Category Archives: Income Tax

Income Tax – Country-by-Country Reporting (Third Edition)


The IRAS has issued the third edition of the Country-by-Country Reporting e-Tax Guide on 7 August 2018 by amending the answer to Question 11 of the FAQ.

Question 11: Can rounded figures be reported in the CbC report?

Companies can report rounded figures in their CbC report if the source data from which those amounts have been obtained consist of rounded figures.

Companies should ensure that the rounding does not have a material impact in terms of understanding the CbC report.

When rounding off to the nearest thousand, companies would still have to show the figures in full. For example, if the rounded figure is S$1,126,000, it should be entered in the CbC report as S$1,126,000 and not S$1,126.

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Income Tax – Sole proprietor convicted for PIC sham


It was reported in IRAS’ website on 3 August 2018 that Lim
Mei Lee, who is a sole proprietor of Wahla Balloon, has been convicted and sentenced for abusing the Productivity and Innovation Credit (“PIC“) scheme by giving false information to illegally obtain PIC cash payouts and bonuses for Wahla Balloon.

Investigations by IRAS revealed that Lim gave false information to the Comptroller of Income Tax (“CIT“) by stating in Wahla Balloon’s PIC application forms that the business had incurred qualifying PIC expenditure when no such expenditure had been incurred.

The forms were submitted between November 2013 to July 2014 to claim $11,953.80 in PIC cash payouts and $13,269 in PIC bonuses for the purported expenditure of $19,923 to purchase items such as balloon inflators and to attend balloon making workshops.

Lim thus committed an offense by giving false information to illegally obtain PIC cash payouts and bonuses that she was not entitled to.

Lim faced a total of 8 charges of giving false information to the CIT to illegally obtain PIC cash payouts and bonuses. She pleaded guilty to 3 proceeded charges, involving a total amount of PIC cash payouts and bonuses of $13,204.60, with the other 5 remaining charges being taken into consideration for the purposes of sentencing. The Court ordered Lim to pay a fine of $9,000 and a penalty of $26,409.20, 2X the amount of cash payouts and bonuses illegally obtained, and sentenced her to 23 weeks’ imprisonment in default of payment.

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Income Tax – Three individuals to be charged for tax evasion of rental income


It was reported on IRAS’ website on 16 March 2018 that 3 individuals were charged in the court in 2 separate cases for tax evasion on their rental income.

  • 2 persons were charged on 16 March 2018, for the omission of rental income from their tax returns.  More specifically, one of them faced 4 charges involving omitted rental income amounting to $411,252 for Years of Assessment (YAs) 2010 to 2013 which resulted in a total of $69,065.20 in tax undercharged. The other faced 3 charges involving omitted rental income amounting to $299,769 for YAs 2012 to 2014 which resulted in a total of $52,854.75 in tax undercharged. In addition, this individual will face another charge for the non-filing of his income tax returns.
  • One would be charged on 13 April 2018  for submitting falsified invoices to IRAS to support claims made for rental expenses between YAs 2009 to 2013. The individual will face 5 charges involving the submission of falsified invoices that amounted to $284,308.52. This resulted in a total of $56,499.91 in taxes undercharged.

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Hong Kong Profits Tax – Two-Tier Profits Tax Rate Comes Into Effect on 1 April 2018


On 29 March 2018, the  Inland Revenue (Amendment) (No. 3) Ordinance 2018 (“the Ordinance”) was gazetted to implement the two-tiered profits tax rates regime announced in the 2017 Policy Address by Ms. Carrie Lam, the Chief Executive of HK SAR.

The new two-tier profits tax structure will be effective to any year of assessment commencing on or after 1 April 2018

  • The profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%.  Profits above that amount will continue to be subject to the tax rate of 16.5%
  •  For unincorporated businesses (i.e. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5% and 15% 

The above two-tiered profits tax rates regime is implemented to benefit the most to the small and medium enterprises (SMEs).  Large corporations should not that the regime is restricted to only one enterprise nominated among connected entities.

A Comparison of the Effective Tax Rate between Singapore and Hong Kong

Let’s do a comparison between Hong Kong and Singapore based on the scenario of a company having an assessable profit of HKD3,000,000 (or SGD500,000).

Effective tax rate if the company is incorporated in Hong Kong – 11%
Effective tax rate if the company is incorporated in Singapore – 12% (and this will be increased to 14% as a result of the revision of the Partial Tax Exemption Scheme).

Our comments:  Although Taxation is never the only factor for a company to consider the location of setting up the business, it certainly becomes slightly more attractive for the business to be set up in Hong Kong from an effective rate perspective unless the same business can obtain more tax breaks or reliefs from a Singapore tax perspective.  The Singapore Government has to work harder on this to maintain its competitiveness with Hong Kong.

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Income Tax – Director of metal stamping company to be charged for tax evasion


It was reported in IRAS’ website on 22 March 2018 that a company director was charged in court for assisting his company to evade tax.  He faced 5 charges involving the making of false entries in his company’s income tax returns from Years of Assessment (YAs) 2009 to 2013, which resulted in $648,427.90 in tax undercharged.

In addition, he will face 17 charges for without reasonable excuse, making an incorrect return by understating output tax in his company’s GST returns amounting to $266,870.58 during the same period.

What does this mean to you?

Upon conviction, he may face a penalty of two times the amount of tax undercharged, and a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both.

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