Dear Clients and friends

Welcome to the second issue of our newsletter for 2007.

The Singapore economy continues to do well, resulting in an increase in private property prices and a tight labour market. Supply of prime office space is very tight resulting in steep increases in office rentals.

The last quarter was Budget season in a number of countries and we are pleased to provide synopses of Budgets in Singapore, Hong Kong, India and UK.

The Singapore budget contained significant cuts in Corporate taxes, countered by a forthcoming rise in Goods & Services Tax.

We continue our regular updates of articles and technical matters for your reference.

Warmest Regards
Shanker Iyer

NEWS

Continuing signs of healthy growth for Singapore economy – flash estimates for GDP rose 6 per cent in 1Q 2007

Singapore economy continues to grow at a healthy pace. The Ministry of Trade and Industry’s advance estimates show that real gross domestic product (GDP) rose by 6 per cent in the first quarter this year, compared to the same period last year. On a quarter-on-quarter seasonally adjusted annualised basis, real GDP grew by 7.2 per cent, following a 7.9 per cent gain in the last quarter of 2006. [MORE]

Private home prices see sharpest rise in 7 years

Overall prices of private residential properties rose 4.6 per cent in the 1st quarter this year, compared to 3.8 per cent in the previous quarter. [MORE]

Singapore expects 25 per cent increase in visitors when IRs open in 2010

At a ground-breaking ceremony for Resorts World at Sentosa (RWS) consortium, Minister for Trade and Industry said that Singapore government expects a 25 per cent increase in visitor numbers for 2010 when the two integrated resorts (IRs) open. [MORE]


Firms to hire more staff in 2nd quarter due to rapid increase in work volume

According to a survey by a recruitment firm, more Singaporean firms are expecting to increase their staff hire in Q2 this year as the volume of work load for various industries increases. [MORE]

Total Employment Creation in Singapore for 2006 hit all-time high

Singapore’s strong economy generated record employment gains, leading to an improvement in the unemployment rate for the country to an eight-year low last year. [MORE]

ARTICLES

Viral Marketing – the zero-budget way to market goods and services

Even in an industry that is notoriously prone to fads and fashions, one of the latest ideas in advertising is causing an unprecedented level of excitement. To its advocates, it is a revolution that is profoundly changing the way goods and services are sold. To its critics, it is merely an old idea given new life by the internet. Either way, it is something we will be hearing a great deal more about. [MORE]

Interactive Marketing from the Inside Out – Corporate Blogging

Think of your company’s Web site as a billboard – you post information on it maybe a few times a year and wait for people driving the information super highway to see it. Think of a corporate blog as a door-to-door (or better yet, computer-to-computer) marketing campaign – a way to let your customers and prospects know who you are and why your company is a leader in its field. [MORE]

Investment Returns – Can you time the market?

If it was easy to time the markets then many more of us would be multi millionaires, unfortunately it is not easy to time the markets therefore it is important when constructing an investment portfolio that we understand how long we intend to invest our money for. As the saying goes – Do not try and time the markets, instead spend time in the markets. [MORE]

TAXATION UPDATE

Budgets around the world

Singapore

Singapore’s Second Minister for Finance presented his 2007 Budget speech on 15 February 2007. This year’s Budget focus continues to be on making Singapore the best location for companies to start and grow. In order to attract global players to Singapore, the budget introduced several measures such as the significant 2 per cent cut in corporate tax rate to 18 per cent, the removal of the sunset clause for the full exemption for start-up companies, and the increase of threshold for partial exemption to S$300,000. The lifting of 80/20 rule for the tax exemption scheme for non-resident funds will also further stimulate foreign investors’ interest in investing in Singapore.

Further details are available in our Budget synopsis 2007.

India

India is poised to grow consistently – GDP growth exceeded 9 per cent in 2006, thanks to the growing service and manufacturing sectors. There is indication of a distinctly upbeat outlook by looking at the strong macroeconomic fundamentals and other factors. In the coming years, India is expected to benefit further from demographic dividend emanating from a higher proportion of younger population. We are pleased to attach the India Budget article from SKP Group.

