Singapore legislation
Section 47
Section 47
Comptroller to disregard certain transactions and dispositions
(1)
Subsection (1A) applies where the Comptroller is satisfied that the purpose or effect of any arrangement is directly or indirectly —
to alter the incidence or postpone the time due of any tax which is payable by or which would otherwise have been payable by any person;
to relieve any person from any liability to pay tax or to make a return under this Act;
to reduce or avoid any liability imposed or which would otherwise have been imposed on any person by this Act;
to obtain for any person any credit for or refund of input tax or any increase of such credit or refund —
which would not otherwise have been obtained; or
which would not otherwise have been obtained at the time at which it was obtained; or
to obtain for any person any refund of tax chargeable, or any increase of any refund of tax chargeable, on a claim made in the case of a bad debt pursuant to regulations made under section 25, which would not otherwise have been obtained.
(1A)
Without affecting any validity that the arrangement may have in any other respect or for any other purpose, the Comptroller must disregard or vary the arrangement and make any adjustment that the Comptroller considers appropriate so as to counteract any tax advantage obtained or obtainable by that person from or under that arrangement.
(1B)
An adjustment under subsection (1A) includes an adjustment that results in one or more of the following (called in this section and section 47A additional tax):
an increase in the amount of the tax payable by a person in relation to any prescribed accounting period;
a reduction in the amount of credit for input tax claimed by a person under sections 19 and 20 in relation to any prescribed accounting period;
a reduction in the amount of the refund of tax chargeable, on a claim made by a person in the case of a bad debt pursuant to regulations made under section 25 in relation to any prescribed accounting period.
(2)
Without affecting subsection (1A), the Comptroller may, for the purposes of this section, deem —
any person (not being, apart from this section, a taxable person) who is a party to or has participated in any way in any arrangement, to be a taxable person;
any supply of goods or services, whether or not a taxable supply, that is affected by or is part of any arrangement, to be both made to and made by any taxable person or a person deemed to be taxable under paragraph (a);
any supply of goods or services to take place in any prescribed accounting period that, but for any arrangement affected by this section, would have been the prescribed accounting period in which the supply was made; and
any supply of goods or services to have been made, or consideration for such supply to be given, at open market value.
(2A)
An adjustment under subsection (1A) must not be made more than 5 years after the end of the prescribed accounting period in relation to which the adjustment is to be made.
(2B)
Nothing in this section prevents the applicability of subsection (1) to a case, or any action of the Comptroller under subsection (1A) in a case, from being questioned in an appeal under Part 8 lodged against an assessment.
(2C)
Despite any objection under section 49 to or appeal under Part 8 lodged against any additional tax, the additional tax must be paid to the Comptroller —
within one month after the date a written notice of the adjustment is served in accordance with section 87(1) on the person to whom the adjustment is made; and
in the manner stated in the notice.
(2D)
The Comptroller may, in the Comptroller’s discretion, and subject to any term and condition (including the imposition of interest on the additional tax) as the Comptroller may impose, extend the time specified in subsection (2C) within which payment is to be made.
(3)
In this section and section 47A —
Definition
“arrangement” means any agreement, contract, plan, understanding, scheme, trust, grant, covenant, disposition, transaction and includes all steps by which it is carried into effect;
Definition
“tax advantage” includes —
any reduction in the liability of any person to pay tax;
any entitlement, earlier entitlement or increase in entitlement of a person to a credit for or refund of input tax;
any reduction in the total consideration payable by any person in respect of any supply of goods or services;
any postponement of the time when tax is due or payable; or
any entitlement or increase in entitlement of a person to a refund of tax chargeable, on a claim made in the case of a bad debt pursuant to regulations made under section 25.
(4)
This section does not apply to any arrangement carried out for bona fide commercial reasons and had not as one of its main purposes the avoidance or reduction of tax or the obtaining of any tax advantage.