Dear Clients and Friends
Welcome to the first issue of our newsletter for 2011.
Singapore’s economic growth in 2010 of 14.7% was the fastest in Asia. The government has accumulated a large surplus and there is much anticipation of a generous Budget which will be announced on 18 February 2011.
Meanwhile, inflationary pressure is a rising cause of concern in Singapore as elsewhere around the world. The Singapore authorities are fighting imported inflation by means of maintaining a strong Singapore dollar. Strong anti-speculation measures have been implemented to keep a check on the buoyant Singapore property market.
More details on the above topics and other developments in the last quarter are contained in this issue of our newsletter.
Warmest Regards
Shanker Iyer
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NEWS |
SINGAPORE BUDGET DAY 2011
2011 Singapore Budget to be announced on Friday 18 February 2011.
Budget surplus could hit $6 billion
Analysts have projected Singapore’s budget surplus for 2010/11 to reach a record S$6 billion – the highest since 2007 – a dramatic reversal from the official government estimate of a $3 billion deficit made a year ago, thanks to the buoyant economy boosting tax receipts. [MORE]
ECONOMY
Singapore was Asia's fastest growing economy in 2010
The Singapore economy grew by 14.7% for the year as a whole, according to advanced estimates released by the Ministry of Trade and Industry (MTI), making it Asia's strongest economic performer and second fastest in the world. [MORE]
Singapore GDP growth expected to moderate between 4 to 6 percent in 2011
While several economists have raised their growth forecasts for the Singapore economy in 2011, the official forecast is of a moderate growth of 4% to 6%. Coming to the fore as a prime driver of this growth will be the services sector while manufacturing growth is expected to normalise to a more modest single-digit growth. [MORE]
INFLATION
Singapore annual inflation climbs to 2-year high
Singapore's annual inflation hit 4.6 % in December 2010, the highest since December 2008. The city-state's consumer price index (CPI) was up a seasonally adjusted 0.9 % from November, according to figures released by the Department of the Statistics. The pickup in CPI inflation was mainly attributed to higher costs of accommodation and cars. CPI inflation is expected to be higher over the next few months before moderating. [MORE]
SGD keeps climbing against the USD, chased by inflation
The Singapore dollar rose in January 2011 against the US dollar to reach a year-high of $1.2831 to one USD dollar. The Sing dollar has racked up impressive gains against the greenback so far, climbing 11 per cent against the US dollar in 2010 – its biggest one-year gain since 1994. Sharp inflation in December however fans expectations of further monetary tightening ahead. [MORE]
PROPERTY
Private residential property price index jumped 17.6% in 2010
The Urban Redevelopment Authority (URA) reported that based on the estimated price index of private residential property, prices rose from 165.7 index points in Q4 2009 to 194.8 index points in Q4 2010. This represents an overall increase of 17.6% for the whole of 2010, in a vibrant property market driven by confidence fuelled by the recovering economy and employment market, and supported by low interest rates [MORE]
Government announces further property market cooling measures
The Monetary Authority of Singapore announced fresh measures to cool the property market and encourage greater financial prudence among property purchasers. With effect from 14 January 2011, the holding period for imposition of Seller’s Stamp Duty (SSD) has been extended, SSD rates have been increased, and the Loan-To-Value (LTV) limits on housing loans granted by financial institutions regulated by MAS have been reduced.
These latest Government efforts to curb the sizzling property market come five months after its last round of measures and its fourth in 16 months. [MORE]
Singapore ranks top for property investments
Singapore and Shanghai rank top among Asian cities as the best real estate investment destinations, while Osaka and Manila are seen as the least ideal, an industry survey showed. [MORE]
LABOUR MARKET
Employment Situation in Fourth Quarter 2010
For the whole of 2010, total employment has grown by 3.7%, with 112,500 more jobs created throughout the year. Singapore’s overall unemployment rate has eased to 2.2% in 2010 from 3% in 2009.
