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2012 Q1
2012 Budget Statement
The FY2012 Budget Statement was delivered by Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam, in Parliament on Friday, 17 February 2012. More details can be found at Ministry of Finance (MOF) website http://www.mof.gov.sg
ACRA issues Practice Directions
The Accounting and Corporate Regulatory Authority (ACRA) issued Financial Reporting Practice Direction No. 1 of 2012. This Practice Direction serves to highlight to directors of companies that they should focus their attention on those SFRS (Singapore Financial Reporting Standards) which require significant management judgements and estimations during this uncertain economic environment.
ACRA also issued Practice Direction No. 1 of 2012: Applications for Exemptions under Sections 373(5) and 373(7) of the Companies Act, Cap. 50. This Practice Direction serves to identify:
a. legal requirements relating to financial reporting imposed on foreign companies
b. policies supporting these requirements
c. criterion and conditions imposed by ACRA for applications under Section 373(5) of the Companies Act, Cap. 50 for waiver from filing of local branch accounts, and Section 373(7) of the Act for relief from the requirements relating to the form and content of accounts or reports lodged.
ACRA issued an article entitled Discussion of Past Disciplinary Cases against Public Accountants and Public Accounting Entities. This article sets out the decisions or rulings extracted from past disciplinary cases against public accountants and public accounting entities. The purpose of this article is to raise awareness of important issues concerning appropriate and acceptable professional conduct; and to make known actions taken by ACRA to uphold professional conduct.
ACRA issued Audit Practice Bulletin No. 2 of 2011: Audit considerations in an uncertain economic environment that highlights some of the areas which have become more significant when performing audits in difficult or uncertain economic conditions and should be read together with Audit Practice Bulletin No. 1 of 2009: Audit Considerations in the Current Economic Environment which continues to be relevant.
In light of the current uncertain global economic environment and its potential impact on businesses and financial reporting, ACRA reminds public accountants to exercise vigilance, professional scepticism and judgement when performing the coming year-end audits.
The documents can be downloaded from ACRA’s website http://www.acra.gov.sg
ACRA Revises Fees for Information Products and Services
The fees for information products and subscription services provided by ACRA have been amended, with effect from 1 January 2012. With escalating operating costs, the current fee adjustment is necessary for the purposes of cost recovery, and streamlining of processes to be pro-business. ACRA has avoided increasing the fees for its information products and services since 1984, despite the various rounds of adjustments to the Goods and Services Tax (GST). More details can be found at ACRA’s website at http://www.acra.gov.sg
Accountancy Mutual Recognition Agreement
In conjunction with the 106th AFA Council meeting, a roundtable was held in Kuala Lumpur on 1 November 2011 between the ASEAN National Accounting Bodies and Accountancy Regulators to discuss the implementation of the Accountancy Mutual Recognition Arrangement (MRA). Members of the ASEAN Federation of Accountants (AFA) together with the respective regulators and the ASEAN Secretariat discussed the milestones, issues and challenges faced in the implementation of the MRA. More details can be found at ICPAS website: http://www.icpas.org.sg/mediacentre/Article.aspx?artid=305
New Licensing Requirements for Credit Rating Agencies
The Monetary Authority of Singapore (MAS) implemented the regulatory framework for Credit Rating Agencies (CRA) with effect from 17 January 2012. Under the new CRA regulatory framework, the provision of credit rating services will be regulated under the Securities and Futures Act (SFA). CRAs will consequently have to be licensed under the Capital Markets Services (CMS) licensing regime under the SFA and be subject to licensing obligations. CRAs will be required to comply with existing Regulations, Guidelines and Notices under the SFA that apply to all CMS licensees. In addition, CRAs will also have to comply with a new Code of Conduct for CRAs that MAS will introduce in conjunction with the establishing of a regulatory regime for CRAs.
MAS will also require CMS licensees providing credit rating services to appoint and register under the Representative Notification Framework any individual who acts as their representative in providing credit rating services. Representatives providing credit rating services will be required to hold at minimum a Bachelor’s degree in a relevant discipline that will allow them to perform the job function effectively.
