Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 1/29/2013

Singapore - Financing arrangement disregarded under pre-1988 anti-avoidance provisions 

January 29: The Singapore High Court held that a taxpayer’s financing arrangement came within the scope of the anti-avoidance provisions under section 33 of the income tax law (as in effect before 1988).

Thus, the taxpayer’s arrangement was to be disregarded, and no tax refunds were to be allowed. AQQ v. Comptroller of Income Tax (2012) MSTC ¶70-017

Overview

Section 33 (prior to 1988) included “artificiality” and “fictitiousness” as elements to be considered in determining if an arrangement amounted to tax avoidance. Currently, section 33 makes no specific reference to these elements.


The Income Tax Board of Review found that the taxpayer had no commercial justification for taking into account the franked dividend income and interest expenses in its tax return and was not entitled to tax refunds. The High Court affirmed, but disagreed with the Board’s approach to section 33. The High Court concluded that it was the financing arrangement—not the dividend income—that violated the then-applicable provisions of section 33.


Read a January 2013 report [PDF 247 KB] prepared by the KPMG member firm in Singapore: AQQ v. Comptroller of Income Tax




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