESG goals and demonstrating responsibility, reducing storage costs at the same time.

Grants and Government Support

To help businesses adopt e-invoicing, the Singapore government offers support like the Productivity Solutions Grant (PSG). This helps to reduce the cost of setting up InvoiceNow.

How to Get Started with E-invoicing in Singapore

E-invoicing offers significant advantages for businesses in Singapore, streamlining operations and enhancing efficiency. Moving to e-invoicing is more straightforward than many assume.

Here are the steps:

Select a PEPPOL Access Point Provider

Engage a certified PEPPOL Access Point provider who will connect your business to the InvoiceNow network.

Check Your Software

Make sure your current accounting or ERP software supports InvoiceNow.

Train Your Team

Switching to e-invoicing may require some changes in how your finance team works. It is important toprovide training so your staff know how to create, send, and receive e-invoices effectively within the new system.

Review Your Invoice Format

Ensure your e-invoices include all the details required by IRAS, such as:

  • GST registration details (if applicable)
  • Your company’s UEN (Unique Entity Number)
  • Postal addresses
  • Itemised invoice details

Your Access Point Provider can help guide you to ensure everything is set up correctly.

Test the System

Testing the system with trial invoices will help identify any adjustments before you go fully live.

With upcoming mandates and the growing emphasis on digital transformation, now is the ideal time for businesses in Singapore to embrace e-invoicing. While the process is relatively straightforward, partnering with the right experts can make implementation smoother and ensure long-term compliance.

Need Support with your Tax and E-invoicing?

At BoardRoom Singapore, we help businesses stay compliant with tax regulations  and prepare for a smooth transition to e-invoicing. Whether you are looking to adopt InvoiceNow or need expert advice on meeting the upcoming requirements, our team is here to support you every step of the way.

Moving to e-invoicing in Singapore doesn’t have to be complicated. Contact us to get started with InvoiceNow and future-proof your accounting and tax processes.

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Your Guide to Global Mobility Tax Solutions

Your Guide to Global Mobility Tax Solutions

Your Guide to Global Mobility Tax Solutions

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Global Mobility Tax Solutions

Given the increasing mobility of the global workforce, global mobility tax solutions are essential, specialised services that assist companies and their employees in navigating the complexities of tax implications associated with international assignments. As your businesses expand globally, you may send employees to work in different countries, resulting in various tax obligations and compliance challenges.

According to Eunice Hooi, Managing Director, Asia, Tax and Accounting, “International assignments are transformative opportunities for organisations and employees alike, but they come with a myriad of tax challenges. Managing global mobility through effective tax strategy ensures success at every turn, enabling employers to unlock the full potential of their global workforce while navigating the complexities of the global tax landscape.”

Managing international assignments demands a well-rounded tax strategy. In this article, we take a deep dive into Global Mobility Tax Solutions and explore the essential components of a successful framework.

What are Global Mobility Tax Solutions?

Global mobility tax solutions encompass a comprehensive framework designed to address the complex tax challenges faced by organisations and employees engaged in international assignments. Key elements include pre-assignment planning, where potential tax obligations and residency issues are assessed, ensuring compliance from the outset. During the posting, ongoing support is provided for tax filings and audit assistance, helping employees navigate local regulations. Post-assignment, processes like tax reconciliation, repatriation tax planning, and exit tax planning are implemented to manage financial impacts and ensure smooth transitions.

What are Global Mobility Tax Solutions

The Framework of Global Mobility Tax Solutions

Global mobility tax solutions typically follow three key phases: preparation and implementation as well as reflection and ongoing support. Each of these steps together ensures effective deployment and compliance, which contributes to the long-term success of global mobility solution.

Phase 1: Pre-Posting Preparations

Before you begin searching for options, the first step is to understand the needs of your company.

Policy Development

Your solution should first establish the framework for how your organisation manage international assignments and the associated tax implications. Your policy should clarify the objectives of the global mobility program, specify the tax responsibilities of both the employer and employee, and outline the support and resources available to help employees navigate complex tax regulations. The policy should be fair, transparent and compliant with the relevant tax regulations in both the home and host countries.

The policy should be a living document, regularly reviewed and updated to reflect changes in tax laws, business needs, and employee feedback. This adaptability ensures that the mobility program remains relevant and effective.

Compensation Structuring

Design a compensation package that is equitable and encourages employee success during international assignments, one that not only attract and retain top talent but also strategically minimise tax liabilities for both the company and the employee. Consider the following when structuring compensation for your employees:

  • Base Salary:The base salary often requires adjustment to reflect the cost of living in the host country. This can involve conducting a cost-of-living analysis to ensure employees maintain their purchasing power while factoring in host country variables such as tax.
  • Allowances and Benefits:Various allowances, such as housing, relocation, and education benefits, are typically included in the compensation package. These allowances should be tailored to the employee’s situation and consider factors like family size and specific needs.
  • Incentives for Assignment:To motivate employees to accept international assignments, organisations may offer additional incentives, such as bonuses or retention payments. These incentives can be possible solutions to enhancing the attractiveness of the assignment and encourage employees to support the organisation’s global mobility

By carefully planning compensation structures, companies can avoid costly tax implications and employees can benefit from a more favourable financial outcome during their international assignment.

Tax Consultation and Planning

With compensation established, both employers and employees need to be made aware of their tax obligations in the home and host countries, so they can make informed decisions before an international assignment begins. This involves conducting thorough tax consultations to assess the specific tax situations of both parties, including an evaluation of the employee’s tax residency status. Understanding income tax, social security contributions, and any applicable tax treaties such as double taxation agreements ensure clarity on potential tax liabilities.

Comprehensive guidance is provided to navigate these obligations, helping to optimise tax outcomes while ensuring full compliance with the relevant tax laws in both jurisdictions.

