Singapore Budget Seminar 2017 - PwC · Accounting system Incorrect zero-rating of standard-rated...

Singapore Budget Seminar 2017Break-out: Technology & Compliance

www.pwc.com/sg

February 2017

Elaine Ng, Tax PartnerKoh Soo How, Tax PartnerTan Ching Ne, Tax Partner

PwC’s Budget Seminar 2017

Agenda

1. Highlights of IRAS revenue collections for FY 15/16

2. Corporate tax- Common mistakes- Trends in CITQs- Lessons learnt

3. GST- Common mistakes- Trends in CGSTQs- Lessons learnt

4. Do’s and don’ts

5. Q&A

February 2017

2


Highlights of IRAS revenue collections for FY15/16

3

February 2017

PwC’s Budget Seminar 2017 4

Tax statistics at a glanceTotal government operating revenue and IRAS’ collection

February 2017

65.2% 65.4% 65.3% 70.5% 73.1%72.1% 72.5% 75.5%

75.4%75.3% 74.1% 72.9% 71.3% 69.1%

0

10

20

30

40

50

60

70

$'B

illi

on

s

IRAS' Collection Total Government Operating Revenue

Source: https://www.iras.gov.sg/IRASHome/Publications/Statistics-and-Papers/Tax-Statistics/

https://www.iras.gov.sg/IRASHome/Publications/Statistics-and-Papers/Tax-Statistics/


Tax statistics at a glanceIRAS’ collection by tax type (excluding estate duty)

February 2017


0

2

4

6

8

10

12

14

16

Corporate Tax Income

Goods and Services Tax

Individual Tax Income

Property Tax

Stamp Duty

Betting Taxes

Witholding Tax



Tax statistics at a glanceIRAS’ collection by tax type (excluding estate duty)

February 2017


0

5

10

15

20

25

30

35

40

45

50

FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16

$'B

illi

on

sCorporate Tax Income

Individual Tax Income

Goods and Services Tax

Property Tax

Stamp Duty

Betting Taxes

Witholding Tax



Tax statistics at a glanceCorporate Income Tax/Goods and Services Tax

February 2017

19261

16383

8128

5660

5144

Wholesale &Retail Trade

Real Estate &Business Activities

Financial & Insurance Activites

Construction

Manufacturing

Top 5 Sectors by Number of Tax-Paying Companies in YA 2015

$13.8 billion collected in FY2015

186,577 companies assessed in YA 2015

69,919 tax-paying companies in YA 2015


33376

16315

7013

9805

9920

Wholesale &Retail Trade

Real Estate &Business Activities

Financial & Insurance Activites

Construction

Manufacturing

Top 5 Sectors by Number of GST-registered Businesses in FY2015

$10.3 billion collected in FY2015

96,226 GST-registered businesses in FY2015



Tax statistics at a glanceTax and penalty arising from audit and investigation

February 2017

41373858

4688

42384013

50074377

6896

4960

4115

3210

2923

34563407

3201

136

122193

261121

0

50

100

150

200

250

FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16

$'M

illio

ns

Individual Income Tax Corporate Income Tax GST Investigation




Corporate taxCommon mistakes

9

February 2017

a


Corporate taxCommon mistakes

• Incorrectly claiming deduction for non-deductible expenses

• Classification of income and expenses for income taxable at concessionary and prevailing corporate tax rates

• Productivity and Innovation Credit (PIC) claims

• Incorrect classification of foreign exchange differences

• Capital allowance claims

February 2017


Corporate tax

Common mistakes: Issues

February 2017

Non-deductible expenses

Classification of inc/exp

Forex

PIC

Others


Corporate taxTrends in CITQs

12

February 2017

b


Corporate taxTrends in CITQs

• Transfer pricing

• Foreign exchange differences

• Foreign tax credit

• Classification of income and expenses for income taxable at different tax rates

• Salaries and related costs

• Accrued expenses

February 2017


Corporate TaxLessons learnt

14

February 2017

c


Corporate taxLessons learnt

15

February 2017

• Analysis/coding needs to be done early. No de minimis

• Review accruals policy

• Cross implications of corporate tax with other areas such as personal tax and GST

• Cross implications of incentive commitments and substance requirements for BEPS/TP


GSTCommon mistakes

February 2017

a17


GSTCommon mistakes

Non-compliance

Technical Technical

Human Legislative /Business

changesAccounting

system

Incorrect zero-rating of standard-

rated supplies

Failure to account for GST on non-trade

income, fixed asset disposals )

