Impact of Covid-19 on personal income tax and permanent establishments in Singapore (Part 2)
This article provides an insight into the tax considerations in respect of the current crises with focus on the Singaporean personal income tax regime and the possible creation of permanent establishment risk.
The Covid-19 pandemic has forced many workers to perform their work obligations in countries other than their country of employment. This has created potential permanent establishment (PE) risks according to the laws of many jurisdictions.
The extended period of presence of staff in Singapore of a non-resident Company may lead to a PE exposure in Singapore, eg by:
However, due to Covid-19 travel restrictions, employees of a foreign company may have to remain in Singapore. IRAS will consider that such presence may not lead to the creation of a permanent establishment in Singapore for the foreign company for YA 2021 and/or YA 2022, provided it meets all the following conditions:
Tax authorities in various jurisdictions are coming up with guidelines on how to specifically address these abnormalities posed by the pandemic. Meanwhile, the local legislation and the suggestions of the OECD are useful references in the meantime. The OECD publication “Analysis of Tax Treaties and the Impact of the Covid-19 Crisis” which serves as a guideline is considered as a ‘soft law’ because it is not binding but could assist to support arguments in-country with the tax authorities.
There is an increasing likelihood of businesses dealing with several cross-border employee related tax issues in the post Covid-19 period. Preparing the relevant records and documentation will help to support claims in the event of a dispute, or upon request. This will become more critical in the months ahead especially as the resurgence of cases causes more disruptions around the world.
Since COVID-19, there has been a significant increase in demand for employees to work remotely from Australia for foreign employers. Such a relocation is often solely for the convenience of the employee to fulfil a dream of working in Australia or to return home. If you have an employee wishing to work remotely from Australia, you […]
What is the issue? From 6 April 2025, the remittance basis of taxation for UK resident non-domiciled individuals will be abolished and will be replaced by a simplified Foreign Income and Gains (FIG) regime. There will also be changes to the way inheritance tax operates, so that it will be based on a test of residence […]
Since 2020, as a result of the COVID-19 pandemic, Mexico has become an attractive location for certain foreigners to work remotely. However, employers have to consider numerous tax and immigration factors for their employees working remotely from Mexico. According to Mexican legislation, an expatriate is a person who is legally authorised to carry out a […]
The Government of Sweden has submitted a bill extending the period for granting expert tax relief from five to seven years. If the Government bill is approved by Parliament, the extension will be in effect for eligible employees commencing work on 1 April 2023 or later. This article explains how the tax relief works and […]
On 19 September 2023, Dutch Parliament voted for several amendments to the 30%-ruling (exempting 30% of the pay of a foreign employee working in the Netherlands) from 1 January 2024. Upon the likely enactment, this will have an impact on the tax position of existing and future expats working in the Netherlands, reducing or limiting […]
A Spanish Supreme Court Ruling on 20 June 2022 effectively reverses the decision by the Spanish tax authorities to remove the tax exemption for company directors for works carried out abroad(1). In its ruling, the Supreme Court considers that directors and board members can apply the exemption, provided that requirements set out in Article 7.p) […]
Digital assets and cryptocurrencies continue to evolve by offering new services and products such as Decentralized Finance (DeFi) and non-fungible tokens (“NFTs”), but is tax legislation also keeping up to date with the ever-changing world of digital assets and cryptocurrencies?
India has signed double tax avoidance agreement (DTAA) treaties with several countries and entered into a protocol, inter-alia, containing the Most Favoured Nation (MFN) clause with 13 countries including France, Belgium, Spain, Sweden Switzerland, and the Netherlands. The MFN clause usually states that if, after date of entry into force of the tax treaty between […]
Guidelines on the taxation of cross-border workers during the Covid-19 pandemic and an update on PEPP as defined in the latest budget laws in Luxembourg.