Preparation of Assignment Agreement

When everything else is in order, you can begin to prepare the assignment agreement. This document outlines the terms and conditions of an employee’s international assignment, ensuring clarity and alignment between the employer and the employee. Including the existing elements above, your agreement should also list the following:

  • Termination and Repatriation: Conditions under which the assignment can be terminated should be clearly defined. Additionally, provisions for repatriation upon completion of the assignment—including support for relocation and reintegration into the home country—should be outlined.
  • Support and Resources: The agreement should detail the support offered to the employee during the assignment, such as access to tax consultants, relocation services, and ongoing communication regarding compliance and regulations.

Phase 2: During-Posting Dynamics

Once the agreement is finalised and the position has been filled, the During-Posting Dynamics phase begins. This phase is crucial as it requires ongoing attention to tax strategies to navigate the intricacies of international tax laws effectively and ensure the well-being of your global talent.

Tax Equalisation

The primary goal of tax equalisation is to maintain tax neutrality for the employee, so they do not experience a financial gain or loss due to differing tax systems in their host country. Essentially, it allows the employee to pay taxes as if they had remained in their home country, with the employer typically covering any additional tax burden incurred in the host country.

Generally, organisations will calculate an estimated home country tax liability based on the employee’s salary and applicable tax laws. This figure serves as the benchmark for determining what the employee should pay in taxes during their assignment. Keep in mind that once the amount has been established, you may need to adjust your withholding practices to account for the employee’s estimated home country tax liability. Also, once the assignment has been completed, a reconciliation process is usually conducted, involving a comparison of the actual taxes paid by the employee in the host country against the equalised amount. This ensures tax neutrality for the employee while keeping the assignment cost-neutral for the company.

Tax Filing Assistance

As employees often face unfamiliar tax regulations in a host country, offering tax filing assistance to employees who are part of your company’s global mobility program helps ensure that your employees are compliant with tax obligations in both their home and host countries. This support helps mitigate the complexities and potential pitfalls associated with international tax regulations. Tax filing assistance includes guidance on the specific filing requirements, deadlines, and any local tax obligations that apply, helping employees navigate these complexities.

Organisations may also want to offer access to tax professionals who can prepare and file tax returns on behalf of employees. This solution ensures that the filings are accurate and compliant with local laws, reducing the risk of errors and potential penalties.

Cross-Border Tax Management

Ongoing adjustments to the tax strategy are key to ensuring an efficient and cost-effective approach throughout the assignment. During the assignment, continuous review of tax planning strategies is essential to optimise the employee’s tax position and minimise tax liabilities across borders. This involves regularly assessing changes in tax laws, both in the home and host countries, to ensure compliance and identify opportunities for tax savings. By actively managing this, employers can help employees reduce their tax burden while maintaining alignment with local and international tax regulations.

Tax Audit Assistance and Support

Regular monitoring of the employee’s tax situation ensures compliance with local tax regulations and timely submission of tax filings, minimising the risk of audits. In the event of a tax audit, tax audit assistance includes preparation of documentation to defend tax positions and access to tax advisors, as well as assistance with appeals, negotiations, or adjustments to tax filings based on audit results.

Phase 3: Post-Posting Reflections

Once the employee’s assignment concludes, your company should evaluate the effectiveness of your global mobility tax strategy. This evaluation will help determine if the desired outcomes have been achieved, and whether you need to make adjustments to adjust for future solutions.

Tax Reconciliation and Settlement

After an assignment ends, tax professionals perform final calculations to determine the actual tax liabilities for the employee in both the host and home countries. Tax reconciliation and settlement ensures that all tax-related matters are resolved following an employee’s international assignment, which not only mitigates potential financial risks for both the employee and the organisation but also enhances trust and satisfaction in the global mobility program. The solution includes tax filing reviews and settlements, as well as any documentation and reporting.

Repatriation Tax Planning

When the employee has returned from the assignment, the company should provide ongoing tax support and advisory services to ease the transition. Repatriation tax planning helps to minimise tax liabilities and ensure compliance with both home and host country regulations. This not only protects the employees under the mobility program from unexpected liabilities but also contributes to the organisation’s reputation as a supportive employer in the global talent market. Solutions include a review of the tax obligations incurred during the assignment, including capital gains and wealth taxes while factoring the tax treaties between home and host countries.

Cross-Border Tax and Retirement Planning

Cross-border tax and retirement planning addresses the complexities that arise when employees return home after an international assignment. It ensures their financial and retirement strategies remain effective and compliant across jurisdictions. This includes providing guidance on the tax implication of any remaining assets or investments in the host country, as well as offering guidance on cross-border retirement planning, including pension contributions, social security implications, and tax-efficient withdrawal strategies.

Exit Tax Planning and Compliance

When an employee leaves a country, they may be subject to exit taxes on unrealised gains and assets. While this can vary depending on the country, understanding and managing exit taxes can help mitigate financial burdens and ensure compliance with various tax regulations. Companies can provide guidance on final tax filings and payments required in the host country. This will help employees navigate the complexities of the process, and ensuring all obligations are met before departure.

Funding and Grant Support from Enterprise Singapore

Enterprise Singapore offers funding and grants to support companies in their ESG journey, such as the Enterprise Development Grant (EDG) which provides support for projects aimed at upgrading, innovating, growing, and transforming your business. There is a small window for companies to take advantage of this grant. From 1 April 2023 to 31 March 2026, under the EDG, small and medium-sized enterprises (SMEs) can receive up to 70% support for sustainability-related projects. EDG covers eligible project costs, including third-party consultancy fees, software and equipment expenses, and internal manpower costs.

As a Registered Management Consultant (RMC) with Enterprise Singapore, Tina emphasises, “Navigating climate-related challenges and opportunities requires not just compliance but strategic foresight. Our goal is not just to help companies meet the reporting standards, but also access funding to drive impactful climate initiatives.” This approach ensures that companies enhance their sustainability strategy while securing the financial support needed for their climate goals.