Recharges/rebilling of expenses

Deemed supplies e.g. provision of gifts

Fringe benefits

Claiming of input tax on “blocked” expenses

No input tax adjustments for exempt supplies nor

longer period adjustment performed

Poor communication of business changes (e.g.

restructuring) to tax team

Failure to identify and take account of legislative or

policy changes

Transposition or formula errors

Incorrect entering of data

Incorrect use of GST codes

Incorrect decisions in setting up codes e.g. zero-rating based on

billing address

18

February 2017


GST Trends in CGSTQ’s

18

February 2017

b


GSTTrends in CGSTQ’s

19

February 2017

• Zero-rated supplies

- Adequacy of export documentation

- Nature of ‘international services’ and legislative provision

• Nature of exempt supplies and input tax apportionment

• Deemed supplies/provision of fringe benefits

• Recharges of expenses

• Input tax claims and tax invoices

• Disallowed expenses


GSTLessons learnt

20

February 2017

c


GST

Lessons learnt

21

February 2017

• Share Common Mistakes with team

• Understand the tax coding logic in system

• Analyse the nature of zero-rated supplies

- Share export documentation requirements with Logistics

- Review service agreements to ensure currency and that zero-rating is supported

• Ensure that AP understands tax invoice requirements and what are disallowed expenses

• Document process for risks and controls with periodic reviews

• Documentation, documentation, documentation


Do’s and don’ts Suggestions to enhance compliance

22

February 2017


Suggestions to enhance compliance

Do’s

23

February 2017

Enhance tax knowledge

• Engage personnel with sound income tax/GST knowledge and adequate accounting and tax experience. This helps to ensure transactions are given correct tax treatment and tax computation is accurately prepared

• Keep abreast with the latest tax changes and developments through IRAS's website and attend seminars.

• Have early engagement with tax advisors/agents on new transactions/policies to discuss tax treatment before transaction and tax return preparation commences


February 2017

Good internal controls

• Evaluate internal controls and test if they are robust enough to identify and capture transactions with tax impact on a timely and accurate basis.

• Have accounting codes correctly set up for:- proper classification of income under concessionary and non-

concessionary tax rates; - proper identification of direct and common expenses; - capturing expenses that are private and capital in nature; and - having accounting/GST codes correctly set up by using

transaction table that outlines the GST treatment for various transactions (revenues and expenses).


Do’s


February 2017

Record-keeping

• Put in place a record keeping system to ensure that that income tax/GST declarations are duly supported with the required documents.

• Keep business records for a minimum period of time (varies by jurisdiction).


Do’s


February 2017

Process Review and/or Healthcheck

• Where there has been organisation restructuring, to consider:

- income tax/GST implications

- if here needs to be new process steps

- legacy processes are still valid; and

- a need for another healthcheck review to ensure tax reporting are in control and working effectively.

Suggestions to enhance complianceDo’s


February 2017

Using tax technology tools

• Technology can help save time, preserves data integrity and eliminate transposition errors

• Data analytics provide a snapshot of your organisation’s tax risks and opportunities for decision making

• Applications can be used to manage and standardise Group’s global tax compliance process, track deadlines and tax payments.


Do’s


TO Connect

29

February 2017


Tax data analytics

Organisations demand quicker access to tax insights and comparative analyses for strategic decision making purposes

Pre-emptive diagnostics against trend of tax authorities performing big data analysis

Examples of tax risks diagnostics:

• ETR analysis

• WHT leakage analysis

• Trending on tax non-deductibility

• Country-by-Country Reporting data

30

February 2017


Tax ‘calendering’

30

Manage tax deadlines and key tasks at a glance

MY TASKS

31

February 2017


GST Comply First Time

February 2017

31


GST Comply First Time

February 2017

32


GST Comply First Time (trend analysis)

February 2017

33

Figures reported in the GST F5 return for Financial year end 2012 2011

Box Description/Standard 01/01/2012 04/01/2012 07/01/2012 10/01/2012 01/01/2011 01/04/2011 01/07/2011 01/10/2011

Accounting Period 31 / 3 / 2012 30 / 6 / 2012 30 / 9 / 2012 31/12/2012 31/03/2011 30/06/2011 30/09/2011 31/12/2011