Foreign employment also picked up in 2010 after dipping in 2009 as a strong economic recovery produced more jobs than could be filled. Employment of foreigners bounced back from a decline of 4,200 jobs in 2009 to a rise of 58,300, despite a move to tighten the inflow of foreign workers. [MORE]
Tightening immigration policy
The lowest PR intake in at least five years was recorded in 2010: only 29,265 permanent resident passes were granted, representing a 50% drop from the 59,460 passes given out in 2009. The sharp drop in PRs is a result of the tightening of immigration policy to better manage the inflow and quality of new immigrants. [MORE]
Employment outlook for 2011: It will still be a job seeker’s market in Singapore
Convinced that the economic recovery is here to stay, employers will be looking to hire aggressively this year, with financial services leading the way, according to both recruitment consultants and employers.
Recent employment outlook polls by recruitment firms in Singapore estimate that about 48% to 53% of employers are targeting more hires in 2011. They are also prepared to dangle generous salaries to attract workers and retain staff. [MORE]
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ARTICLE |
Private Trust Company: A solution that empowers and prepares the next generation to manage the family wealth
A private trust company (PTC) acts as a trustee for a specific trust or a few related trusts. It does not solicit for business from the public. In Singapore, the Settlors and Beneficiaries of trusts are “connected persons” related by blood, adoption or marriage. In the case of a corporation, “connected persons” are present or former employees/directors or shareholders with at least 20% voting power. [MORE]
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TAXATION UPDATE |
PRODUCTIVITY AND INNOVATION CREDIT
In an endeavour to increase productivity among businesses, the Productivity and Innovation Credit (PIC) was introduced in the Singapore Budget 2010. This generous tax incentive is available to all businesses in Singapore who incur expenditure on any of the following activities:
- Research and Development
- Investment in Design
- Acquisition of Intellectual Property Rights
- Registration of Intellectual Property Rights
- Investment in Automation
- Training
Businesses will be able to claim tax deduction of up to 250% of the first S$300,000 of the qualifying expenditure incurred on each of the six activities and 100% deduction for the balance expenditure except in the case of Research and Development activities where businesses will be able to claim 150% for the balance expenditure over S$300,000.
The deductions will be available during the five year period from Year of Assessment (YA) 2011 to YA 2015. [MORE]
TRANSFER PRICING
With effect from January 2011, cross border related party loans should mandatorily be on an arm’s length basis.
The arm’s length principle is an internationally accepted standard adopted for transfer pricing between related parties and has been endorsed by the Inland Revenue Authority of Singapore (IRAS as the standard to guide transfer pricing. [MORE]
TAX DEDUCTION FOR ANGEL INVESTORS
To encourage eligible individuals to invest in start-ups and help them grow, a new incentive granting tax reliefs to angel investors was announced in the Budget 2010. Under this new incentive, an approved angel investor who invests a
minimum of S$100,000 into a qualifying start-up in a Year of Assessment will enjoy a tax deduction at 50% of his investment at the end of the second year of holding the investment. The tax deduction is capped at S$500,000 and the incentive is valid from 1 March 2010 to 31 March 2015. [MORE]
PROPERTY TAX
New Progressive Tax Rates with effect from 1 January 2011 for owner-occupied homes
In Budget 2010, the Government announced a shift to a system of progressive property tax rates of 0%, 4% and 6% for all owner-occupied homes based on the Annual Values of these properties, effective from 1 January 2011. [MORE]
TAX TREATIES UPDATE
Singapore and Estonia Enhance Tax Cooperation
Singapore and Estonia signed a protocol to incorporate the internationally agreed Standard for the exchange of information for tax purposes upon request in their standing agreement for the avoidance of double taxation. [MORE]
Protocols to the standing agreements for the Avoidance of Double Taxation between Singapore and Denmark, Singapore and the United Kingdom to enter into force
The protocols to the standing agreements for the avoidance of double taxation between Singapore and Denmark, as well as Singapore and the United Kingdom entered into force on 8 January 2011. [MORE]
Protocol to the standing agreement for the Avoidance of Double Taxation between Singapore and France to enter into force
