Feedback wanted on allowing double tax deduction for costs

Feedback wanted on allowing double tax deduction for costs

Companies could soon benefit from double tax deduction for costs associated with issuing retail bonds, if proposed legislation is passed.

The initiative is part of efforts to broaden the range of investment options available to retail investors, the Finance Ministry (MOF) said yesterday.

The move is outlined in a draft Bill, which also contains a suite of other proposed changes and refinements to the Income Tax Act.

The MOF is holding a public consultation on the Bill until July 29, and is inviting feedback.

If passed into law, the double tax deduction for issuing retail bonds will take effect from May 19.

Companies which have recently issued retail bonds include Aspial Corp, Frasers Centrepoint, Perennial Real Estate Holdings and Oxley Holdings.

Other amendments outlined in the Bill include changes announced in this year's Budget, such as increasing the corporate income tax rebate, and capping total personal income tax relief at $80,000 per year of assessment.

The Bill also includes an amendment requiring country-by-country tax reporting for multinational corporations.

Singapore-headquartered multinationals with global revenues exceeding $1.125 billion will have to submit an annual country-by-country report containing the income, taxes paid, and other indicators of level of economic activities in every tax jurisdiction where they operate.

This will take effect from enterprises' financial years starting on or after Jan 1, 2017.

Singapore has entered into bilateral agreements for automatic exchange of country-by-country reports with some tax jurisdictions.

The Inland Revenue Authority of Singapore will conduct these exchanges. These jurisdictions have to meet certain conditions such as having strong rule of law to ensure the confidentiality of the information exchanged.

Tax experts said this requirement is part of a global move towards greater tax transparency.

Mr Chris Woo, tax leader at PwC Singapore, said the new rules will subject multinationals to additional compliance requirements and also open their operations up to greater scrutiny from the tax authorities.

Still, given that the proposed legislation will apply only to Singapore- headquartered companies with global revenues in excess of $1.125 billion, the number of firms affected will not be large, said Mr Geoffrey Soh, head of transfer pricing at KPMG in Singapore.

The public can access the detailed consultation documents for the draft Bill on MOF's website and on government feedback portal Reach.

Respondents may send their comments to the Ministry of Finance directly via the website, e-mail, fax or post.


SOME COMPANIES WHICH HAVE ISSUED RETAIL BONDS

FRASERS CENTREPOINT

AMOUNT RAISED: $500 million

COUPON: 3.65%

EXPIRES: 2022


ASPIAL CORP

AMOUNT RAISED: $200 million

COUPON: 5.3%

EXPIRES: 2020


PERENNIAL REAL ESTATE HOLDINGS

AMOUNT RAISED: $200 million

COUPON: 4.55%

EXPIRES: 2020


OXLEY HOLDINGS

AMOUNT RAISED: $150 million

COUPON: 5.15%

EXPIRES: 2020


This article was first published on Jul 09, 2016.
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