Tag Archives: International tax

Singapore To Sign The Multilateral Convention To Implement Tax Treaty Related Measures To Prevent BEPS


On 7 June 2017, Singapore has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”), with over 60 other jurisdictions.

The signing of this MLI represents Singapore’s commitment to upholding the principles behind BEPS, i.e.  profits should be attributable to the jurisdictions where the substantial economic activities giving rise to such profits are conducted.

The Finance Minister, Mr. Heng Swee Keat said

“Singapore strongly supports the principle that profits should be attributable to the jurisdiction where substantive economic activities generating the profits are based.  Signing the Multilateral Instrument allows Singapore to swiftly update its wide network of Avoidance of Double Taxation Agreements to internationally agreed standards. Singapore’s signing of the Multilateral Instrument reaffirms Singapore’s commitment and support to the BEPS Project.”

What is the impact on Singapore’s DTA network when Singapore signs the MLI?

The MLI provides flexibility for a jurisdiction to

  • determine which of its DTAs it would like to amend using the MLI; and
  • indicate which provisions in the MLI it would like to adopt and how such provisions should be adopted.

For example, if both Singapore and Jurisdiction A have signed the MLI, the bilateral DTA between Singapore and Jurisdiction A will be amended only if both Singapore and Jurisdiction A indicate that they would like to amend their bilateral DTA using the MLI.

In the MLI context, such a bilateral DTA is referred to as a “Covered Tax Agreement (CTA)”.  A provision in the DTA between Singapore and Jurisdiction A (i.e. the CTA) will be amended by an MLI provision only if both Singapore and Jurisdiction A have taken the same position regarding that provision in the MLI.

At the point of signing the MLI in June 2017, Singapore has provided a provisional list of the DTAs that it would like to amend using the MLI, as well as its provisional positions on the MLI provisions. This provisional list may be amended and will only be confirmed upon ratification of the MLI.  Singapore has included 68 of its 82 comprehensive DTAs after considering various factors, such as our DTA partners’ commitment to the BEPS Project. These DTAs will be amended by the MLI only if the respective DTA partners also sign the MLI and have included the respective DTAs under the scope of the MLI.

How did Singapore determine its positions on the MLI?

The MLI allows jurisdictions to swiftly implement the tax treaty related BEPS recommendations, which include both mandatory provisions (i.e. the minimum standards under the BEPS Project) as well as non-mandatory provisions.

Singapore will be adopting these mandatory provisions in the MLI,

(i) Article 6 (Purpose of a covered tax agreement) – To include a statement of intent in the preamble of the covered tax agreement that the DTA is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance

(ii) Article 7 (Preventing treaty abuse) – To include a general anti-abuse rule in the covered tax agreement, commonly known as the Principal Purpose Test (PPT).

(iii) Article 16 (Mutual Agreement Procedure) – To include a mechanism to allow a Singapore resident taxpayer to seek assistance from IRAS when the taxpayer encounters taxation in a DTA jurisdiction that is not in accordance with the intended application of the DTA.

Singapore will also be adopting a number of non-mandatory provisions in the MLI, which it believes will be beneficial for its taxpayers.  One such example is the adoption of the mandatory binding arbitration provision in our DTAs. This provision will provide an alternative dispute resolution mechanism if the competent authorities are unable to reach agreement or are unable to do so in a timely manner.  The mandatory binding arbitration provision will be included in our DTAs if the respective DTA partners also choose to adopt the provision.

If you have any questions, contact us at support@whm-consulting.com

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International Tax – Updates on Country-by-Country Reporting


31 countries have concluded the Multilateral Competent Authority Agreement (“MCAA”) for the automatic exchange of Country-by-Country reporting.  The OECD is of the view that the MCAA will enable consistent and swift implementation of the new Transfer Pricing Reporting Standards developed under Action 13 of the BEPS Action Plan.

What this means is that the tax authorities to the MCAA has now the ability to obtain a complete understanding of the way the Multi-National Enterprises (MNEs) structure their operation while also ensuring that the confidentiality of such information is safeguarded.

“Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on the key indicators of multinational businesses. This is a much-needed tool towards the goal of ensuring that companies pay their fair share of tax, and would not have been possible without the BEPS Project.” said OECD Secretary-General Angel Gurría.

Impact on the MNEs

Starting from 2016 accounts, the tax administrators will get aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group.

It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as signed today. First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the Action 13 report on transfer pricing documentation provides for alternative filing so that the playing field is levelled.

Implications for Singapore

Singapore is not one of the signatories  to this MCAA.   The latest Transfer Pricing Guidelines issued by the IRAS on 4 January 2016 did not introduce the requirement for taxpayers to implement Country-by-Country reporting, notwithstanding that consultation is ongoing regarding implementation.

If you have any questions regarding the above, please contact us.

 

Double Taxation Agreement between Singapore and Rwanda


It was reported in IRAS’ website on 26 August 2014 that the  double taxation agreement (“DTA“) between Singapore and Seychelles has been signed by both countries on 26 August 2014.

The DTA is expected to enhance economic cooperation between both countries.  Amongst other provisions, the DTA lowers withholding taxes for businesses – interest (10%) and royalties (10%), and provides for the exchange of information for tax purposes based on the internationally agreed Standard.

If you have any questions regarding the above, please contact support@whm-consulting.com.

Double Taxation Agreement between Singapore and Seychelles


It was reported in IRAS’ website on 10 July 2014 that the  double taxation agreement (“DTA“) between Singapore and Seychelles has been signed by both countries on 9 July 2014.

The DTA is expected to enhance economic cooperation between both countries.  Amongst other provisions, the DTA lowers withholding taxes for businesses – interest (12%) and royalties (8%), and provides for the exchange of information for tax purposes based on the internationally agreed Standard.

If you have any questions regarding the above, please contact support@whm-consulting.com.

Revised Double Taxation Agreement between Singapore and Barbados comes into force


It was reported in IRAS’ website on 25 April 2014 that the revised double taxation agreement between Singapore and Barbados has entered into force on the same date.

The effective date of this revised agreement will be 1 January 2015.

If you have any questions regarding the above, please contact support@whm-consulting.com.

Be Well!
Jack:)