The Belgian government has approved a draft bill in which changes for the new Belgian special tax status for foreign executives and specialists are embedded. The limited duration of the tax benefits, the minimal remuneration threshold, and the ‘30%-rule’ are the most profound changes. The changes will be effective from January 1, 2022. As a […]
In December 2020, Greece introduced tax incentives to attract foreign tax residents. Specifically, the provisions of Article 5C of the Greek Income Tax Code (ITC), which came into force on 1 January 2021, stipulate that foreign employees or foreign freelancers becoming Greek tax residents can enjoy a 50% tax exemption from income derived in Greece […]
Due to the Covid-19 pandemic, many Belgian tax residents working in Luxembourg were no longer able to travel since remote working/home working was recommended or mandatory, based on governmental rules. As such, ‘the 24-day rule’ (whereby taxation of days working in Belgium are treated as fully taxable in Luxembourg and not in Belgium, provided the […]
In response to the unprecedented spending on public services during the recent pandemic, the UK government has introduced a 1.25% health and social care levy applicable to every person liable to National Insurance Contributions (NIC), including self-employed individuals and internationally mobile employees (IMEs). Where employees are concerned, employers will also be required to pay the […]
In accordance with OECD guidelines, the taxability of ESOP in India depends on where employment is exercised and the period of service for which ESOP has been granted.
The Asian Development Bank has forecast that developing Asia’s growth is forecast to rebound to 7.3% in 2021 and 5.3% in 2022. This compares to 4.2% and 4.4% respectively for Europe (see here) and 6.9% and 3.6% for the US (see here). Businesses already with a footprint in the Asian region will be gearing up their operations to deal with the region’s expected […]
As Covid restrictions begin to lift there will inevitably be increased movement of workers across borders. This brings back into focus a range of global mobility and tax considerations for businesses and individuals. Examples include work permits, visas, payroll and social security amongst other issues. Below is a snapshot of some pints concerning Uruguay to […]
Global mobility is a significant advantage in a world where all countries are connected by monetary flow, means of transports and digital communication. A comprehensive global mobility strategy takes time, teamwork, and careful thought. The main challenges faced when designing a global mobility program are payroll, tax issues and laws, and compensation among others. It […]
In April 2020 the OECD issued guidance on the impact of Covid-19 on double taxation agreements (DTA) and their application to cross border workers. In January 2021 they updated this guidance. This guidance is necessary as some cross-border workers have been stranded in a country that is not their normal residence, and double taxation could arise without applying a practical approach to the […]
Tax reform continues to come in waves across the globe. One common theme of many reforms is tax breaks for low to mid wage earners and surprising tax hikes for high wage earners. This trend seems to be consistent with the latest out of the Czech Republic. New changes to the Czech tax law effective […]
The Covid-19 pandemic has resulted in unprecedented disruptions across multiple countries and economies in the world. In addition to adversely affecting the world economy, the restrictions placed on travel could have personal income tax implications for individuals and permanent establishment risks for businesses. This article provides an insight into the tax considerations in respect of the current crises with a focus on the Singaporean personal income tax regime and the possible creation of permanent establishment risk. Taxation […]
world. In addition to adversely affecting the world economy, the restrictions placed on travel could have personal income tax implications for individuals and permanent establishment risks for businesses.
On 24 December 2020, a draft protocol on social security co-ordination for EU-UK cross border working arrangements that start from 1 January 2021 was published. The draft protocol contained an article covering detached workers, i.e. employees who normally work in one EU member state/the UK who are sent to work in the UK/an EU member […]
During the first wave of Covid-19 back in the spring of 2020, many employers found themselves dealing with the issue of “remote workers” in significant volumes, for the first time. When “working from home”, means working from home in another part of the city or the country then the issues are more likely to be […]
The pandemic has led to many people choosing to relocate. Many are leaving densely populated cities to work remotely to where they feel are more desirable locations for themselves and family. Others are holding steadfast to their crowded city dwellings. Either way, geographies are challenged to retain (or welcome) existing residents and newcomers. Many are […]
What is the issue? With Brexit talks still ongoing, employers should be planning for the impact of a hard Brexit on social security coverage and benefit provision for their employees who travel between the UK and EU (including EEA & EFTA countries and Switzerland) for work. HMRC’s October employer bulletin provided a welcome update on […]
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