(August 4, 2015)

On August 3, 2015 the Inland Revenue Authority of Singapore published the second edition of its IRAS e-Tax Guide – GST Guide on Attribution of Input Tax. According to the e-Tax Guide the aim of the guide is to explain how a partially exempt business should attribute its input tax and also clarifies when input tax may be considered to be “directly attributable” to a supply.

In paragraph 2 “At a glance” the following is stated:

1. Input tax is claimable if it is directly attributable to the making of taxable supplies. If you make both taxable and exempt supplies, you would not be allowed to claim input tax attributable to the exempt supplies made unless the De Minimis Rule is satisfied.

2. A partially exempt business which does not satisfy the De Minimis Rule will have to claim input tax as follows:

   1. Input tax directly attributable to the making of taxable supplies will be claimable;

   2. Input tax directly attributable to exempt supplies is not claimable unless the exempt supplies fall within the list in Regulation 33 and that conditions in Regulation 35 can be satisfied; and

   3. Residual input tax to be apportioned by an apportionment formula.

   
   

The e-Tax Guide discusses a.o. the following subjects:

• Glossary

• De Minimis rule

• Regulation 33 exempt supplies

• Regulation 34 business

• Regulation 35 test

• Background

• What is Directly Attributable

• Residual Input Tax

• Summary

• Application

• Example 1 – Legal fees incurred by ABC to draft a Sales & Purchase Agreement to purchase a non-residential property.

• Example 2 – Professional fees incurred by ABC on mortgage loans obtained to purchase a non-residential property for leasing.

• Example 3 – Legal fees incurred by ABC to draft an agreement to provide a loan to its local subsidiary, XYZ Pte Ltd.

• Example 4 – Advertising fees incurred by ABC to advertise the lease of units in a mixed development.

• Example 5 – General overheads, office rental and utilities incurred by ABC to operate its business.

• Example 6 – Compulsory annual listing fees for ABC to remain listed on the Singapore Exchange (“SGX”).

• Example 7 - Professional fees incurred by ABC to issue shares or bonds to raise funds for it to carry out its management services.

• Example 8 – Administrative services incurred by ABC to make dividend payments to its shareholders.

• Example 9: Brokerage expenses to purchase shares locally for investment

• Example 10: Legal Costs incurred by ABC to sue its customers for defaulting on payment

• Frequently Asked Question

For further information click here to be forwarded to IRAS e-Tax Guide – GST Guide on Attribution of Input Tax (Second edition) as available on the website of the Inland Revenue Authority of Singapore, which will open in a new window.

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