Group taxation mechanism –
- No mechanism exists for taxing members of the group of companies on a consolidated basis
- But, there is a group relief system under which current year unabsorbed losses, capital allowances and donations of one company is set of against the assessable income of another company in the same group
- No provision exists for intercorporate dividends, intercorporate transfers
Group relief is available if the group consists of Singapore incorporated company and Singapore incorporated group members. Singapore companies are members of the same group if –
- atleast 75% of the ordinary share capital in one company is beneficially held, directly or indirectly, by the other; or
- at least 75% of the ordinary share capital of each of the two companies is beneficially held, directly or indirectly, by a third Singapore-incorporated company.
Assessment and administration of group –
Holding company – The holding company is required to submit, its statement of account and –
- a consolidated statement of account of the group if it owns more than 50% of the issued capital of its subsidiaries; or
- a report of the state of affairs of the group if it owns less than 50% of the issued capital of its subsidiaries.
Subsidiary company – Subsidiary of a foreign company is not required to file accounts of its parent company, but the amount owed to the parent and related companies should appear in subsidiary’s accounts under separate headings.