Shanker Iyer

Shanker Iyer & Co

30th May 2008

NEXIA INTERNATIONAL – TAX CONFERENCE

Cross Border Transactions

AgendaAgenda

Case Study I

Case Study II

Questions

11

Case Study I

Case Study – 1Case Study – 1

Singapore Company(Singapore Co.)

Liberian Holding Company(Liberian Co.)

100% Share ownership Loan

Loan = 30% of (Capital + Loan)

2 Switzerland Cos. (Swiss Co.)

100% Share Ownershipi.e. 70% of (Capital + Loan)

Div

iden

d

Inte

res

t

Div

ide

nd

Inte

res

t

Case Study – 1Case Study – 1

Singapore Company(Singapore Co.)

Liberian Holding Company(Liberian Co.)

100% Share

ownershipLoan

Loan = 30% of (Capital + Loan)

2 Switzerland Cos. (Swiss Co.)

100% Share Ownershipi.e. 70% of (Capital + Loan)

Div

iden

d

Inte

res

t

Div

ide

nd

Inte

res

t

Without Singapore SPV- Swiss distribution WHT 35%

Singapore tax treaty benefits

Singapore territorial tax system

Singapore foreign income exemption scheme

Singapore’s one tier dividend system

Dividends

Case Study – 1Case Study – 1

Singapore Company(Singapore Co.)

Liberian Holding Company(Liberian Co.)

100% Share

ownershipLoan

Loan = 30% of (Capital + Loan)

2 Switzerland Cos. (Swiss Co.)

100% Share Ownershipi.e. 70% of (Capital + Loan)

Div

iden

d

Inte

res

t

Div

ide

nd

Inte

res

t

Case Study – 1Case Study – 1

Singapore Company(Singapore Co.)

Liberian Holding Company(Liberian Co.)

100% Share

ownershipLoan

Loan = 30% of (Capital + Loan)

2 Switzerland Cos. (Swiss Co.)

100% Share Ownershipi.e. 70% of (Capital + Loan)

Div

iden

d

Inte

res

t

Div

ide

nd

Inte

res

t

Interest

Case Study – 1Case Study – 1

Singapore Company(Singapore Co.)

Liberian Holding Company(Liberian Co.)

100% Share

ownershipLoan

Loan = 30% of (Capital + Loan)

2 Switzerland Cos. (Swiss Co.)

100% Share Ownershipi.e. 70% of (Capital + Loan)

Div

iden

d

Inte

res

t

Div

ide

nd

Inte

res

t

Capital gain

11

Case Study II

Case Study – 1ICase Study – 1I

Marshall Islands(“MI Co.”)

Singapore(“Sing Co.”)

Netherlands (‘Dutch Co.)

Ukrainian Properties

Bank

Loan Finance

US$ 53mn

InvestmentUS$ 9mn

InvestmentUS$ 62mn

Singapore tax treaty benefits

Singapore territorial tax system

Singapore foreign income exemption scheme

Marshall Island(“MI Co.”)

Singapore(“Sing Co.”)

Netherland (‘Dutch Co.)

Ukrainian Properties

Bank

Loan Finance

US$ 53mn

InvestmentUS$ 9mn

InvestmentUS$ 62mn

Case Study – 1ICase Study – 1I

Case Study – 1ICase Study – 1I

Marshall Island(“MI Co.”)

Singapore(“Sing Co.”)

Netherland (‘Dutch Co.)

Ukrainian Properties

Bank

Loan Finance

US$ 53mn

InvestmentUS$ 9mn

InvestmentUS$ 62mn

Where it went wrong in this structure

One condition to foreign source income exemption : not in favor

“Exemption with Progression” not incentive

Marshall Island(“MI Co.”)

Singapore(“Sing Co.”)

Netherland (‘Dutch Co.)

Ukrainian Properties

Bank

Loan Finance

US$ 53mn

InvestmentUS$ 9mn

InvestmentUS$ 62mn

Negative Ruling by IRAS

Proper planning and interpretation of law at preliminary stage

Additional cost burden for client

Case Study – 1ICase Study – 1I

QuestionsQuestions