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30 DECEMBER 2006		Issue 03/2006

Dear Valued Clients,
In this third edition of our e-Newsletter,we would like to highlight some important changes which have been recently proposed. Changes such as the likelihood of increasing the GST rate from 5% to 7%, compulsory e-filing for GST, the lowering of corporate tax rate to remain competitive in the global race for investments, the decrease of age limit to act as a director of a company, etc. As the year draws to a close, companies should review their tax position and take steps to reduce their tax liability. Implementing the correct strategies can help ease the tax burden for the current financial year and improve your cash flow. We hope the e-letter would be an effective tool to keep you posted of important changes Do take a few minutes to read through and we would like to take this opportunity to wish all of you a very happy and prosperous forthcoming new year. We are also pleased to inform you that our corporate secretarial Department, D&I Corporate Services Pte Ltd are providing a new service for the Incorporation of The Seychelles (Offshore) company for tax planning purpose.

LIMITED PARTNERSHIP (NEW draft bill) Under the LP structure, the passive investor known as a “limited partner” will assume limited liability, BUT will not allowed to participate in management. No corporate tax will be levied, as all partners will be taxed according to their personal income tax. There must be at least one general partner although there is no upper limit on the total number of partners in an LP. Should a general partner go bankrupt or should any partner die, the limited partnership will automatically dissolve. The Limited Partners will not be personally liable for all the debts, obligations and liabilities incurred by the LP. However, if a LP is takes part in the management of the LP’s business, he will be personally liable for all the debts, obligations and liabilities incurred during the period he participated in the management of LP as thought he were, for the period, a general partner. LP will have at least one partner, as the “general partner” will be liable for all the debts, obligations and liabilities incurred by the LP during the period when he is a general partner. A body corporate is allowed to be a general or limited partner LP will NOT be required to audit or file its accounts with the regulators. However, the firm will have to keep accounting records that would give a “true and fair view of the state of affairs”. A NEW Malaysia-Singapore Double Tax Relief. The new agreement will take effect from 1 January 2007. Reduction in personal income taxes: Personal tax reduced to 20% in YA 2007 Loss Carry-Back System From YA2006, losses of up to $100,000 incurred by the company in the current year can be carried back for one year. Note: We are able to assist companies in claiming back certain amount of the tax paid in the previous YA, if the companies fulfill the requirements stipulated by IRAS. There will be a nominal fee charged for the tax services. Income Tax Section 44 Statement From 1 Jan 2008: All companies in <?XML:NAMESPACE PREFIX = ST1 />Singapore remaining on the imputation system would move to the one-tier system. Imputation system will cease to exist; All dividends payable by companies in Singapore would be exempt from tax in the hands of shareholders; All corporate shareholders receiving dividends paid by companies in Singapore can onward pay the dividends to their shareholders with no restriction on the shareholding and number of tiers for which such dividends can be flowed through; All companies in Singapore are not required to maintain Section 44 accounts; All section 44 charge not utilised by 31^st December 2007 would not be available for set-off against any tax assessed on or after 1^st January 2008; and All tax discharged after 31^st December 2007 (net of any tax due to the Comptroller of Income Tax) may be refunded to companies at the point of tax discharge without the need to refer to companies’ section 44 balances as at 31 December 2002. Note: We are able to assist companies in claiming back the balance tax credit from IRAS before 31 December 2007, if the companies fulfill the requirements stipulated by IRAS. There will be a nominal fee charged for the tax services. Two new changes in CPF Scheme that will take effect on 1 July 2006 Transfer excess Medisave account contributions to special or retirement instead of ordinary account Restrictions on use of CPF savings for multiple property purchases Phasing out of non-residential properties scheme Increase in CPF minimum sum, Medisave minimum sum and Medisave contribution saving More details can be found at http://mycpf.cpf.gov.sg/CPF/News/News-Release/N_13June2006.htm	In an effort to boost entrepreneurship, government sets aside $3.9 billion over 5 years grants and loans to small local companies to expand. Grants are 35% higher than previous 5 years and loans are 60% more to help Small Medium Enterprises (SMEs) generate more income. Extracted: TODAY, Tuesday, March 07, 2006 18 YEARS ALREADY A DIRECTOR Instead of waiting until they turn 21, they can soon legally undertake business transactions, enter partnership and become directors at age of 18, the MOF announced on 6 November 2006 The changes will take effect after the legislation is amended.Extracted: The Straits Times, Tuesday, Nov 07, 2006 GST will go up to 7% The Goods and Services Tax (GST) will go up to 7 per cent to pay for more government