SINGAPORE Law and Practice Contributed by: Lee Xin Mei, Cheryl Tan, Eugene Lee and Benjamin Liew, Rajah & Tann Singapore LLP
8. Accounting Rules and Issues 8.1 Legal Issues With Securitisation Accounting Rules Accounting issues relating to securitisation transactions are addressed by accountants, and accountancy firms will render the relevant accounting advice to parties seeking to under - take such securitisation transactions. In par - ticular, originators will typically require advice on whether or not a particular desired account - ing treatment under the applicable accounting standards can be achieved. Key considerations are whether or not a securiti - sation transaction can receive off-balance sheet treatment from the originator’s group. 8.2 Dealing With Legal Issues One of the key factors that auditors typical - ly consider is whether the assignment of the receivables takes effect as a true sale, that is, whether the assignment of the receivables by the originator to the SPV would constitute a sale of the receivables, rather than a loan secured by the relevant assigned receivables. Please see 6.3 Transfer of Financial Assets .
Singapore for tax purposes, are generally sub - ject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the final withholding tax rate of 15%) to non-resident persons (other than non-resident individuals) is currently 17%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation car - ried on or exercised by such person in Singapore and is not effectively connected with any perma - nent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15%. The rate of 15% may be reduced by applicable tax treaties. However, where the above-mentioned payments are made pursuant to securities that are “quali - fying debt securities” under the ITA, such pay - ments are not subject to Singapore withholding tax. See 1.3 Applicable Laws and Regulations . 7.4 Other Taxes A transfer of receivables is generally exempt from GST under the Fourth Schedule to the Singapore tax opinions are generally sought for securitisation transactions in Singapore. For instance, if the receivables are transferred to a purchaser that is not resident in Singapore at an artificial discounted price, the transaction may be recharacterised in whole or in part as a loan or indebtedness where such discount is consid - ered to be interest that is subject to withholding tax. Goods and Services Tax Act 1993. 7.5 Obtaining Legal Opinions
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