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Singapore: Two Bills Passed Amending Income Tax Act

(Dec. 9, 2009) The Parliament of Singapore passed the Income Tax (Amendment) (Exchange of Information) [EOI] Bill 2009 on October 19, 2009, and the Income Tax (Amendment) Bill 2009 on November 23, 2009. (Bill texts, Parliament of Singapore website, &, respectively (last visited Dec. 8, 2009).)

The EOI bill provides for Singapore's implementation of the international standard for the exchange of information for tax purposes upon request, which was developed by the Organisation for Economic Co-operation and Development in concert with non-OECD countries. As a result of the bill's passage, the government's signing a protocol on October 14 to its agreement on avoidance of double taxation (DTA) with Bahrain, and its agreeing to a new DTA with France (its 12th EOI agreement), Singapore is no longer on the OECD's “grey” list of tax havens. A jurisdiction must have signed 12 EOI agreements in order to be removed from that list. (Han Lee Yen, Income Tax Bill Amendments Bring Singapore Closer to “White List,” NTU BUSINESS LIBRARY, Oct. 22, 2009, available at
; Fn. 1, A Progress Report on the Jurisdictions Surveyed by the OECD Global Forum in Implementing the Internationally Agreed Tax Standard, OECD, Dec. 7, 2009, available at Aside from the grey list, the OECD has a white list (for jurisdictions that have “substantially implemented” the standard) and a black list (for those that have “not committed to” the standard). As of the OECD's December 2009 report on the three lists, the black list was empty; it reads instead “[a]ll jurisdictions surveyed by the Global Forum have now committed to the internationally agreed tax standard.” (OECD, id.)

Under the other bill that amends the Income Tax Act, changes were introduced that, among other adjustments:

  • redefine a “limited liability partnership” and change the tax framework of public-private partnerships;
  • insert a new section on ascertainment of income from certain public-private partnership arrangements;
  • redefine a “qualifying employee” and a “part-time employee”;
  • insert a new section on “exemption of income of approved persons arising from funds managed by a fund manager in Singapore;”
  • introduce a new section on amalgamation of companies; and
  • apply the arm's length principle by inserting a new section on “transactions not at arm's length.” (Income Tax (Amendment) Bill 2009, supra.)

The arm's length principle is based on article 9 of the OECD Model Tax Convention, and prescribes that transactions between two related entities should be the same as if the two were actually two independent ones, not part of the same corporate structure. (See, e.g., John Neighbour,Transfer Pricing: Keeping It at Arm's Length, 230 OECD OBSERVER (Jan. 2002), available at