Please click here for more details.

United Kingdom

The changes for UK’s 2007 Budget speech seem to benefit big businesses more than the smaller ones, with the rate for companies with profits in excess of £1.5m to be reduced from 30 per cent to 28 per cent from 1 April 2008. The basic rate of personal income tax is to be reduced from 22 per cent to 20 per cent for 2008/09. We are pleased to attach the budget summary of Saffery Champness Chartered Accountants.

Please click here for more details.

Hong Kong

Hong Kong’s GDP increased by 6.8 per cent in 2006 and its economy has continuously enjoyed above-trend growth over the past three years, which registered an average annual increase of 7.6 per cent. We attach the budget speech by the Hong Kong Financial Secretary for your reference.

Please click here for more details.

Singapore Taxation Update

GST Update

2007 GST rate change

Subsequent to the announcement in the Budget 2007 that GST is to be increased from the existing 5 per cent to 7 per cent with effect from 1 July 2007, IRAS has issued a guide for GST-registered businesses on 22 February 2007 to prepare the affected traders for the GST rate change. [MORE]

GST Advance Ruling System (Draft)

After the public consultation on the implementation of Advance Ruling System for GST which was included in the Draft GST (Amendment) Bill 2006, the GST Act will be amended to provide for an advance ruling system, to enact a new Section 90A and a new fifth schedule effective 1 July 2007. These provisions will bind the Comptroller of GST on the ruling made.  

A draft circular on the GST Advance Ruling System was issued by the IRAS on 12 April 2007.  The circular sets out the features of the advance ruling system, application procedures, fee structure and processing time. [MORE]

Zero-rating of Telecommunication and Related Services

Under Section 21(3)(q) of the GST Act, only prescribed services comprising international telecommunication transmission can be zero-rated.  The prescribed telecommunication services are provided under the 5th Schedule of the GST Act (International Services Order).

A guide was issued by the IRAS on 26 April 2007, in which the application of zero-rating relief for telecommunication and related services are explained.  The tax guide provides clarifications with scenarios on the prescribed services under each paragraph of the 5th Schedule. 

For more information, please click here for the IRAS guide.

Zero-rating of Container Services and the Sale & Lease of Containers

In 2007 Budget, the Government has announced that with effect from 1 April 2007, the supply of servicing (repairs, maintenance and management services), sale and lease of containers can be recognised as international services and zero-rated. 

The following will qualify for zero-rating:

• Repair, maintenance and management services performed directly on sea-worthy and air containers used for transportation of goods internationally; and

• The sale and lease of sea and air containers used for international transportation of goods.

Pending the legislative amendment, the relief will be given by way of remission.  Suppliers and service providers who satisfy the qualifying criteria for zero-rating relief should write to the Comptroller of GST to apply for remission.

For more details, please click here.

Tax Treaty Update

Ukraine – on 26 January 2007 Singapore and Ukraine signed agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income. The agreement will enter into force after its ratification by both countries.

Income Tax Amendment Act 2007

Shanker Iyer was invited to contribute an article to ACCA's official journal, FOCUS, relating to amendments to the Singapore Income Tax Act. Please click here for the full article.

ACCOUNTING UPDATE

Revised Sample Auditor’s Report in SSA 700

The revised Singapore Standards on Auditing (SSA) 700 superseded SSA 700 “The Auditor’s Reports on Financial Statements” in May 2006. [MORE]

Exposure Draft (ED) of Financial Reporting Standards (FRS) – SMEs

The International Accounting Standards Board (IASB) has published on 15 February 2007 for public comment on the ED of its IFRS. [MORE]

CORPORATE UPDATE

Launch date of XBRL Filing and FS Manager revised to 1 November 2007

From 1 November 2007, Singapore companies will have to file their financial statements in extensible business reporting language (XBRL), instead of portable document format (pdf) currently. [MORE]