Tax Filing Assistance

A Holistic Approach to Global Mobility Tax

Global Mobility Tax Solutions involve a comprehensive set of strategies designed to manage the tax complexities of international assignments. Key elements include pre-assignment planning, which assesses tax obligations and residency status, followed by during-posting support that ensures compliance and addresses ongoing tax issues. Tax audit assistance is provided to navigate potential audits, while tax reconciliation ensures final liabilities are settled post-assignment. Repatriation tax planning evaluates the tax impacts upon returning home, and exit tax planning addresses tax obligations when leaving a host country. Throughout these stages, clear communication and employee support are vital to optimise tax outcomes and enhance the overall mobility experience.

How BoardRoom Can Help

To ensure that both you and your employees minimise taxes while being abroad, consider partnering with a trusted provider for your international accounting and tax needs. With over 50 years of experience, BoardRoom has assisted countless businesses worldwide with comprehensive global mobility tax solutions, including record-keeping and cross-border transactional management.

Get in touch with BoardRoom today to explore how our international accounting and tax services can provide you with peace of mind while you grow your business.

Contact BoardRoom for more information:

Eunice Hooi Profile Pic

Eunice Hooi

Managing Director Asia, Tax & Accounting

E: [email protected]

T: +65 6536 5355

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Case Study: Optimising Tax Efficiency in Profits Repatriation

Case Study Optimising Tax Efficiency in Profits Repatriation

Case Study: Optimising Tax Efficiency in Profits Repatriation

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Client Profile

BoardRoom’s client, a multinational conglomerate with a diverse portfolio, operates through subsidiaries in various jurisdictions, including Indonesia, Malaysia, Philippines, Thailand and Vietnam. As part of its corporate strategy, the client is exploring tax-efficient options for repatriating profits via dividends and royalties from its operating subsidiaries.

Specifically, the client is evaluating two jurisdictions—Singapore (SINGCO) and Hong Kong (HKCO)—for establishing the Investment Holding Company and the Intellectual Property (IP) ownership in order to maximize tax efficiency in profit repatriation.

BoardRoom Group’s 2-Step Tax Approach

In assisting the client to achieve its tax-efficiency objectives, BoardRoom adopted a two-step approach:

The first step involved the assessment of the tax regimes of Singapore (SINGCO) and Hong Kong (HKCO) to determine the tax-optimal location for establishing the Investment Holding Company and IP ownership.

Key considerations included corporate tax rates, availability of tax incentives and exemptions, application of tax treaties, as well as economic substance requirements.

In the second step, BoardRoom evaluated the corporate income tax implications of repatriating profits via dividends and royalties from the operating subsidiaries to SINGCO and HKCO. The assessment focused on domestic and treaty withholding tax rates, tax exemptions and the overall tax burden associated with each jurisdiction.

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Recommendation: Overall Consideration of Tax and Non-Tax Factors

Based on BoardRoom’s tax assessment, recommendations were given to the client on a tax-optimal location for establishing the Investment Holding Company and IP ownership, as well asthe tax-optimal strategy for repatriating profits. BoardRoom’s assessment has considered both Singapore (SINGCO) and Hong Kong (HKCO) from various tax angles, including corporate tax rates, tax incentives, treaty benefits and the overall tax burden associated with profit repatriation.

The final decision also considered non-tax factors such as the client’s strategic business requirements and specific operational priorities, as well as the business ecosystem, regulatory environment and geopolitical stability in Singapore versus Hong Kong.

By incorporating both tax and non-tax factors into its decision-making process, the client can confidently move forward with its tax-efficient repatriation strategy, while ensuring compliance and minimizing tax risks.

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Your Guide to Corporate Tax Filing in Singapore

Your Guide to Corporate Tax Filing in Singapore

Your Guide to Corporate Tax Filing in Singapore

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Managing your corporate tax obligations and ensuring their timely filing is a crucial part of conducting and operating your business in Singapore. The Singapore government has specific regulations in place regarding corporate taxes, and while it offers a business-friendly environment, it’s important to learn the steps involved to navigate the process more easily. This guide provides the essential information you need to file your taxes accurately and on time.

What Is Corporate Tax Filing?

Corporate tax filing is the process of declaring your company’s income to the Inland Revenue Authority of Singapore (IRAS) and paying any taxes owed. It’s a mandatory annual process that ensures businesses contribute their fair share to the nation’s development.

Why Is Corporate Tax Filing Important?

Corporate tax filing is important for several reasons, and they include the following:

Ensuring Compliance
Filing corporate tax ensures that your business complies with Singapore’s tax regulations, avoiding any late filing penalties and potential legal issues with IRAS. It protects your business and helps you maintain a good standing with the authorities.
Maintaining Accurate Records
Corporate tax filing plays a vital role in giving you a clear and comprehensive financial picture of your business, detailing records of your income, expenses, and tax liabilities. With these details, you can easily track your business performance and identify areas for improvement.
Eligibility for Incentives
Accurate corporate tax filing allows your company to benefit from various tax deductions or exemptions offered by IRAS. These incentives can significantly reduce your overall tax burden and contribute to your business’s financial health

Who Needs to File Corporate Income Tax in Singapore?

According to IRAS, companies that must fulfil corporate tax obligations include:

  • A business entity incorporated or registered under the Companies Act 1967 or any law in force in Singapore. It usually has the words ‘Pte Ltd’ or ‘Ltd’ as part of its name
  • A foreign company registered in Singapore such as a branch of a foreign company
  • A foreign company incorporated or registered outside Singapore

However, sole proprietorships and partnerships have separate filing requirements. Sole proprietors report their business income under their personal income tax filing, while partnerships file a separate partnership tax return.