The protocol to the standing agreement for the avoidance of double taxation (DTA) between Singapore and France entered into force on 1 January 2011. [MORE]
Singapore-Libya Avoidance of Double Taxation Convention Comes into Force
Singapore’s convention with Libya for the avoidance of double taxation (DTC) came into force on 23 December 2010. [MORE]
Second Protocol to standing DTA between Singapore and Australia takes effect
The Second Protocol to the existing Agreement for the Avoidance of Double Taxation (DTA) between Singapore and Australia, which incorporates the internationally agreed Standard for exchange of information into the DTA, entered into force on 22 December 2010. [MORE]
Singapore-Slovenia Avoidance of Double Taxation Agreement Comes Into Force
Singapore’s agreement with Slovenia for the avoidance of double taxation (DTA) came into force on 25 November 2010. [MORE]
Singapore and Albania Sign Avoidance of Double Taxation Agreement
Singapore and Albania signed an Agreement for the Avoidance of Double Taxation (DTA) on 23 November 2010. [MORE]
Singapore and Ireland Sign Avoidance of Double Taxation Agreement
Singapore and Ireland signed an Agreement for the avoidance of double taxation (DTA) on 28 October 2010. [MORE]
Third Protocol to standing DTA between Singapore and the People’s Republic of China takes effect
The Third Protocol to the existing Agreement for the Avoidance of Double Taxation (DTA) between Singapore and the People’s Republic of China, which incorporates the internationally agreed Standard for exchange of information into the DTA, entered into force on 22 October 2010. [MORE]
Singapore and Panama sign agreement for Avoidance of Double Taxation
Singapore and Panama signed an Agreement for the avoidance of double taxation (DTA) on 18 October 2010. [MORE]
OTHER TAX UPDATES
US Tax Updates: US Internal Revenue Service Announces New Overseas Voluntary Disclosure Initiative
On 8th February 2011, the U.S. Internal Revenue Service announced a new overseas voluntary disclosure initiative (“OVDI”). Individuals who enter the initiative minimise their risk of criminal prosecution and have “certainty” that fixed civil penalties, which are lower than the maximum penalties allowable under law, will be levied in connection with their disclosures. The IRS has increased its focus on “foreign facilitators” and taxpayers participating in the OVDI will be required to provide information regarding the financial institutions and advisors who assisted them with the unreported assets and income. [MORE]
Time limit to raise assessments
Prior to Year of Assessment (YA) 2008, the Income Tax Act allows IRAS to raise an assessment or additional assessment within six years after the end of that year of assessment. In keeping with the reduction of the record keeping period from seven years to five years with effect from YA 2008, the statutory time limit to raise an assessment or additional assessment has been accordingly reduced from six to four years. However, this statutory time limit will not apply to cases where fraud is involved. [MORE]
Tax deductions for donations to IPCs made simple from 1 Jan 2011
Come 1 January 2011, individuals and businesses that donate to an Institution of Public Character (IPC) will be required to provide identification number (e.g. NRIC number for an individual and the Unique Entity Number for a business) for their donations. [MORE]
IRAS introduces hassle-free, electronic GST refund system for tourists
The Inland Revenue Authority of Singapore (IRAS) is partnering Global Blue to develop a new electronic tourist refund system from mid-2011 that will remove form-filling by tourists at the point of purchase, and make it easy for them to claim GST refunds at Changi Airport. [MORE]
LATEST E-TAX GUIDES ISSUED BY IRAS
New e-Tax Guides
Revised e-Tax Guides
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CORPORATE UPDATE |
Payment for Certificate of Compliance
With effect from 1 February 2011, the Certificate of Compliance can be purchased from ACRA's one-stop shopping portal, iShop@ACRA, for a fee of $15. [MORE]
ACRA-AGC Joint Consultation – Supplementary Report on Formalities in the Execution of Documents: Amendments to Companies Act and Limited Liability Partnerships Act
The Accounting and Corporate Regulatory Authority and the Attorney-General’s Chambers invited members of the public to provide feedback on the Supplementary Report on Formalities in the Execution of Documents: Amendments to Companies Act and Limited Liability Partnerships Act. [MORE]
Public Consultation on Review of Business Registration Act (Cap. 32)
The Accounting and Corporate Regulatory Authority (ACRA) invited members of the public to provide feedback and suggestions as part of its review of the Business Registration (BR) Act (Cap. 32). [MORE]