Singapore to allow businesses set up under the Limited Partnership structure by end of the year

Singapore is aiming to let businesses to be set up as Limited Partnerships (LPs) by end of 2007. New law of Limited Partnership structure may attract investors who prefer to be passive partners. [MORE]

MANPOWER AND IMMIGRATION UPDATE

CPF Employer Contribution Rate revised

As announced in this year’s Budget Speech by the Singapore government, the CPF contribution rate for employer will be increased by another 1.5 percentage points to 14.5 per cent, with effect from 1 July 2007. [MORE]

Singapore’s Employment Pass Eligibility Certificate (EPEC)

Foreigners who wish to spend more time in Singapore in order to look for a job can apply for the Employment Pass Eligibility Certificate (EPEC) – it grants the holder a Social Visit Pass valid up to a year. The EPEC is issued on a one-time basis and is strictly non-renewable.

Foreigners may apply for EPEC if they hold recognised tertiary / professional qualifications. For more information, please click here.

SINGAPORE GOVERNMENT ASSISTANCE UPDATE

Small and Medium Enterprise (SME) Rebate Scheme – for CPF employer contributions

In the 2007 Budget, Singapore government announced an increase of 1.5% in the CPF employer contribution rate to 14.5% with effect from 1 July 2007.  In line with this increase in the CPF employer contribution rate, the Government has implemented the Small and Medium Enterprises (“SMEs”) Rebate scheme to help locally-registered SMEs adjust to higher labour costs.

This scheme will last two years with rebates being paid to each qualifying company on an annual reimbursement basis as follows: [MORE]

Back-to-school approach for SME leaders and managers by Management Development Programme

Leaders of Small and medium enterprises (SMEs) can now have the opportunity to equip themselves with appropriate knowledge and general expertise in order to give them an edge in today’s globalised economy through SPRING Singapore’s Management Development Programme. [MORE]

S$30 million SME GST Assistance Scheme

Small and medium enterprises (SMEs) will be able to offset compliance costs through a new two-year assistance scheme called GST Assistance Scheme. This scheme is applicable for SMEs who voluntarily register to be a Goods and Services Tax (GST) trader in order to claim the GST incurred on their business expenses. [MORE]

EVENTS

Past Events

SC International Asia Pacific Regional Conference
Raffles City Convention Centre, Singapore
19-21 April 2007

Delegates and Board members at the SC International Asia Pacific Regional Conference 2007, held at Singapore Raffles City Convention Centre.	Two of our guests speakers, Mr. Robert Chandran  of Chemoil Energy Ltd; and Dr Ernest Kan of ICPAS, at the SCI Asia Pacific Regional Conference 2007.

SC International Management Board SC International (SCI), a global association of independent accounting firms providing a comprehensive portfolio of accounting, business consultancy and tax advisory services – held their Asia Pacific Regional Conference 2007 in Singapore. Shanker Iyer & Co, the Singapore member firm of SCI, organised the 3-day conference at Raffles City Convention Centre. The conference was chaired by Shanker Iyer, SCI’s Asia Pacific Chairman.   Delegates, particularly from the Asia Pacific region, such as Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Tahiti, Taiwan, Thailand and USA, as well as SCI management board members, were at the conference. The programme of the conference included a whole day speakers’ programme where invited speakers from different industries were at the conference – among the guest speakers were Manfred P. Rist, Vice Chairman of Foreign Correspondent’s Association in Singapore; Glenn B. Maguire, Chief Economist (Asia Pacific) of Société Générale Corporate and Investment Bank (Hong Kong); K K Lam, Director of Hong Kong Economic & Trade Office; Robert V. Chandran, President & CEO of Chemoil Energy Ltd; Ernest Kan, Vice President of ICPAS; and Karthik Siva, Chairman of Global Brand Forum. Internal discussions among all delegates and board members as well as Special Interest Groups (SIGs) focusing on audit and international taxation matters were discussed at the conference. The International Management Board meeting was also held in Singapore during the conference.