Understanding the Singapore Corporate Tax System

Singapore’s corporate tax system revolves around the concept of the Year of Assessment (YA). The YA refers to the calendar year for which you’re filing your taxes. It’s important to note that corporate tax is levied on income earned in the preceding year. For example, in 2024 (which is also your YA2024), you’ll file your corporate tax return for income generated in 2023.

Singapore boasts a flat corporate tax rate of 17%, applicable to both local and foreign companies. This rate is applied to your company’s “chargeable income,” which is essentially your taxable income after deducting allowable expenses from your gross income.

Filing Corporate Income Tax

Key Corporate Tax Filing Requirements

Before filing your corporate tax return, you must understand the requirements to complete the following two Corporate Income Tax (CIT) returns annually at different times:

Estimated Chargeable Income (ECI)
The ECI is an estimate of your company’s taxable profits for a particular YA. You must file your ECI with IRAS within three months of your financial year-end. For instance, if your financial year ends on December 31, 2023, the ECI filing deadline would be March 31, 2024. Some companies may qualify for an ECI filing waiver.

Your company does not need to file ECI in the YA when both the criteria are met:

  • Annual revenue is $5 million or below for the financial year; and
  • ECI is nil for the YA. The ECI is the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies
Form C-S/ Form C-S (Lite)/ Form C
These forms are the official tax return documents submitted to IRAS. The specific form depends on your company’s revenue and other conditions.

Form C-S and Form C-S (Lite) are for companies with income taxed at the 17% Corporate Income Tax rate and not claiming certain deductions or credits in the Year of Assessment (YA), such as Carry-back of Current Year Capital Allowances/Losses, Group Relief, Investment Allowance, Foreign Tax Credit, and Tax Deducted at Source. If your company’s annual revenue is $5 million or below, you will use Form C-S. If your company’s annual revenue is $200,000 or less, you will use Form C-S (Lite).

Companies that do not meet the above criteria must file Form C.

The filing deadline for these forms is typically 30 November of the YA.

Penalties for Late or Inaccurate Corporate Tax Filing

Late or inaccurate filings can result in penalties from IRAS. The penalties can be significant and include:

  • Late filing penalty: If you fail to file your corporate tax by the due date, IRAS may issue an estimated Notice of Assessment (NOA) based on your company’s past years’ income or any information that IRAS may have. Your company must pay the estimated tax within 1 month from the date of the NOA even if you intend to object to the assessment or are awaiting the outcome of the objection. A penalty of 5% of the unpaid tax will be imposed on you if the full payment is not submitted to IRAS by the due date addressed in the NOA.
  • Late payment penalty: If tax payment is overdue by 60 days after the 5% penalty, a 1% monthly penalty may apply for each completed month that the tax remains unpaid, up to a maximum of 12% of the unpaid tax.
  • Inaccurate filing penalty: A penalty ranging from 200% up to 400% of the additional tax may be imposed due to the inaccuracy, depending on whether there is evidence indicating intention to evade taxes. In severe cases where the taxpayers are found to have the intention to evade taxes, they may be prosecuted with a maximum fine of SG$50,000 and/or imprisonment of up to 5 years.
How Can BoardRoom Help You with Corporate Tax Filing in Singapore

How Can BoardRoom Help You with Corporate Tax Filing in Singapore

Navigating Singapore’s corporate tax system can be intricate. BoardRoom takes the complexity out of tax filing, allowing you to focus on running your business. Our team of tax professionals possesses in-depth knowledge of Singapore’s tax regulations and can handle all aspects of your corporate tax filing, from ECI filing and tax computation to preparing and submitting your final tax return to IRAS.

Talk to BoardRoom today to ensure accurate filing and compliance in your corporate tax filing.

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Comprehensive Guide to XBRL Filing Requirement in Singapore

Comprehensive Guide to XBRL Filing Requirement in Singapore

Comprehensive Guide to XBRL Filing Requirement in Singapore

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XBRL filing is a mandatory requirement for many companies in Singapore, playing a vital role in the realm of financial reporting. This guide dives deep into the requirements, preparation and process of XBRL filing, equipping you with the essential knowledge and steps to navigate the entire filing process, ensuring a smooth and compliant submission for your company.

What Is XBRL Filing?

XBRL stands for Extensible Business Reporting Language. It’s a standardised format requirement when incorporated companies submit their financial statements electronically to regulatory bodies such as Accounting and Corporate Regulatory Authority (ACRA) in Singapore.

Why Is XBRL Filing Mandatory in Singapore?

XBRL filing is mandatory for incorporated companies in Singapore, as mandated by the ACRA to enhance transparency, comparability, and efficiency for both regulatory bodies and companies. Traditional paper-based financial statements can be difficult to analyse and compare due to variations in format and presentation. With its standardised tagging system, XBRL ensures consistent data representation across companies.

XBRL Filing Deadlines

To ensure that your XBRL filing is successful, you must be mindful of the deadlines according to ACRA regulations.

The standard deadlines vary between listed companies and non-listed companies:

  • Listed Companies: These companies must file their XBRL data within 5 months from the end of the financial year.
  • Non-Listed Companies: Non-listed companies have a slightly longer grace period, with filings due within 7 months from the end of their company’s financial year.

If you require additional time to file, you can apply for an extension through the ACRA’s online platform. However, it’s recommended to submit your filing within the standard deadlines to avoid potential penalties.

Penalties for Non-Compliance

Failing to comply with XBRL filing deadlines or requirements in Singapore can result in penalties from ACRA.

