Singapore Looks At International Tax Issues

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 In her speech to the recent Asia-Pacific Regional Tax Conference in Singapore, Teo Josephine, Minister of State for Finance and Transport, discussed taxation issues in the region that are important to businesses, including double taxation agreements( DTAs) and trasfer pricing.
 She pointed out how Singaporean companies are internationalizing their businesses. In 1990, Singapore's cumulative stock of foreign direct investment (FDI) abroad was about SGD16 bn (USD 12,9 bn) and, by 2000, had only grown to about SGD100 bn. However, in the last decade, that FDI has grown quickly to reach over SGD400 bn, with inward FDI totaling just over SGD650 bn.
 Asia accounts for more than half of Singapore's FDI abroad, and, as of end of 2011, the top three outbound investment destinations for Singaporean companies within Asia were China, Malaysia and Indonesia, which together accounted for 60%.
 With more Singaporean businesses internationalizing, Josephine Teo confirmed that cross-border business transactions and investment activities have also increased in volume. More companies have foreign sources of income and are subject to tax rules in more than one tax jurisdiction.
 To overcome possible instances of double taxation, she also confirmed that Singapore has developed a wide DTA network, to facilitate cross-border businesses by providing greater tax certainty and by reducing the cost of doing business both in Singapore and overseas. To date, Singapore has signed 74 comprehensive DTAs, and is still looking to expand that network.
 However, she noted that " treaties alone are not enough and implementation matters just as much. Tax authorities worldwide have increased their enforcement activities to ensure that transfer prices have not been set to avoid tax. With the imposition of stricter penalties and documentation requirements, as well as increased audit activities, transfer pricing has now become a leading risk management issue for cross-border businesses."
 In Singapore, if in doubt, she added, businesses can approach the Inland Revenue Authority of Singapore to seek upfront tax certainty on their pricing arrangements through Advance Pricing Arrangements. Where necessary, the Inland Revenue Authority of Singapore also helps businesses resolve cross-border transfer pricing disputes through Mutual Agreement Procedures with Singapore's treaty partners.
 From 2007 to March this year, Inland Revenue Authority of Singapore has concluded 10 transfer pricing cases under a Mutual Agreement Procedures, and 27 bilateral Advance Pricing Arrangements involving seven other jurisdictions.
 " Businesses will be pleased to know that Inland Revenue Authority of Singapore intends to deepen its transfer pricing capability to assist businesses with cross-border transfer pricing issues," Josephine Teo concluded. " We support cross-border businesses that are engaged in activities with real economic substance. General anti-avoidance provisions in our tax regime are set up to prevent abusive business transactions, and to ensure that our corporate sector remains healthy and robust."