Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/12/2013

Singapore - Pre-2008 bond discounts, redemption premiums not deductible 

February 12:   Singapore’s Income Tax Board of Review agreed with the Comptroller of Income Tax’s disallowance of a taxpayer’s claim for deduction of discount and redemption premium amounts in connection with the taxpayer’s issuance of bonds in 1995 and 1996.

The case is: FEOL v. Comptroller of Income Tax (2013) MSTC ¶50-011.

Summary

The taxpayer issued interest-bearing bonds in 1995 and 1996, and offered a discount and redemption premium on both issuances. The discounts and redemption premiums for 1995 were approximately $2.9 million, and for 1996, were approximately $11.7 million.*


$ = Singapore dollar


The taxpayer sought to deduct the discounts and redemption premiums. At issue was whether these amounts were “outgoings and expenses” incurred in the production of income, or alternatively whether they were “interest payable on capital.”


In this case (concerning years prior to the Income Tax (Deductible Borrowing Costs) Regulations 2008), the Board held that the discounts and premiums were not “outgoings and expenses,” were not “interest,” and thus were not deductible for tax purposes.


Read a February 2013 report [PDF 593 KB] prepared by the KPMG member firm in Singapore:
FEOL v. Comptroller of Income Tax




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