Shorter Extension of Time for holding of AGM and laying of financial statements at AGM
ACRA has implemented the "Shortening of Extension of Time" initiative on 9 September 2010. Under the initiative, the maximum extension period allowed for a company to hold its Annual General Meeting (AGM) and lay its financial statements at its AGM will be reduced from three to two months. [MORE]
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ACCOUNTING UPDATE |
New accounting standard for SMEs
The Singapore Accounting Standards Council (ASC) issued the Singapore Financial Reporting Standard for Small Entities which will be applicable for financial reporting periods beginning on or after 1 January 2011.
An organisation is eligible to apply the SFRS for Small Entities if it is not publicly accountable and it publishes general-purpose financial statements for external users. It must also have annual revenue not exceeding $10 million, gross assets not more than $10 million and fewer than 50 employees. At least two of the three criteria must be met. [MORE]
ASC issues Improvements to FRSs 2010
The ASC has issued the amendments to FRSs - Improvements to FRSs 2010, comprising general amendments resulting from 2009 proposals. [MORE]
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HUMAN RESOURCE UPDATE |
New Regulatory Framework for Employment Agencies
The Ministry of Manpower (MOM) is introducing a new Employment Agency Regulatory Framework to raise recruitment standards and build more confidence in the professionalism of the industry. The changes will come into force on 1 April 2011. [MORE]
Changes to the Employment of Foreign Manpower (Work Passes) Regulations
The Ministry of Manpower (MOM) has made changes to the Employment of Foreign Manpower (Work Passes) Regulations to clarify existing rules regarding the employment of foreign manpower. The revised regulations will apply to all existing and new work passes from 1 February 2011. [MORE]
Retirement & Re-Employment Act passed; Employers to offer re-employment to workers aged 62 yrs from Jan 2012
The Parliament has passed new laws to make it mandatory for companies to offer workers re-employment beyond the statutory retirement age of 62. From 2012 January, workers who turn 62 must be offered an option to work for another three years, if they are medically fit and show satisfactory job performance. [MORE]
Guidelines for the Protection of Employees against the Effects of Haze at Workplaces
As Singapore and its surrounding region continue to tackle the recurring risk of haze pollution, the Ministry of Manpower (MOM) has issued guidelines for employers to protect the safety and health of employees against the effects of haze. [MORE]
Public Consultation on Proposed Enhancements to the Workplace Safety and Health Act
The Ministry of Manpower (MOM) had invited members of the public to give feedback on the proposed enhancements to the Workplace Safety and Health Act (WSHA). Initially covering only factories and higher risk workplaces, the MOM announced that the scope of the WSHA would be extended to all workplaces by September 2011. [MORE]
Public Consultation on Proposed Enhancements to the Work Injury Compensation Act Framework
The Ministry of Manpower (MOM) is proposing revisions to enhance the Work Injury Compensation Act (WICA) framework. The proposed changes seek to strike a fair balance between compensation for injured employees and the obligations placed on employers, and to ensure that WICA continues to be a simple, low-cost and expeditious method of resolving claims for work-related injuries. [MORE]
Electronic Submission of Supporting Documents via Employment Pass Online
From 1 April 2011, the Employment Pass Online (EP Online) users will be able to upload relevant supporting documents when submitting a work pass/related pass application. Thus, employers will no longer need to submit physical copies of most supporting documents at the Ministry of Manpower (MOM) Work Pass Services Centres for verification. [MORE]
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SINGAPORE GOVERNMENT ASSISTANCE SCHEME UPDATE |
Government adjusts financing schemes in tandem with economic recovery
The economic recovery has prompted the Government to rein in the financing schemes that were introduced at the onset of the global economic crisis. The Special Risk-Sharing Initiative (SRI) has lapsed on 31 January 2011; the Government’s financing support for the Bridging Loan Programme will therefore cease while the other schemes have been revised with effect from 1 Feb 2011. [MORE]
$500m leg-up for SMEs that go for growth
The government launched the first phase of its $1.5 billion public-private co-investment fund for Singapore-based SMEs in December 2010.
