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Summary Of Responses To Public Consultation On Draft Income Tax (Amendment) Bill 2017

07 Sep 2017

 56 suggestions accepted and incorporated into the upcoming Income Tax (Amendment) Bill 2017

1. The Ministry of Finance held a public consultation exercise on the draft Income Tax (Amendment) Bill 2017 from 19 June - 10 July 2017[1]. The draft Bill proposes legislative amendments to effect tax changes announced in Budget 2017 and to introduce Transfer Pricing Documentation requirements, as well as other changes arising from the periodic review of the income tax system.

2. Most of the feedback received focused on the following tax changes:

  • Clarify the Comptroller’s power, and introduce a surcharge to enforce arm’s length principle for transfer pricing
  • Introduce transfer pricing documentation requirements and penalties for non-compliance
  • Introduce a tax framework for company re-domiciliation
  • Introduce Financial Reporting Standard (“FRS”) 109[2] tax treatment

Common feedback are highlighted in Annex A.

3. Of the 131 suggestions received, 56 were accepted and consequent revisions were made to the draft text of the Bill. The remaining suggestions were not accepted, as they were inconsistent with the legislative drafting conventions or the policy objectives of the proposed legislative changes.

4. MOF would like to thank all individuals and organisations who have taken the time and effort to provide their inputs.


[1] Please refer to the earlier press release for further information.

[2] FRS 109 Financial Instruments sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. FRS 109 replaces FRS 39 Financial Instruments: Recognition and Measurement.


Annex A: Summary of common feedback on the Income Tax (Amendment) Bill 2017

  1. Introduce Transfer Pricing Documentation (“TPD”) requirements and penalties for non-compliance
  1. Feedback: Provide more clarity and guidance on the TPD requirement, for example, whether businesses with a turnover exceeding $10m but fall within the excluded circumstances provided in IRAS’ Transfer Pricing (“TP”) Guidelines are required to maintain TPD.

  MOF’s response: Accepted. Rules will be introduced to specify the circumstances under which a person is exempt from preparing TPD. IRAS will also provide more    guidance in its TP Guidelines on the TPD requirements by January 2018.

  1. Feedback: Define the term “turnover” to allow businesses to unambiguously determine whether they cross the $10m turnover threshold and are thus required to maintain TPD.

  MOF’s response: Accepted. We use the term “gross revenue” instead of “turnover” and the former is defined in the Bill.


  1. Clarify Comptroller’s power and introduce surcharge to enforce arm’s length principle for transfer pricing
  1. Feedback: Provide more guidance on the application of the Comptroller’s power to enforce the arm’s length principle, for example, the circumstances in which IRAS will re-characterise a related party transaction.

  MOF’s response: Accepted. IRAS will provide guidance in its TP Guidelines by January 2018.

  1. Feedback: Remove the provision that allows the Comptroller to deem any TP adjustment made on foreign income as being received in Singapore and hence subject to tax in Singapore.

  MOF’s response: Rejected. For the Comptroller to make TP adjustment under section 34D to increase the amount of foreign income, the foreign income must first  be    received in Singapore from outside Singapore. Upon making such adjustment, the provision (i.e. section 34D(1D))  enables the Comptroller to treat the amount of  such  foreign income that is increased as being received in Singapore from outside Singapore.


  1. Provide for adjustments to the amount of statutory or exempt income arising from the adoption of Financial Reporting Standard 115  

Allow businesses that have significant tax payable as a result of this change to pay by instalment.

MOF’s response: Accepted. IRAS may allow taxpayers facing financial hardship to pay by instalment on a case-by-case basis.


  1. Financial Reporting Standard 109 tax treatment
  1. Feedback: To provide certainty for taxpayers, the Comptroller’s ascertainment of whether gains or losses arising from adoption of FRS 109 is capital or revenue in nature should be established within four years after the end of the year of assessment relating to the basis period in which the gains or losses are recognised under FRS 109.

MOF’s response: Accepted, with modifications. Under FRS 109 tax treatment, for financial instruments on revenue account, any gains or losses recognised under FRS 109 would be taxable or deductible, including unrealised gains or losses. Thus, instead of applying the four year time limit from the basis period in which the gains or losses are recognised under FRS 109, the Comptroller will be allowed to raise additional assessments, if necessary, within four years beginning immediately after the end of the year of assessment relating to the basis period in which the instrument is disposed of. This modification ensures that the Comptroller makes the determination of the nature of the gains or losses when all facts are available.

  1. Feedback: Taxpayers should be given a choice under the law to opt out of the FRS 109 tax treatment notwithstanding the adoption of FRS 109 for accounting treatment.

MOF’s response: Not accepted. The FRS 109 tax treatment will apply for taxpayers adopting FRS 109 for accounting purposes, i.e. there is no opting-out election. Doing so will keep our tax system simple and reduce compliance cost, as well as ensure a consistent tax outcome for all taxpayers applying the same accounting standards.


  1. Re-domiciliation Framework

The Tax Exemption Scheme for New Start-Up Companies should be granted to a redomiciled company if it is registered in Singapore within three years from its incorporation date.

MOF’s response: Not accepted. The Tax Exemption Scheme for New Start-Up Companies was introduced to support entrepreneurship in Singapore, and to help new local start-up companies grow. Allowing redomiciled companies to qualify for this scheme will not be in line with the policy objective of the scheme.