These penalties may include:

Late filing fees
ACRA imposes a fee of S$300 for late filing within 3 months after the due date. However, the fees can increase progressively the longer the filing is overdue, up to S$600 for filing that is due more than 12 months after the deadline.
Compliance notices
ACRA may issue compliance notices requiring corrective action within a specific timeframe.
Disqualification of Directors
Directors of companies have a duty to ensure that the financial statements and annual returns are filed on time. A director who is convicted of three or more filing related offences under the Companies Act within a period of five years will be disqualified as a director, under S155 of the Companies Act.
Striking Off
Persistent non-compliance can lead to the company being struck off the register, meaning it will cease to exist as a legal entity.

Exemptions from XBRL Filing

While XBRL filing is a mandatory requirement for many companies in Singapore, certain entities are exempted from this requirement.

These exemptions include:

  • Solvent Exempt Private Companies (EPCs): These companies are smaller and privately held and have the flexibility to choose to file their financial statements in traditional PDF format.
  • Singapore Branches of Foreign Companies: Foreign companies operating branches in Singapore are not required to file in XBRL. They can submit their financial statements in PDF format to align with their headquarters’ reporting practices.
Financial statements

What Are the Types of XBRL Formats and Their Filing Requirements?

There are various XBRL filing format types, including full XBRL, simplified XBRL, and XBRL FSH for banks or insurers. However, their requirements vary.

The following is a breakdown of these common formats:

Company TypeXBRL FormatDescriptionFiling Requirements (XBRL Taxonomy 2022)
-Listed companies

 

-Companies with corporate shareholders

 

-Companies with more than 20 individual shareholders

 

-Non-listed companies that are not considered smaller companies and publicly accountable

Full XBRLCaptures comprehensive company information in primary statements and selected notes.Balance sheet, income statement, financial statement highlights, auditor’s report, director’s report (selected sections).
-Non-listed companies that are considered as smaller companies and publicly accountable

 

-Dormant companies

 

-Companies limited by guarantee (NPOs, Charities)

Simplified XBRLCaptures essential information on financial performance and position.Balance sheet, income statement, statement of changes in equity (may vary).
Banks & Financial Institutions regulated by the Monetary Authority of Singapore (MAS)XBRL FSHFocuses on financial statement highlights.Requirements vary based on the size and nature of the institution, typically including a balance sheet, Income statement, cash flow statement, notes to the financial statements, and regulatory reporting.
Licensed Insurers regulated by the MASXBRL FSH (for Insurers)Similar to banks and financial institutions, but with specific insurance details that helps insurance companies comply with regulatory requirements.Balance sheet, income statement, cash flow statement, schedules, supplementary information (premiums, claims, reserves, etc.).

Preparing for XBRL Filing

Whether you need to file for simplified XBRL, full XBRL, or other format types, it’s crucial to prepare ahead to ensure a smooth and efficient process. Follow the below steps for your preparation.

  • Understanding the XBRL Taxonomy: The XBRL Taxonomy serves as a standardised dictionary, defining the specific tags used to represent financial data elements in your filings. Familiarise yourself with the available tags, the tag hierarchies such as parent-child relationships, and industry-specific tags outlined in the taxonomy.
  • Mapping Financial Statement Data to XBRL Tags: Achieve accurate mapping by carefully matching financial statement line items to XBRL tags.
  • Learning the Tools Available for XBRL Filing: The BizFinx Preparation Tool  is a free software provided by ACRA for XBRL filing. It can help you map the data, validate the XBRL file, and generate reports to prepare the XBRL financial statements.

XBRL Filing Process

Once you have prepared your XBRL files, you can start navigating the actual filing process by following the below step-by-step guide to ensure every requirement is fulfilled:

  1. Log in to Bizfile+
  2. Select your Profile
  3. Click ‘File eServices’
  4. Select ‘Local Company’
  5. Click ‘Annual Filing’
  6. Select ‘Filing of Annual Return by Local Company’ for companies with FYE before 31 Aug 2018 or ‘Filing of Annual Return by Local Company (For FYE from 31 Aug 2018)’
  7. Enter your company UEN and click ‘Next’
  8. When the E-Form is displayed, verify your company information, select the necessary fields, attach your supporting documents, review and submit.
XBRL Filing Process

Common Errors and Troubleshooting

Even with careful preparation, errors during the XBRL filing process are still a possibility.

The following are some of the common pitfalls you may encounter and should be careful of:

  • Incorrect Tagging of Financial Data Elements:  This occurs when financial data elements are matched with the wrong XBRL tags within the taxonomy.
  • Missing or Incomplete Information: Incomplete data submissions and mapping to inappropriate XBRL tags can lead to filing rejections.
  • Technical Glitches During Upload:  Technical issues during the upload process can sometimes disrupt filing.  These glitches range from internet connectivity problems to compatibility issues between your XBRL software and the ACRA’s online platform.

Apart from gaining a thorough understanding of XBRL Taxonomy, paying meticulous attention while filling in information for submission, and backing up your XBRL file, ACRA provides a troubleshooting guide for users, serving as a helpful reference for them to navigate any technical challenges.

How Can BoardRoom Help You with Fulfilling XBRL Filing Requirements In Singapore?

Understanding XBRL filing requirements ensures timely compliance for submission. Familiarising yourself with the different XBRL formats, exemptions, and potential pitfalls are important to avoid the penalties of non-compliance of your annual return filing.

As a leading provider of corporate solutions, including XBRL services, BoardRoom’s dedicated team of experts can ensure your XBRL filing requirements are fulfilled with a streamlined process to enable accurate, efficient, and timely submission.

  • Expertise and efficiency: BoardRoom has dedicated XBRL specialists who can ensure accuracy, compliance, and timeliness.
  • Software access: With access to advanced XBRL software, we help you streamline the process and reduce errors.
  • Cost-effectiveness: While there are upfront costs, outsourcing can save time and resources in the long run, especially for complex filings.
  • Local knowledge: Our expert team understands the specific requirements of ACRA and can navigate any potential challenges.
  • Peace of mind: Outsourcing allows you to focus on your core business activities while ensuring your XBRL FS are compliant and filed accurately

Contact BoardRoom today to learn more about our XBRL conversion and filing services, and how we can ensure a smooth and efficient XBRL filing experience for your business.

