TUM: S$360 million
Last Updated: Jan 1, 2017
OSH is pleased to announce that as of 1st January 2017, the current actual tax assessment/liabilities under our active dispute management is at S$360M—a 20% increase since July 2016. We use TUM as an objective measure of our pole position in the tax dispute and litigation market. It denotes the total tax assessed and under objection currently advised and managed by the firm, excluding transaction values and trust assets. We are truly humbled by the cases entrusted to us.
1. Voluntary Disclosure of Unreported Benefits
The firm succeeded in securing reduced penalties of less than 5% in a disclosure to the Comptroller of Income Tax under the Voluntary Disclosure Programme. The matter involved unreported tax-on-tax benefits paid to employees totalling more than $3 million.
The complexity in the case was in persuading the IRAS to settle the matter without reference to the tax rate, or affairs of the employees, under the Auto Inclusion Scheme.
1. Deduction of Interest Expenses on Refinancing Loans
The firm advised on the deduction of interest incurred on loans obtained to refinanced earlier loans, the interest on which had been the subject of an earlier positive ruling issued by the Comptroller of Income Tax. Despite the refinancing loans falling within scope of the administrative concession provided by the Comptroller in respect of the deduction of refinancing loans, the Comptroller has denied the client’s claims for deduction. One of the issues in this case appears to be the use of Mauritius financing structures and their effectiveness.
2. Group Relief for Losses of Amalgamating Company
The firm is making submissions to the IRAS for the transfer of losses totalling more than $7 million from the amalgamating company to its parent following a statutory amalgamation under the Companies Act. The issue involves a technical question of the interface between the statutory amalgamation provisions and the Income Tax Act provisions. The business had prior to engaging the firm been unsuccessful in several appeals to the Minister of Finance.
3. Customs Investigation
The firm is advising and representing a large online retail agent on an investigation carried out by the Singapore Customs for alleged under-declaration of import GST.
4. Deduction of Interest Expenses
The firm is acting for a company on the deductibility of interest expenses incurred on bonds issued as part of a restructuring exercise whereby the shareholders exchanged their equity stakes in the company for debt. The matter is currently under an appeal to the Income Tax Board of Review and is slated for hearing in September 2016.
5. Value of Supply
The firm is advising a client on its liability for Goods and Services Tax (“GST”) and Business Profit Tax (“BPT”) in a foreign jurisdiction under a similar legal framework to that of Singapore. Both matters turn on the single issue of the value of supply made by the client. The foreign tax authority failed to take into account the client’s unique business operations and based its assessment on industry-wide average prices which have been found to be improper comparables in an earlier appeal on a similar issue.
6. Annual Value of Property
The firm is advising and representing the client in a property tax dispute concerning the Chief Assessor’s decision to include the value of certain plant and machinery in the computation of the annual value of the subject property.
7. Nature of Divestment Gains
The firm was recently engaged to advise a client in a matter concerning taxability of gains from a pre-planned divestment amounting to approximately $70 million in potential taxes.
8. Disposal by Insurance Company
The firm was engaged to resolve a dispute with the IRAS concerning the taxability of the insurance company’s gains from disposal of part of a commercial building.
9. Deduction of Pre-payment Penalty
The firm advised on the deduction of pre-payment penalties totalling more than US$50 million paid on inter-company loans within a multinational conglomerate. The matter involved the interpretation of subsidiary legislation which has to date not been dealt with by the Singapore courts, and turned on the novel issues of whether the pre-payment penalties were “compulsory” and “represented” interest obligation adjustments.
10. Seller’s Stamp Duty
The firm made adjudication submissions to the Commissioner of Stamp Duties on a very novel issue concerning the additional buyer’s stamp duties in a situation where the whole site concerned with subsequently rezoned.
11. Comparative Permanent Establishment Analysis
The firm has been asked to conduct a comparative permanent establishment analysis for a client deciding between London and Switzerland as its European gateway. This review followed from an earlier establishment of business process rules for the purposes of managing the client’s permanent establishment risk, an exercise also pioneered by Sim Ho. The firm also recently assisted the client in conducting a benchmarking analysis employing what was determined to be the appropriate transfer pricing method to determine whether its related party transactions were consistent with the arm’s length requirement as specified under the Income Tax Act.