spending to help the lower income.Extracted: The Straits Times, Tuesday, 14 November, 2006 Corporate tax rate may have to be lowered Singapore is prepared to cut its corporate tax rate further to remain competitive in the global race for investments.Extracted: The Straits Times, Tuesday, 14 November, 2006 GST e-filing compulsory starting from September 2008 All Goods and Services Tax (GST) returns will have to be filed online by September 2008, but the deadline for large firms is even sooner. From next January, companies with annual turnover above $5 million will have to ditch paper forms and file on their computers.Extracted: The Straits Times, Monday, 04 September, 2006 Personalised Employment Pass: A New Scheme to Faciliate The Contributions of Global Talent To Singapore The Ministry of Manpower will introduce a Personalised Employment Pass (PEP) from 1 January 2007 to help us better attract and retain global talent. The PEP will facilitate selected Employment Pass holders to continue working in Singapore. The PEP will be granted to suitable EP holders or foreigners who have graduated from our institutions of higher learning, and have worked in Singapore for a period of time. Changes to Form C Filing deadline and instalment payment of tax based on estimated chargeable income It was announced in the 2006 Budget speech that the period for keeping business records under the Income Tax Act would be reduced from 7 years to 5 years so as to lighten the costs to business. In order that businesses will benefit from this reduction in record-keeping period, IRAS will have to finalise the tax assessments of companies within this shorter timeframe. Funding for SMEs Over the last couple of years, many financial institutions, both local and foreign, have set up dedicated units to serve the needs of SMEs and to develop new financing tools that suit their requirements. The efforts of Government agencies and the Action Community for Entrepreneurship (ACE) Action Crucible for Financing – a private and public sector initiative aimed at improving SME’s access to financing , have contributed to raise the awareness of the importance of SMEs and improving the infrastructure to help SMEs obtain financing through many fixed channels. Extracted: TODAY, Wednesday, July 19, 2006 Financing options available – Local Enterprise Finance Scheme(LEFS) - SPRING Loan Insurance Scheme (LIS) - SPRING SME ACCESS loan, managed by DBS – SPRING Business Instalment Loan – Standard Chartered Bank Credit Biz – Maybank Business Term Loan – OCBC UOB SME Cash – UOB While there are many avenues for SMEs to seek financing on their own, working with Government agencies still has its benefits. Some SMEs found that testimonials or referrals by the Government helped lend credibility to their business plans. One-stop business info hub for SMEs TO MEET entrepreneurs' long-standing requests for a dedicated information hub, the government has created a web portal specially for small and medium-sized enterprises (SMEs) at http://www.business.gov.sg. A chinese version of the website is available at www.scci.org.sg/enterpriseone. It is launched on 22 February 2006 by Deputy Prime Minister Wong Kan Seng, the new portal is easy to navigate and written in simple language. The user- friendly portals includes step-by-step guides on how to apply for Government financing schemes and market statics gathered from 25 agencies so tha business spend less time searching for information. Extracted: TODAY, Thursday, February 23, 2006 Reminders for clients For PLCs: Please let us know the expected date you could finalise the accounts and ready for the audit as jobs are pre-assigned in advance. Ensure that you have all documents ready to avoid any delay in the audit work. A list of information needed can be found in our website at http://www.tanchan-cpa.com/download.htm (under For Auditing of company, association, firm, society and enterprise, Schedules required for Audit and Tax Purposes) Audit is to examine accounts with schedules provided. Income tax Form C is due for submission by 31st July the following year after its YE. If ECI is submitted electronically within 3 months from the YE date, there will be an auto extension of time until 31st December to file your Income Tax Return. Do inform us once you know your chargeable income. 'NIL' is required for making losses. As the year draws to a close, companies should review their tax position and take steps to reduce their tax liability. Implementing the correct strategies can help ease the tax burden for the current financial year and improve your cash flow. We value feedback and welcome any enquiries. You can reach us at Office Tel:+65 6533 7393 - Partner: Tan Chin Ren (Ext.129) Email: tancr@tanchan-cpa.com - Audit Manager: Wang Yi (Ext.105)Email : wangyi@tanchan-cpa.com - Customer Service Division: Eileen (Ext.103) Email: eileen@tanchan-cpa.com - Corporate Secretarial Division: Peggy (Ext.115)Email:svc@dni-secretarial.com - Tax Enquires : Jason (Ext.123) Email:audit1@tanchan-cpa.com - Address: 2 Havelock Road #04-08 Apollo Centre Singapore 059763

Disclaimer: This email is intended for the use of the addressee. If you are not the intended recipient of this message, kindly notify us at info@tanchan-cpa.com. While all reasonable care has been taken in the preparation of information contained in this newsletter, Tan, Chan & Partners takes no responsibility for any action (s) taken on the basis of information contained herein or for any errors or omissions in that information.