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What is transfer pricing? A guide to understanding opportunities and risks

What is transfer pricing A guide to understanding opportunities and risks

What is transfer pricing? A guide to understanding opportunities and risks

boardroomsuperadmin

Transfer pricing is a fundamental financial strategy for multinational companies operating across various jurisdictions. Over the years, countries around the world, including Singapore, Malaysia, Hong Kong and China, have established specific documentation requirements for transfer pricing to prevent tax evasion and ensure compliance.

In simple terms, transfer pricing is used to determine the fair pricing of goods, services or intellectual property exchanged between related entities in the same enterprise. Understanding what transfer pricing is and how it can be used to optimise tax liabilities is an important strategy. However, businesses have to be mindful of navigating complex regulatory frameworks. Tax authorities have sharpened their focus on transfer pricing arrangements, especially in China, Malaysia, Singapore and Hong Kong, where compliance is vital.

Singapore’s tax authority demands meticulous documentation and adherence to the arm’s length principle, which ensures that transacting businesses are on equal footing. This not only ensures regulatory compliance but also fosters fair profit allocation across borders, which also enhances tax efficiency.

In this article, we explore the complexities of transfer pricing and the essential guidelines businesses must grasp to navigate these challenges effectively.

The purpose of transfer pricing: A key business strategy

Effective transfer pricing plays a pivotal role in audit management, global tax efficiency and risk management for multinational enterprises (MNEs). To leverage transfer pricing strategies effectively, MNEs must ensure their records are up to date to navigate complex tax landscapes and mitigate risks effectively.

Compliance and risk mitigation
Effective transfer pricing requires comprehensive documentation to demonstrate compliance with regulatory requirements. It provides a clear record of how transfer prices are determined, how they align with the arm’s length principle, and how they are substantiated by economic analysis. This practice is crucial for audit management as it provides evidence of compliance but also mitigates the risk of penalties and disputes with tax authorities.
Tax efficiency
Strategic transfer pricing reporting allows companies to optimise their global tax positions. By documenting transfer pricing policies, the methodology employed and its rationale, a business in Singapore can justify its tax position and allocate profits in a manner that maximises tax efficiency. This strategic approach to tax planning helps to reduce tax liabilities while ensuring business objectives and regulatory obligations are met.
Staying ahead of changes
Businesses need to stay on top of ever-changing regulations and market dynamics, especially when they operate internationally across multiple jurisdictions. Staying ahead of changes can be daunting, but MNEs can enhance their transfer pricing strategies by actively monitoring and analysing shifts in regulations, industry trends and economic conditions. Taking a proactive approach allows businesses to adjust transfer pricing strategies accordingly, maintain compliance and capitalise on tax optimisation and risk management opportunities.

Because transfer pricing reporting combines compliance with proactive risk management and tax-efficiency strategies, for many global businesses, it’s a cornerstone of their corporate governance strategies.

The key to successful transfer pricing in international business

In today’s interconnected business landscape, MNEs face the challenge of optimising transfer pricing strategies across diverse jurisdictions while ensuring compliance with various regulations and tax rates.

As BoardRoom’s Managing Director Asia, Tax, Eunice Hooi understands the compliance pressures faced by MNEs in the region. To navigate this complex terrain effectively, Eunice advises MNEs to adopt a proactive approach to transfer pricing, where the policies align with their overall business functions and value chains.

MNEs must understand how each business segment contributes to the creation of value across the entire chain. Monitoring and adjusting strategies in response to evolving business dynamics is also crucial. This requires regular reviews of transfer prices to ensure alignment with regulatory changes and economic circumstances.

Navigating regulatory challenges

A significant challenge when introducing transfer pricing strategies lies in navigating diverse regulatory landscapes and tax obligations across countries of operation. Each jurisdiction may impose different compliance regulations and tax rates. This means it is essential for companies to stay informed and adapt their strategies accordingly.

The high-tax countries typically have more comprehensive and strict transfer pricing regulations, preventing MNCs from manipulating their related party transactions to artificially shift profits to low-tax jurisdictions, leading to erosion of taxable income in the higher-tax jurisdictions. These transfer pricing regulations aim to align the pricing of transactions between related parties with what would be expected in an open market between unrelated parties.

In contrast, low-tax countries may have less stringent transfer pricing regulations with the aim to attract foreign investments. These jurisdictions generally offer favourable tax environments to encourage businesses to establish their operations within their borders.

To effectively manage these challenges and ensure compliance, many businesses adopt proactive approaches, such as employing advanced pricing agreements and conducting regular risk assessments. Additionally, developing a robust and consistent transfer pricing policy and methodology is crucial. This helps companies not only manage regulatory challenges successfully, but also maximise profitability by optimising transfer prices according to market conditions and tax implications.

Navigating regulatory challenges

Transfer pricing in Singapore: Case study of company in Asia

Consider the case of a business that operates globally with headquarters in Singapore and operational footprints in Hong Kong, Malaysia and China. The organisation’s diverse structure includes a HR Shared Services Centre in Malaysia, a Treasury Service Centre in Hong Kong, manufacturing facilities in China, and a strategic supply chain hub in Singapore. Given its diverse group of companies, this multinational company faces intricate transfer pricing challenges.

The challenge

The main challenge for this company is accurately assessing the economic value of intercompany transactions across its various jurisdictions. Because each subsidiary contributes distinctly to the value chain, it needs to be able to accurately capture the true value creation arising from the related party transactions.