Existing CRAs will be given a transition period of 6 months to apply for the required licence. For more information on the CRA regulation and new requirements, please refer to the following link: http://www.mas.gov.sg/legislation_guidelines/securities_futures/sub_legislation/SFA_Content_Page.html
Further Enhancements to Conveyancing Workflow
The Ministry of Law implemented new measures on 1 August 2011 to protect conveyancing money, by regulating how lawyers can receive and hold conveyancing money. These measures include requiring lawyers to hold conveyancing money in conveyancing accounts with specially appointed banks, namely: Bank of China, Bank of East Asia, CIMB Bank Berhad, DBS Bank, Far Eastern Bank, Oversea-Chinese Banking Corporation and United Overseas Bank. Alternatively, lawyers can hold such money through the Singapore Academy of Law’s conveyancing money service, or via escrow arrangements. The withdrawal of money from such accounts requires joint authorisation by lawyers acting for different parties
As a further enhancement, from 1 January 2012, the Singapore Land Authority’s Electronic Payment Instruction (ePI) service will allow lawyers to electronically notify banks of the details of conveyancing money paid into conveyancing accounts, instead of using hard copy forms. The Inland Revenue Authority of Singapore will also accept electronic stamp duty payments via the ePI service, which will reduce processing time and further streamline conveyancing transactions.
More information can be found at www.conveyancing.sg.
Additional Co-funding under ACAP Programme
GST-registered companies that undertake Assisted Compliance Assurance Programme (ACAP) from 1 April 2012 can look forward to a second tranche of co-funding by the Inland Revenue Authority of Singapore (IRAS). IRAS announced an additional $5 million budget to co-fund GST-registered businesses 50% of the fees incurred in undertaking ACAP. This is in addition to the original budget of $5 million set aside by IRAS when ACAP was first launched in April 2011.
As part of its efforts to facilitate and raise voluntary compliance among GST-registered businesses, IRAS introduced ACAP, a holistic solution for companies to proactively self-manage their GST risks and treat tax risk management as part of their corporate governance framework. Companies that undertake ACAP within the 5-year period from 5 April 2011 to 4 April 2016 and attain ACAP status will be offered two attractive incentives, namely, 50% co-funding of ACAP fees capped at $50,000; and a one-time waiver of penalties for voluntary disclosures of past GST errors.
The ACAP status allows businesses to enjoy benefits such as 3 to 5 years of exemption from time-consuming & costly GST audits, faster GST refunds and resolution of GST issues and automatic renewal of GST schemes. ACAP helps companies to proactively manage their tax risks and ensure that consistently robust internal controls are in place to detect tax errors early and on a timely basis.
As the ultimate responsibility for tax compliance rests with companies, the ACAP co-funding will not continue indefinitely.
The GST Guide on Assisted Compliance Assurance Programme which explains the requirements of the ACAP and the details on the ACAP incentives are available on IRAS’s website at www.iras.gov.sg.
MOF Accepts 23 out of 55 Suggestions on the Draft Income Tax (Amendment) Bill 2011
The draft Income Tax (Amendment) Bill 2011 contains proposed legislation to put into effect the tax changes announced in Budget 2011, as well as other changes arising from the periodic review of the income tax system.
The Ministry of Finance (MOF) has accepted for implementation 23 out of the 55 suggestions on the draft Income Tax (Amendment) Bill 2011 received during the public consultation exercise held from 11 July 2011 to 1 August 2011. These suggestions will be incorporated into the revised Income Tax (Amendment) Bill 2011. The remaining 32 suggestions were not accepted for implementation as they were inconsistent with the legislative drafting conventions or the policy objectives for the proposed legislative changes.
MOF has accepted some of the suggestions to expand the list of qualifying PIC equipment. To provide certainty to taxpayers, the list of qualifying PIC equipment, including additions, has been published on IRAS’ website. MOF has also accepted the suggestion for the list of qualifying PIC equipment including new additions to be applicable for the duration of the scheme i.e. from Year of Assessment (YA) 2011 to YA 2015. On the extension of the cash conversion till the end of the scheme, MOF will review this in 2012, nearer the date of the expiry of the conversion.
More details are available at IRAS’s website http://www.iras.gov.sg
Final Recommendations on the Proposed Revisions to the Code of Corporate Governance
The Corporate Governance Council submitted its final recommendations on proposed revisions to the Code of Corporate Governance to the Monetary Authority of Singapore in November for consideration.
Along with this submission, the Council has also released a response paper to feedback received from the public consultation conducted between June and July 2011. A total of 75 responses were received. Most respondents were supportive of the Council’s proposed revisions. The response paper sets out the feedback received on the key proposals, the Council’s response to the feedback, and the final proposals.
Having carefully considered the feedback received, the Council has finalised its recommendations on the revised Code. The final proposals are made in areas of director independence, board composition, director training, multiple directorships, alternate directors, remuneration practices and disclosures, risk management, as well as shareholder rights and roles. In addition, the Council recommended that a transition period be introduced to facilitate compliance with the revised Code.
More information is available at www.mof.gov.sg.
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