Many times in our education to our clients on income tax and Goods & Services Tax (“GST“), we stress that these two branches of tax law are different and it is absolutely risky to apply income tax concept to solve a GST problem or vice versa.
For instance, if a foreign company is treated as a resident company in Singapore because it is proven to the IRAS’ satisfaction that the control and management of its business is exercised in Singapore, does it mean that it is also belonging in Singapore for GST purposes?
In our opinion, the concept of tax residence for income tax purposes is different from the concept of belonging in a country for GST purposes. The place where a person is belonging depends on where it has its business establishment or fixed establishment, or if it has no such establishment, where its usual place of residence. This is provided for under Section 15 of the GST Act. So, if a foreign company has indeed such establishment only in Singapore, it is arguable that it should be seen as belonging in Singapore. On the other hand, if it has such establishments in Singapore and other parts of the world, then it would only be treated as belonging in Singapore if the establishment in Singapore most directly used the service.
Once again, it is a risky proposition to apply any income tax concepts to solve a GST problem and vice versa.
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