American Chamber of Commerce (AmCham)
Singapore Tax Update 2006
7 February 2007

	Shanker Iyer provided a layman's overview of the many tax changes in Singapore during 2006 to AmCham members on 7 February 2007. Topics covered include corporate and personal income tax as well as Goods and Services Tax (GST).
At the American Chamber of Commerce Tax Update –Greg Fergin of AmCham; and Agnes Schlesinger and Shanker Iyer of Shanker Iyer & Co

Singapore International Chamber of Commerce (SICC) & American Chamber of Commerce (AmCham)
Singapore Budget Briefing 2007
28 February & 8 March 2007

Phillip Overmyer of SICC (3rd from left), with Michelle, Alison, Shanker Iyer, Agnes and Yee Ching of Shanker Iyer & Co (left to right)	The Budget Briefing was held at Pan Pacific Hotel, Singapore

Singapore's Second Minister for Finance, Mr Tharman Shanmugaratnam delivered his Budget speech on 15 February 2007. Shanker Iyer presented his Budget paper to members of SICC and AmCham on 28 February and 8 March 2007 respectively, and discussed the new tax measures and incentives announced in the 2007 Budget statement.

COPIES OF OUR ABOVE PRESENTATIONS ARE AVAILABLE ON OUR WEBSITE www.iyerpractice.com

Upcoming Events

The 2007 ACCA Singapore Annual Conference – Thriving in a Complex and Regulated Environment
Raffles City Convention Centre Singapore
Friday, 13 July 2007

Shanker Iyer has been invited to be the Chairman of this prestigious conference of the Association of Chartered Certified Accountants. In 2006 the conference attracted over 400 participants.

SENIOR STAFF APPOINTMENT

Amish Gaglani  ACA Manager, Accounting and Management Services We are delighted to welcome Amish Gaglani as Manager of our Accounting and Management Services. Amish is a Chartered Accountant from The Institute of Chartered Accountants in India. He has 11 years of experience in accounting and auditing with various industries.

SENIOR STAFF PROMOTIONS

	Chithra Kandaswamy,  ACA Senior Manager Audit and Specialist Services		R Narayanan,  CA, CIA Manager Audit and Specialist Services
	Michelle Wong,  B.Com (Acctg & Fin) Assistant Manager Tax Services		Tan Yee Ching,  BBA Assistant Manager Tax Services

SINGAPORE PUBLIC HOLIDAYS - remainder of 2007

• Vesak Day – 31 May, Thursday
• National Day – 9 August, Thursday
• Hari Raya Puasa – 13 October, Saturday
• Deepavali – 8 November, Thursday
• Hari Raya Haji – 20 December, Thursday
• Christmas Day – 25 December, Tuesday
  

SINGAPORE PUBLIC HOLIDAYS - remainder of 2008

• New Year’s Day – 1 January, Tuesday
• Chinese New Year – 7 & 8 February, Thursday and Friday
• Good Friday – 21 March, Friday
• Labour Day – 1 May, Thursday
• Vesak Day – 19 May, Monday
• National Day – 9 August, Saturday
• Hari Raya Puasa – 1 October, Wednesday
• Deepavali – 28 October, Tuesday
• Hari Raya Haji, 8 December, Monday
• Christmas Day – 25 December, Thursday

REMINDERS FOR YOUR DIARY...

Important Dates 30 June 2007 – Deadline for holding Annual General Meetings for companies with a 31 December 2006 year end. Extensions are available on a case by case basis, but applications must be lodged before 30 June 2007. 30 June 2007 – Deadline for providing Estimated Chargeable Income for companies with a 31 March 2007 year end “THE IYER PRACTICE NEWSLETTER” is issued exclusively by Shanker Iyer & Co for the information of clients and associates and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions. Materials published may only be reproduced with the consent of Shanker Iyer & Co