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

1 Total Value of Standard-rated Supplies 3,200,200.00 1,765,557.69 1,676,774.00 6,642,531.69 3,200,200.00 1,765,557.69 1,676,774.00 3,200,200.00 9,842,731.69

2 Total Value of Zero-rated Supplies 1.00 12.00 3,743,782.00 3,743,795.00 1.00 12.00 3,743,782.00 1.00 3,743,796.00

3 Total Value of Exempt Supplies 123,000.00 362,771.60 (15,846.00) 469,925.60 123,000.00 362,771.60 (15,846.00) 123,000.00 592,925.60

4 Total Supplies 93,727,936.00 70,308,458.47 5,404,710.00 169,441,104.47 93,727,936.00 70,308,458.47 5,404,710.00 93,727,936.00 263,169,040.47

5 Total Value of Taxable Purchases - 6,556,767.21 3,874,984.00 10,431,751.21 - 6,556,767.21 3,874,984.00 - 10,431,751.21

6 Output Tax Due 1.00 333,589.03 117,374.16 450,964.19 1.00 333,589.03 117,374.16 1.00 450,965.19

7 Less: Input Tax and Refunds Claimed 71,578.80 (45,638.09) (45,795.36) (19,854.65) 71,578.80 (45,638.09) (45,795.36) 71,578.80 51,724.15

8 Net GST (117,374.16) 379,227.12 163,169.52 425,022.48 (117,374.16) 379,227.12 163,169.52 (117,374.16) 307,648.32

9 Total value of Goods imported under MES/A3PL or Approved Schemes - 7,084,902.06 11,192,607.00 18,277,509.06 - 7,084,902.06 11,192,607.00 - 18,277,509.06

13 Revenue 3,874,984.00 5,776,569.28 3,154,687.00 12,806,240.28 3,874,984.00 5,776,569.28 3,154,687.00 3,874,984.00 16,681,224.28

14 TP/TS ratio 0.40 0.09 0.72 1.21 0.40 0.09 0.72 0.40 1.61

Trending for Financial Year end 2011 vs 2012

Comments Comments

Trending

Figures reported in the GST F5 return for Financial Year end 2011

Instructions:

Use this tab to complete trending analysis of the return. This will allow you to trend the overall return over historic return data on a quarter-by-quarter basis.

Reviewer should review for anomalies in the GST trend analysis such as:

- Unusual fluctuations in the values of GST supplies [Boxes 1 to 4], taxable purchases [Box 5], output tax [Box 6] and input tax [Box 7]

- Substantial discrepancies between the turnover reported in financial accounts and taxable supplies reported in GST returns

- >1.2 ratio of taxable purchases over total supplies

Anomalies should be investigated and a note made using the notes section.

All notes made here will be stored to the historic record for audit trail and review purposes.

-

0

0

0

0

Q1 Q2 Q3 Q4

MillionsOutput Tax

FY12 FY11

(0)(0)(0)

-0 0 0 0

Q1 Q2 Q3 Q4

MillionsGST Input Tax

FY12 FY11


GST Comply First Time (AP/AR exceptions)

February 2017

34

AR Duplicates

Overall Comments

Resolved?

Prepared by: Lee Chen ChewOn 02/09/2013

Reviewed by: Click button above upon completion

# Tax Code Tax Group Name Tax % Doc. No.

Posting

Date

Document

Date

Base

Amount

Tax

Amount Total Tax

Base

Amount SC

Total Tax

(SC) Customer/Supplier name Description

Supplier's

invoice no.

Serial

Numb

er

Delete

Indicator Remarks

10 S1 GST 7% (Local) 7 IN400926 27.07.2012 27.07.2012 537.98 37.66 37.66 424.71 29.73 Sincere Supply Pte Ltd Part sales, Q100682 (partial) 9

11 S1 GST 7% (Local) 7 IN 400926 27.07.2012 27.07.2012 27.36 1.92 1.92 21.60 1.51 Sincere Supply Pte Ltd Part sales, Q100682 (partial) 10

32 S2 Zero-rated 0% 0 IN 400935 27.07.2012 27.07.2012 - - - - - Chains Caravelle Hotel JVCo Ltd CL+TITO Expansion 34

33 S2 Zero-rated 0% 0 IN 400935 27.07.2012 27.07.2012 - - - - - Chains Caravelle Hotel JVCo Ltd CL+TITO Expansion 35

20 S1 GST 7% (Local) 7 IN 400940 27.07.2012 27.07.2012 3,141.40 219.90 219.90 2,480.00 173.60 Resorts World at Sentosa Pte Ltd.GSMA for Q100245 19