A strategic approach

The multinational company adopted a value-chain approach to transfer pricing, conducting a detailed analysis of functions, assets and risks for each operational function. This approach allowed for the establishment of transfer prices that truly reflect the economic value of goods and services exchanged between the entities, from manufacturing in China to distribution from Singapore.

The key benefits achieved:

Through the value-chain approach, three distinct benefits were achieved for the company:

  1. Strategic decision-making: the company could make strategic decisions regarding resource allocation and business expansion plans based on a more accurate assessment of where economic value is actually being created within the group of companies.
  2. Risk management: by aligning transfer pricing practices with actual economic activities, the company minimised its compliance risks. This tailored approach provided a robust defence in transfer pricing audits, reducing the likelihood of disputes and penalties.
  3. Tax optimisation: profits were allocated according to the value contributed at each stage of operations, ensuring compliance and optimising tax liabilities. This strategic allocation not only adhered to regulatory requirements but also maximised tax efficiency for the company.

The impact:

This case showcases how a tailored transfer pricing strategy can significantly benefit multinational operations. By adopting a comprehensive transfer pricing strategy rooted in the value-chain approach, the company can enhance its operational efficiency, reduce costs and drive top and bottom-line growth in today’s dynamic global business environment.

Expert advice on transfer pricing in Asia

To navigate the complexities of transfer pricing in Asia, Singapore MNEs can turn to specialised tax advisors. By partnering with an expert in the field, MNEs can be confident that they’ll meet their regulatory obligations in the jurisdictions they operate in while optimising their tax positions.

“We act as strategic tax advisors, guiding our clients through the complexities of transfer pricing,” says Eunice. “Our approach involves understanding their entire business processes, operations and legal structure, including IP ownership if applicable.”

As experts on transfer pricing guidelines, BoardRoom works with clients to conduct a thorough review and assessment of every aspect of business operations, spanning procurement, production and distribution. This allows our team to identify key value drivers, cost centres and profit contributors in the business’s value chain. With a deep understanding of these intricacies, we provide personalised guidance.

Once we have a comprehensive understanding of the business, we collaborate with clients to develop a tailored transfer pricing strategy that aligns with their needs and objectives. This strategy includes both the conceptual framework and the necessary documentation, ensuring a robust and compliant approach to transfer pricing management.

Because the BoardRoom team assesses all areas of the business and what’s important for a business’ strategic direction, we offer a level of detail that many other tax advisors don’t.

“Many advisors focus solely on explaining rules and regulations to their clients based on their reading of the guidelines,” says Eunice. “They can articulate the requirements for a transfer pricing strategy and documentation. However, they often lack the practical commercial experience to help their client implement these strategies.

Setting rules is one thing, but the crucial question is how to implement the transfer pricing strategy effectively.”

Implementation is where the real challenge lies, and this requires a deep understanding of business operations, dynamics and practical solutions that align with regulatory compliance and strategic objectives.

Through a client-centric approach, we offer a suite of transfer pricing services:

Value chain analysis
At the core of our transfer pricing services is a comprehensive analysis of our clients’ value chains. We review and assess each stage of their operations, from procurement to production to distribution, to identify value drivers, cost centres and profit contributors. By understanding the intricacies of their value chain, we can assist the clients in optimising their transfer pricing strategies to enhance efficiency, minimise tax risks and maximise profitability.
Ex-ante price setting
One of the key components of our transfer pricing services is assisting clients in setting appropriate transfer prices before transactions occur. Through market analysis, benchmarking studies, and economic modelling, we assist clients in setting the prices for intercompany transactions at arm’s length and complying with relevant regulations.
By establishing clear and defensible pricing policies upfront, we help clients mitigate the risk of transfer pricing adjustments, penalties and disputes with tax authorities.
Ex-post price testing
In addition to proactive ex-ante price setting, our transfer pricing services encompass ex-post price testing to validate the arm’s length nature of intercompany transactions. We employ statistical techniques, such as comparable profits methods and transactional net margin methods, to assess the accuracy and reliability of transfer prices.
We assist clients in conducting regular transfer pricing reviews, giving the clients the assurance that their transfer pricing policies withstand scrutiny and align with best practices, thus minimising the risk of non-compliance and potential financial consequences.
Transfer pricing partner in Singapore

Your transfer pricing partner in Singapore

At BoardRoom, we play an important role in helping businesses understand the intricacies of transfer pricing, its meaning and its importance in their overall strategic activities in Asia, including Singapore, Malaysia, Hong Kong and China. Through guidance, meticulous analysis and proactive implementation, we help our MNE clients navigate the complexities of transfer pricing regulations and optimise their tax positions.

Enterprises seeking guidance on everything to do with transfer pricing in Asia, come to us because they want a partner who can capitalise on opportunities and ensure compliance. Please contact us today to discover what our team can do for you.

Contact BoardRoom for more information:

Eunice

Eunice Hooi

Managing Director Asia, Tax

E: [email protected]

T: +65 6536 5355

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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!

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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.

Contact BoardRoom for more information:

Eunice

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 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 on how to close a company in Singapore efficiently while safeguarding stakeholders’ interests.

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 member’s 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 member’s voluntary winding up.

Below is a breakdown of the types of company closure in Singapore:

Closure MethodEligibility DurationKey Considerations
Striking OffNo debts, no assets, no ongoing business activities, No pending legal proceedings or tax liabilitiesAt least 4 monthsSuitable for dormant or inactive companies
Members’ Voluntary Liquidation (MVL)Solvent company, able to pay off debts within 12 monthsApproximately 12 monthsRequires a liquidator to distribute assets, a Declaration of Solvency must be filed by directors to initiate MVL
Compulsory LiquidationInsolvent company, initiated by creditors or court orderVariesTypically initiated by creditors or via legal proceedings

 

Winding of a company

Which Method Should You Choose?

