Balancing your accounts.

P/S Orchard Turn under construction.

1% reduction in corporate tax rate would cost $400mio a year.
1% increase in GST is expected to raise $750mio.

An 8% decline in compulsory road tax is to compensate you 50cts ERP increase in toll rate, more tolls to be operational and higher carpark charges. [I still lose. For a 2-litre car, 8% is about $120 per annum. $120 is meaningless. Btw, my car is only 1.6 litre.]

A 1.5% increase in employer's CPF is cushioned by a 2% cut in corporate tax rate and an increase in the partial exemption threshold from $100,000 to $300,000.

A 2% increase in GST is compensated by a comprehensive offset package to citizens with no change to personal income tax. [I still lose as I won't be able to get a single cent of the offset package.]

Borrowing costs other than interest

There are many other costs associated with the act of borrowing other than interest costs. Example of such costs could be professional fees, arrangement fees, statutory fees etc.

While such costs may be considered capital expenditures, these costs are currently not tax deductible.

Recent budget annoucement has indicated a willingness to reconsider this area. Look out for more details from May 2007.

Incentives for Overseas Investment

Why the need for Singapore companies to invest overseas?
In a very simple manner, to make more monies from a bigger market size.

There was a rallying call from the government under Goh's administration for Singapore companies to go overseas. I was working for one such company who took up that challenge.

We were overcame by lack of attitude preparation to operate in a foreign market and finally succumbed to the financial crisis in the late 1990s.

Recently, Mr David Sandison in his article in BT's "Tax alone cannot solve everything" raised the issue on overseas investment again. He said Singaporeans still need a push to get them out and about in the world, to take their businesses across borders and leave a footprint in the global sands.

Currently, incentives to venture abroad are virtually non-existent, and even less used, as they reward only failure through deductions for losses.

The interpretation of our tax schemes may be harsh. They were crafted to anticipate losses from early days of any investment.

Perhaps it is timely now to heed Mr Sandison's call to change the approach.

Let's talk about sex in the Boardrooms!

Humans compressed over 2 streets.

"No no," my friends. I want to say, "Let's talk about TAX in the boardrooms."

Recently a student asked me some questions on how to apply GST on the transactions that she has to invoice.

Not sure where she is in her company's management hierarchy. The fact that she is asking questions should be a comforting plus to her boss. Incorrect GST application not only invite unnecessary attention from the authority but may incur financial loss in the form of fines, penalty and manhours to remedy. A 5%-mistake (and soon a 7%) will really eat into your margin. Customer goodwill may be eroded too.

The directors of a computer gaming developer startup were grilling me on the tax implications of some corporate moves that they are considering.

In the past, tax matters were considered private, too technical for the laymen - it was something the tax department or someone from the auditor's office dealt with, with the tax authorities.

What is the price of not talking about tax in the boardroom?

• Without good tax management, you will not be considered a good boy ie. a company with good corporate governance; and
• You will not have the strength & depth to venture overseas and hold yourself up to the sometimes different standards in other jurisdictions.

If you don't about tax in the boardroom, what do you guys actually talk about? [wink.. wink..]