21 S1 GST 7% (Local) 7 IN 400940 27.07.2012 27.07.2012 28,272.72 1,979.09 1,979.09 22,320.00 1,562.40 Resorts World at Sentosa Pte Ltd.GSMA for Q100245 20

22 S1 GST 7% (Local) 7 IN 400941 27.07.2012 27.07.2012 120,159.06 8,411.14 8,411.14 94,860.00 6,640.20 Resorts World at Sentosa Pte Ltd.Jul12 - 73M RWS GSMA 21

23 S1 GST 7% (Local) 7 IN 400941 27.07.2012 27.07.2012 12,958.44 907.08 907.08 10,230.00 716.10 Resorts World at Sentosa Pte Ltd.Jul12 - 73M RWS GSMA 22

34 S2 Zero-rated 0% 0 IN 400949 21.08.2012 21.08.2012 160,239.50 - - 128,500.00 - Genting Malaysia Berhad 50 x system kits, Q100710 301

40 S2 Zero-rated 0% 0 IN 400949 21.08.2012 21.08.2012 - - - - - Genting Malaysia Berhad 307

41 S2 Zero-rated 0% 0 IN 400949 21.08.2012 21.08.2012 - - - - - Genting Malaysia Berhad 308

37 S2 Zero-rated 0% 0 IN 400955 23.08.2012 23.08.2012 7,997.09 - - 6,413.07 - IGT Asia -Macau Lda Intercom expenses recharge 304

45 S2 Zero-rated 0% 0 IN 400955 23.08.2012 23.08.2012 623.50 - - 500.00 - IGT Asia -Macau Lda Intercom expenses recharge 312

6 S1 GST 7% (Local) 7 IN 400957 24.08.2012 24.08.2012 12,756.92 892.98 892.98 10,230.00 716.10 Resorts World at Sentosa Pte Ltd.RWS GSMA 274

7 S1 GST 7% (Local) 7 IN 400957 24.08.2012 24.08.2012 118,290.42 8,280.33 8,280.33 94,860.00 6,640.20 Resorts World at Sentosa Pte Ltd.RWS GSMA P1 275

8 S1 GST 7% (Local) 7 IN 400958 24.08.2012 24.08.2012 1,159.72 81.18 81.18 930.00 65.10 Resorts World at Sentosa Pte Ltd.2xVF, 4xBTTF GSMAP2 276

9 S1 GST 7% (Local) 7 IN 400958 24.08.2012 24.08.2012 9,277.68 649.44 649.44 7,440.00 520.80 Resorts World at Sentosa Pte Ltd.2xVF, 4xBTTF GSMAP3 277

10 S1 GST 7% (Local) 7 IN 400959 24.08.2012 24.08.2012 3,092.56 216.48 216.48 2,480.00 173.60 Resorts World at Sentosa Pte Ltd.GSMA for Q100245P4 278

11 S1 GST 7% (Local) 7 IN 400959 24.08.2012 24.08.2012 27,833.04 1,948.31 1,948.31 22,320.00 1,562.40 Resorts World at Sentosa Pte Ltd.GSMA for Q100245P5 279

29 S2 Zero-rated 0% 0 IN 400981 07.09.2012 07.09.2012 - - - - - KGIM Conversion sales, Q100741 527



16 S1 GST 7% (Local) 7 IN 401001 28.09.2012 28.09.2012 12,386.88 867.08 867.08 9,900.00 693.00 Resorts World at Sentosa Pte Ltd.RWS GSMA 514

17 S1 GST 7% (Local) 7 IN 401001 28.09.2012 28.09.2012 114,860.16 8,040.21 8,040.21 91,800.00 6,426.00 Resorts World at Sentosa Pte Ltd.RWS GSMA 515

18 S1 GST 7% (Local) 7 IN 401002 28.09.2012 28.09.2012 9,008.64 630.60 630.60 7,200.00 504.00 Resorts World at Sentosa Pte Ltd.2xVF, 4xBTTF GSMA 516

19 S1 GST 7% (Local) 7 IN 401002 28.09.2012 28.09.2012 1,126.08 78.83 78.83 900.00 63.00 Resorts World at Sentosa Pte Ltd.2xVF, 4xBTTF GSMA 517

