Showing posts from November, 2017

Considerations when investing in Indonesia from Singapore

Things in Indonesia are booming.  When I talk with those unfamiliar with Indonesia, they are often amazed.  I maintain that Indonesia is one of the world’s best kept secrets.  So many people do not even know that Bali is a part of Indonesia.
By some measures, Indonesia is the 16th largest economy in the world.  It gives credibility to ASEAN given its size.  As a young democratic country, Indonesia has maintained political stability since emerging from decades of autocratic rule.  Demand for infrastructure in Indonesia is fueled by both economic growth and urbanisation, while petroleum and minerals continue to make up the majority of exports. To continue reforming its investment climate, the government has rolled out measures to ease red-tape, open up sectors for investment and improve public services.
Often Singapore is used as a base for investing in Indonesia.  This is understandably a sensitive topic.  In July 2017, the Indonesian President was quoted as saying that he aims to per…

Does a UK Tax Resident need to pay tax on Foreign Investment Income?

Many of our UK clients ask about the tax treatment of their overseas investments. The good news is that their foreign investment income may not be taxed by HMRC. This is because UK residents who have their permanent home (‘domicile’) outside the UK may not have to pay UK tax on foreign income. The same rules apply if you make any foreign capital gains, for example you sell shares or a second home.

Domicile is a complex topic and professional advice is suggested.  In short, your domicile’s usually the country your father considered his permanent home when you were born.  It may have changed if you moved abroad and you don’t intend to return.

If you’re non-domiciled -

You don’t pay UK tax on your foreign income or gains if both:they’re less than £2,000 in the tax yearyou don’t bring them into the UK, for example you transfer them to a UK bank accountChapter 9 in HMRC’s guidance on ‘Residence, Domicile and the Remittance Basis’ explains the rules for bringing income or gains to the UK.

Does a Singapore Tax Resident need to pay tax on Foreign Investment Income?

Many of our Singapore clients ask about the tax treatment of their overseas investments.  The good news is that investment income of SG tax residents isn't usually taxed by IRAS.

In Singapore, taxes are imposed on income earned or accrued in Singapore, as well as foreign-sourced income remitted into Singapore.  The foreign-sourced income tax exemption regime means that foreign branch profits, service income and dividends are exempt from tax upon remittance into Singapore, if conditions are met. All other sources of foreign income continue to be subject to the foreign tax credit system.

A Singapore tax resident company can enjoy tax exemption on its specified foreign income that is remitted into Singapore.  Again, the three categories of specified foreign income are:
Foreign-sourced dividendForeign branch profitsForeign-sourced service income
Under Section 13(9) of the Income Tax Act, tax exemption will be granted when all of the following three conditions are met :
The highest corporat…

Privacy is Dead, Long Live Privacy!

The so called “Paradise Papers” have once again brought the issue of taxation into the headlines.

The Paradise Papers describes 13.4 million stolen confidential electronic documents relating to offshore structures. These stolen documents were leaked to a German newspaper who proceeded to share them with the International Consortium of Investigative Journalists. It is believed that these documents originate from the offshore law firm Appleby (with offices in Hong Kong and Shanghai), the corporate services providers Estera (Bermuda) and Asiaciti Trust (Singapore), and business registries in 19 tax jurisdictions. Over 120,000 people and companies are named.

Offshore financial structures are typically used for two reasons –

1. Privacy and

2. Tax planning.

We believe that there will always be opportunities for legal tax planning using offshore structures.

When it comes to privacy however – many believe that privacy is dead.

Firstly, let’s talk about tax planning. Taxation has long been a sensiti…