Personal Service Companies and the Tax Avoidance Surcharge in Singapore

Abstract

Incorporation of personal service companies provide tax and non-tax advantages. With the introduction of a tax avoidance surcharge in Singapore, incorporation for non-tax advantages risks additional “tax costs” if challenged by the revenue authorities, introducing uncertainty and litigation costs. Instead of relying on a GAAR, targeted measures should restrict tax advantages to the first company incorporated by each individual taxpayer.

Keywords: Personal service companies, Singapore, Tax avoidance, Tax planning

JEL Classification: K10