20 S1 GST 7% (Local) 7 IN 401003 28.09.2012 28.09.2012 3,002.88 210.20 210.20 2,400.00 168.00 Resorts World at Sentosa Pte Ltd.GSMA for Q100245 518

21 S1 GST 7% (Local) 7 IN 401003 28.09.2012 28.09.2012 27,025.92 1,891.81 1,891.81 21,600.00 1,512.00 Resorts World at Sentosa Pte Ltd.GSMA for Q100245 519

36 S2 Zero-rated 0% 0 IN 401007 25.09.2012 25.09.2012 75.47 - - 60.32 - IGT Philippines Drop ship to RWM 533

37 S2 Zero-rated 0% 0 IN 401007 25.09.2012 25.09.2012 1,272.75 - - 1,017.23 - IGT Philippines Drop ship to RWM 534

25 S1 GST 7% (Local) 7 IN 401017 28.09.2012 28.09.2012 36,727.72 2,570.94 2,570.94 29,354.00 2,054.78 Resorts World at Sentosa Pte Ltd.Adv. system maintenance 523

26 S1 GST 7% (Local) 7 IN 401017 28.09.2012 28.09.2012 135,242.31 9,466.96 9,466.96 108,090.08 7,566.31 Resorts World at Sentosa Pte Ltd.Adv. system maintenance 524

Instructions:

This report generates a list of taxable supplies

transactions w hich are reported more than one time w ithin

the same quarter.Review er is to identify the actual

duplicate transactions and mark the transaction as "Y" in

the "Delete Indicator" column (column Q) to exclude such

transactions.All notes made here w ill be stored to the

Show All Sheets


GST Comply First Time (disallowed expenses)

February 2017

35

Disallowed expenses

Overall Comments

Resolved?

Prepared by: Lee Chen ChewOn 02/09/2013

Reviewed by:

#

Tax

Co

de Tax Group Name Tax % Doc. No.

Posting

Date

Document

Date

Base

Amount

Tax

Amount

Total

Tax

Base

Amount SC

Total

Tax

(SC) Customer/Supplier name Description

Supplier's

invoice no.

Serial

Number

155 P5 Out of Scope 0% (Non-GST supplier)- PU 704391 10.07.2012 10.07.2012 (2,382.00) - - (1,880.48) - One World International School SingaporeOWIS Grade 8 July~Sep'12 School Fees for John HousInv1012,1192,1192 141

156 P5 Out of Scope 0% (Non-GST supplier)- PU 704391 10.07.2012 10.07.2012 (4,764.00) - - (3,760.96) - One World International School SingaporeOWIS Grade 8 July~Sep'12 School Fees for John HousInv1012,1192,1192 142

172 P5 Out of Scope 0% (Non-GST supplier)- PU 704572 21.08.2012 21.08.2012 (975.50) - - (782.28) - Marsh (Singapore) Pte Ltd Marsh: Property All Risks Ins Premium 30-Jun-12 toI01132468 427

173 P5 Out of Scope 0% (Non-GST supplier)- PU 704572 21.08.2012 21.08.2012 (4,877.50) - - (3,911.39) - Marsh (Singapore) Pte Ltd Marsh: Property All Risks Ins Premium 30-Jun-12 toI01132468 428

Instructions:

This report generates the list of taxable

purchase transactions w hich are likely to

be disallow ed expenses under the

regulation 26 & 27 of the GST Act.

Review er is to identify the disallow ed

expenses and mark the transaction as "Y"


Take things lightly

Assume everyone knows everything

Submit without a basis

Delay till the last minute

Remember IRAS PENALTIES for mis-reporting!!

37

February 2017


Don’ts


Q&A

37

February 2017


Questions?

38

February 2017


Thank you

Elaine NgPartner, PwC Singapore

PricewaterhouseCoopers Singapore Pte Ltd

Tel: +65 6236 3627

e-mail: [email protected]

Tan Ching NePartner, PwC Singapore


Tel: +65 6236 3608


Koh Soo howPartner, PwC Singapore


Tel: +65 6236 3600


© 2017 PwC. All rights reserved. Not for further distribution without the permission of PwC. "PwC" refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way.

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Singapore Budget Seminar 2017 - PwC · Accounting system Incorrect zero-rating of standard-rated...

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