The anti-avoidance response to professionals incorporating companies in Singapore

The issue of whether the incorporating of companies by professionals in Singapore constitutes tax avoidance has attracted considerable attention. The recent case of GCL v. CIT provides some guidance in this area. It reaffirms the general two-part test in CIT v. AQQ, requiring one to first apply the...

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Main Author: OOI, Vincent
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2020
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Online Access:https://ink.library.smu.edu.sg/sol_research/3159
https://ink.library.smu.edu.sg/context/sol_research/article/5117/viewcontent/2020_Anti_Avoidance_Response_to_Professionals_Incorporating_Companies_in_Singapore_sv.pdf
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spelling sg-smu-ink.sol_research-51172021-04-20T06:47:50Z The anti-avoidance response to professionals incorporating companies in Singapore OOI, Vincent The issue of whether the incorporating of companies by professionals in Singapore constitutes tax avoidance has attracted considerable attention. The recent case of GCL v. CIT provides some guidance in this area. It reaffirms the general two-part test in CIT v. AQQ, requiring one to first apply the objective predication principle before moving on to consider the subjective bona fides commercial reason exception. It establishes that the mere fact that a professional incorporated a company through which to practise would not be sufficient to constitute tax avoidance, since such an arrangement is common and widely used, with established commercial benefits. However, the salary paid to a professional is subject to scrutiny and cannot be artificially reduced. Doing so may constitute tax avoidance and/or attract an ‘arm’s length’ adjustment under section 34D of the ITA. It also establishes that the ‘personal exertion principle’ has no basis in Singapore. 2020-06-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/sol_research/3159 https://ink.library.smu.edu.sg/context/sol_research/article/5117/viewcontent/2020_Anti_Avoidance_Response_to_Professionals_Incorporating_Companies_in_Singapore_sv.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Yong Pung How School Of Law eng Institutional Knowledge at Singapore Management University Tax Law Taxation Tax Avoidance Asian Studies Securities Law
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Tax Law
Taxation
Tax Avoidance
Asian Studies
Securities Law
spellingShingle Tax Law
Taxation
Tax Avoidance
Asian Studies
Securities Law
OOI, Vincent
The anti-avoidance response to professionals incorporating companies in Singapore
description The issue of whether the incorporating of companies by professionals in Singapore constitutes tax avoidance has attracted considerable attention. The recent case of GCL v. CIT provides some guidance in this area. It reaffirms the general two-part test in CIT v. AQQ, requiring one to first apply the objective predication principle before moving on to consider the subjective bona fides commercial reason exception. It establishes that the mere fact that a professional incorporated a company through which to practise would not be sufficient to constitute tax avoidance, since such an arrangement is common and widely used, with established commercial benefits. However, the salary paid to a professional is subject to scrutiny and cannot be artificially reduced. Doing so may constitute tax avoidance and/or attract an ‘arm’s length’ adjustment under section 34D of the ITA. It also establishes that the ‘personal exertion principle’ has no basis in Singapore.
format text
author OOI, Vincent
author_facet OOI, Vincent
author_sort OOI, Vincent
title The anti-avoidance response to professionals incorporating companies in Singapore
title_short The anti-avoidance response to professionals incorporating companies in Singapore
title_full The anti-avoidance response to professionals incorporating companies in Singapore
title_fullStr The anti-avoidance response to professionals incorporating companies in Singapore
title_full_unstemmed The anti-avoidance response to professionals incorporating companies in Singapore
title_sort anti-avoidance response to professionals incorporating companies in singapore
publisher Institutional Knowledge at Singapore Management University
publishDate 2020
url https://ink.library.smu.edu.sg/sol_research/3159
https://ink.library.smu.edu.sg/context/sol_research/article/5117/viewcontent/2020_Anti_Avoidance_Response_to_Professionals_Incorporating_Companies_in_Singapore_sv.pdf
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