An initial $500 million will be pumped into the fund, made up of $250 million seed money from the government, and dollar-for-dollar matching by private sector capital.
The fund, first announced in the Budget for 2010, is aimed at helping Singapore-based firms with revenues of up to $500 million in need of capital to grow their business. [MORE]
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EVENTS |
Past Events
Becoming a Singapore PR
The Iyer Practice & ipac financial planning singapore
27 January 2011
Mr Shanker Iyer discussed various considerations in taking up Singapore PR. |
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Singapore 2010 Tax Update
The Iyer Practice & Singapore International Chamber of Commerce (SICC)
20 January 2011
The firm presented a high-level look back on key tax changes in Singapore over 2010. |
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Becoming a Singapore PR:
Considerations and Expat Tax Update
The Iyer Practice & AAM Advisory
9 December 2010
Mr Shanker Iyer discussed various issues concerning Singapore PR to important year-end considerations for Singapore Expat Tax.
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International Tax Planning through Singapore
ITPA Meeting Amsterdam
7-9 November 2010
Mr Shanker Iyer opened the global meeting of the International Tax Planning Association with a presentation on recent amendments to company and tax law in Singapore that make the country an attractive vehicle for international tax planning.
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IRAS Appreciation Ceremony
September 2010
Mr Shanker Iyer was presented by Mr Moses Lee, Commissioner of the Inland Revenue Authority of Singapore (IRAS), with a Certificate of Appreciation for being a Member of the IRAS Taxpayer Feedback Panel from Sep 2008 to Aug 2010 |
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Upcoming Events
25 February 2011 |
Swedish Business Association Singapore |
Becoming a Singapore PR |
9 March 2011 |
The Iyer Practice and Singapore International Chamber of Commerce |
Singapore Budget 2011 |
24 March 2011 |
The Iyer Practice and AAM Advisory |
Expatriate Tax Update |
For more details on our upcoming events, please refer to The Iyer Practice website.
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STAFF NEWS |
LONG SERVICE AWARD
In Recognition of 15 Years of Service
Mr J Bala, newly-appointed Senior Director of Audit & Specialist Services, was presented by Mr Shanker Iyer with a token of appreciation for his 15 years of dedicated service to the firm. |
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STAFF PROMOTIONS – January 2011
We are pleased to announce the following staff promotions:
Audit & Specialist Services
J Bala – Senior Director
Alice Jacob – Senior Analyst
Wei Hau Thea – Senior 1
Christopher White – Associate
Client Accounting
Sudip Baniya – Supervisor
Corporate Services
Liana Cheng – Senior Director
Muneera Azmi – Assistant Director
Gene Lim – Senior 1 |
Taxation
Prapti Acharya – Assistant Director
Tan Yee Ching – Assistant Director
Leong Mew Pheng – Assistant Manager
Melissa Yeo – Supervisor 2
Pang Chia Wei – Senior 2
Chai Yee Ni – Senior 1
Erna Mariana – Associate 2
Wang Ren Hong – Assistant 2
Samantha Lee – Assistant 2
Administration
Violet Yik – Senior Manager |
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SINGAPORE PUBLIC HOLIDAYS - REMAINDER OF 2011 |
SINGAPORE
22 April |
Friday |
Good Friday |
Remarks:
* The following Monday will be a public holiday.