  • Strike-off: Best for companies with no outstanding liabilities or business operations.
  • MVL: Suitable for solvent companies with assets to distribute among shareholders.
  • Compulsory Liquidation: Necessary for insolvent companies with unpaid debts.

Companies should consult a licensed liquidator or accountant to determine the suitable closure method, as eligibility varies based on the company’s financial, legal and operational circumstances.

Step-by-Step Guide to Closing a Company in Singapore

Striking Off a Company

  1. Confirm eligibility – Ensure that the company has ceased business activities, settled all debts, has no outstanding liabilities, no pending litigation, and no unresolved tax matters.
  2. Prepare documentation – Submit the Application for Striking Off to ACRA via BizFile+.
  3. Obtain Tax clearance – File final tax returns, settle outstanding taxes, and obtain a notice of Tax Clearance from the Inland Revenue Authority of Singapore (IRAS).
  4. Await ACRA processing – ACRA will assess the application and publish a notice in the Government Gazette.
  5. Final closure – If no objections arise within 60 days, ACRA will publish a final notice and remove the company from the register.

    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 the EGM published in one English local newspaper and in the eGazette.

    For businesses looking at how to close a company in Singapore through members’ voluntary liquidation, please refer to the infographic “The process of voluntary liquidation in Singapore” below for more details.

    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.

    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 must 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. Within 14 days after his appointment, the liquidator must 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, the directors’ powers will cease upon the appointment of a liquidator, and the liquidator will take 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 the EGM must be published in one local English newspaper and in the eGazette. The liquidator will present to shareholders its final account of how the liquidation was conducted and how payments were made. It must also lodge the account of the liquidator’s receipts and payments, as well as 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 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.

    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 the 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.

    Tax Obligations Before Closing a Company

    • Final corporate tax filing: Companies must file all outstanding corporate tax returns (Form C-S/C) with IRAS before closure.
    • GST deregistration: Companies registered for GST must cancel their registration within 30 days of ceasing business operations. Then file a final GST return to settle any liabilities or claim refunds.
    • Tax clearance certificate: Required from IRAS to confirm no outstanding taxes before liquidation.
    • Shareholder distributions: Distributions made during liquidation are generally treated as capital repayments and not subject to tax if properly classified. However, distributions of retained earnings or profits may be considered taxable dividends depending on the nature of the funds.

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

    • Goods and services tax (GST) – Companies must fulfil all GST obligations, including settling any outstanding liabilities, claiming refunds, filing a final return, and cancelling their 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 the liquidation process is completed.
    • 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.

    To avoid unnecessary tax liabilities during closure, businesses should work with tax professionals who understand how to close a company in Singapore efficiently.

    Updated rules for financial reporting during liquidation

    The 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 the 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 this declaration of receipts and payments. This means liquidators no longer need to split receipts and payments based on the calendar year when filing declarations with the IRAS, making for easier reporting.

    For businesses exploring how to close a company in Singapore, staying informed about such regulatory changes can ensure a more seamless liquidation process.

    Common tax pitfalls during liquidation

    Some of the common tax pitfalls include:

    • Failure to clear outstanding corporate tax before striking off
    • Late filing penalties from IRAS
    • Overlooking GST deregistration 

    According to Ade Teo, Senior Manager of Regional Tax Services for BoardRoom Singapore, another 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

    Costs Involved in Closing a Company

    The costs of closing a company in Singapore vary depending on the method and complexity of the process. 

    Key expenses typically include:

    • Government Fees – These may include regulatory filing fees, such as those required by the Accounting and Corporate Regulatory Authority (ACRA) for company strike-offs and liquidations.
    • Professional Fees – Engaging corporate service providers, such as liquidators or corporate secretarial firms, incur professional fees for handling the administrative and compliance aspects of the liquidation.
    • Legal and Tax Advisory Fees – Businesses may need to engage legal and tax professionals to navigate compliance requirements and ensure proper tax clearance.

    Businesses should consult experienced professionals to get a clear understanding of the costs associated with their specific situation.

    Why Applications Fail & Common Pitfalls

    Many companies face rejection when applying for closure due to the following reasons:

    • Unpaid taxes or outstanding debts: Companies must settle all financial obligations before closure.
    • Pending legal matters: If a company is involved in lawsuits, it is not eligible for striking off.
    • Failure to deregister licenses – Any business licenses, permits or registrations must be cancelled before applying for closure.
    • Incomplete or inaccurate documentation – Applications with missing, incorrect or inconsistent information will be rejected.

    After Closing Your Company

    Even after closure, there are post-closure responsibilities to keep in mind:

    • Document Retention: Companies must keep business records for at least five years fromt eh date of closure, in accordance with the Companies Act and IRAS guidelines.
    • Reinstating a Struck-Off Company: If there is a valid reason to do so, a previously struck-off company can be restored within six years via a court application.
    • Managing Dormant Companies: If a business is not fully closed but inactive, it must still fulfil statutory obligations such as annual return filing and corporate tax submissions, unless it has been granted a waiver or exemption by ACRA and IRAS.

    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.

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

    Streamline the liquidation of your company with BoardRoom

    In the event that your business needs to close down, understanding how to close a company in Singapore and navigating tax issues, as well as the liquidation process of a company, is of utmost importance.

    For more than 50 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.

    Frequently Asked Questions (FAQs)

    1. Can I reopen a struck-off company?

    Yes, a struck-off company can be restored within six years by submitting a court application and settling any outstanding obligations.

    2. How long does company liquidation take?

    • Striking off takes around 5 months, depending on ACRA approval.
    • Members’ Voluntary Liquidation (MVL) typically takes approximately 12 months, depending on asset distribution.

    3. What happens if I don’t clear my taxes before liquidation?

    IRAS will reject the closure application, and the company will remain liable for outstanding taxes. Late filing penalties may also apply.

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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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