** The date, 26 October 2011, for Deepavali needs to be checked against the Indian Almanac when it is available. Should there be a change in date; the Ministry of Manpower will issue a media release to announce the change. |
1 May |
Sunday* |
Labour Day |
17 May |
Tuesday |
Vesak Day |
9 August |
Tuesday |
National Day |
30 August |
Tuesday |
Hari Raya Puasa |
26 October |
Wednesday** |
Deepavali |
6 November |
Sunday* |
Hari Raya Haji |
25 December |
Sunday* |
Christmas Day |
NEIGHBORING ASIAN COUNTRIES
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INDONESIA |
MALAYSIA |
THAILAND |
15/2 |
Tue |
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Prophet Muhammad’s Birthday |
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18/2 |
Fri |
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Makha Bucha Day |
16/2 |
Wed |
Prophet Muhammad’s Birthday |
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6/4 |
Wed |
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Chakri Day |
13/4-15/4 |
Wed-Fri |
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Songkran Festival |
22/4 |
Fri |
Good Friday |
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1/5 |
Sun |
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Labour Day* |
Labour Day* |
5/5 |
Thu |
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Coronation Day |
17/5 |
Tue |
Waisak Day |
Vesak Day |
Visakha Bucha Day (Vesak Day) |
2/6 |
Thu |
Ascension of Jesus Christ |
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5/6 |
Sun |
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SBP Yang DiPertuan Agong’s Birthday* |
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28/6 |
Tue |
Ascension of the Prophet |
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15/7 |
Fri |
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Asahna Bucha Day |
12/8 |
Fri |
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HM The Queen’s Birthday |
17/8 |
Wed |
Independence Day |
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30/8 |
Tue |
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Hari Raya Puasa |
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31/8 |
Wed |
Hari Raya Idul Fitri |
Hari Raya Puasa,
National Day |
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23/10 |
Sun |
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Chulalongkorn* Day |
26/10 |
Wed |
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Deepavali |
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6/11 |
Sun |
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Hari Raya Haji* |
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7/11 |
Mon |
Hari Raya Idul Adha |
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26/11 |
Sat |
Islamic New Year |
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27/11 |
Sun |
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Islamic New Year* |
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5/12 |
Mon |
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HM The King’s Birthday |
10/12 |
Sat |
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Constitution Day |
25/12 |
Sun |
Christmas Day |
Christmas Day* |
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31/12 |
Sat |
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New Year’s Eve |
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REMINDERS FOR YOUR DIARY... |
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Important Dates
Deadline for Tax filings
- 31 March 2011 - Deadline for providing Estimated Chargeable Income (ECI) for companies with a 31 December 2010 year end. Companies who choose to file their ECI electronically at www.iras.gov.sg will receive an automatic extension until 30 November 2011 to file their tax returns. The normal filing deadline is 31 July 2011.
- 15 April 2011 - Deadline for individuals to submit their tax returns for the year of Assessment 2010. This is also the deadline for claiming NOR status for calendar year 2010.
Deadline for Annual General Meeting and filing of AR
- Annual General Meeting to be held by 31 March 2011 for FYE 30 September 2010 and AR to be filed by 30 April 2011.
- Annual General Meeting to be held by 30 June 2011 for FYE 31 December 2010 and AR to be filed by 31 July 2011.
- Companies unable to meet the AGM deadline are generally able to apply for an extension of time prior to their financial year end to the Accounting and Corporate Regulatory Authority to hold the Annual General Meeting.
- The application fees for extension of time range from S$50 to S150 (S$50 for 1 month, S$100 for 2 months and S$150 for 3 months).
- 30 November 2011 - Deadline for filing tax returns for the Year of Assessment 2010. No extensions available.
- 31 December 2011 - Annual General Meeting Deadline for companies with a 30 June year end.
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“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
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