Year / 2008

by Edgar

Cross border billings

stealing in progress?

Have you been doing cross border billings? Of course, you have not. I hope…

For those who are not familiar with it, here is the explanation. Imagine you have a company in China and also a company in Hong Kong. For businesses secured and completed in China, the billing ie. the invoice is issued from the Hong Kong company.

Why?

Apparently many SMEs, with the above set up, are taking advantage of the 9% discrepancy between the corporate tax rates of two countries (Hong Kong 16.5% and China 25%).

They have been booking their mainland’s revenue in the lower tax region in Hong Kong.

So can we do the same between Singapore and regional countries? You better not as apparently Chinese and Hong Kong authorities are said to be working together to clamp down on such arrangement.

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by Edgar

Words and figures differ

What if Edgar drew a cheque like this where the words and figures are different…

“Amount – Five Thousands Dollars Only $500/-“

In the Forum page of ST a couple of days, DBS Bank apologised to the account holder for wrongly clearing a cheque where the words and figures differ. DBS said they should not have cleared the cheque.

I wish to question whether DBS’s position of not clearing such a cheque is legally correct.

In the Banking Law class that I attended many years ago, I was told that the Bank should honour the cheque based on the “words” stated.

Has the law changed since the years after my Banking Law class? Or have I heard wrongly? If you are not from Singapore, can share with me your country’s practice?

by Edgar

FRS for SMEs


While we are eagerly awaiting for the launch of FRS for SMEs in Singapore, there are changes to IFRS’s version as outline in recent IFRS Conference held on July 17, 2008 in Marina Oriental Singapore.

First and foremost, IFRS said there is going to be a name change from IFRS for SMEs to IFRS for PRIVATE ENTITIES. Warren McGregor gave some background info on the proposed name change.

The IFRS for SMEs is definitely not for the mom-and-pops businesses but rather caters to entities with 50 or more employees in general. They were considering other names like non-publicly accountable entities.

The IFRS for Pte Entities will be fully stand alone ie. no reference to the main/full FRSs.

by Edgar

Exam Results by Email

Lynn has forwarded to me an email message from ACCA reminding students to sign up for results by email.

I would strongly advise so for a hassel free experience as compare to waiting for it by mail days after others have got theirs or you waiting to access the results online on those busy days.

You can sign up by Aug 15, 2008 at myACCA.

ACCA said you should expect the results to be emailed out by Aug 18, 2008.

by Edgar

Accounting for Leases

In the IFRS conference held on July 17, 2008, Sir David Tweedie and Warren McGregor said IASB is working towards abolishing the need to differentiate between finance lease and operating lease.

The Board is taking the approach of “right of use” in crafting the new FRS on Leases. With this approach, it would be reflected as an Asset as long as the lessee has the right of use and consequently mirrored as a Liability as long as the lessee has an obligation to pay.

The Board faces difficulties in sorting out the following features in a lease agreement:-
– option to renew or terminate a lease
– measurement eg. contingent rentals
– overlap with other projects in the area of revenue recognition, derecognition and conceptual framework.

Sir Tweedie made an interesting remark. He said he is looking forward to the day when he could say that he is flying in a plane that is actually reflected in the airline’s balance sheet.

by Edgar

IASB and FASB are doing something together.

Marina Viaduct’s skyline now

Who are they?
IASB – International Accounting Standards Board
FASB – US’s Financial Accounting Standards Board

What have been doing together?
Essentially trying to move the two standards together.
They are planning to do it over 3 phases ie. A, B and C.

What are the 3 phases?
Phase A – completed in Sep 2007 with the issuance of FRS 1R. The FRS introduces the use of some American terminologies. The use of these terms for Singapore is not compulsory. Thus expect confusion in Singapore. Examples,
– Balance Sheet is “Statement of Financial Position”
– Cash Flow Statement is “Statement of Cash Flows”

Phase B
Mr Yeoh Oon Jin, Assurance Leader, PwC Singapore, said the Phase will take a few years to complete and would cover areas on how to prepare the respective statements. Examples,
– what income and expenses items to be classified under which totals and sub-totals in which statements etc etc etc
– whether direct or indirect cashflow presentation should be adopted

Phase C
While they have an idea of what they want to do, no point remembering them as it would too long down the yellow brick road for any certainty of being effected.

Reference – ACCA Focus Q2 2008 pp13-15

by Edgar

Why do you rob banks?

a party in KL worth the memory

A reporter once asked famous bank robber, Willie Sutton: “Why do you rob banks?”
Willie simply replied: “Because that’s where the money is!”

I am sure you will get the same answer if you manage to ask those robbers of banks and ATMs in Malaysia.

In the current new term of my classes, I asked the students the reason as to why did they decide to take up ACCA course.

A student duly responded that it is because ACCA is a qualification regularly asked for in the job advertisements she has reviewed.

So for those who have decided to start and complete your ACCA course, it is a good decision … Good day.

by Edgar

Tax on your Windfall…

Last month, the Malaysian government decided to implement the provision under the Windfall Profit Levy Act 1998 ie. impose a 30 per cent levy on returns on assets above the 9 per cent threshold of the Independent Power Producers’ (IPPs) audited accounts.

Apparently, the law would effectively mean a higher corporate tax rate on profits made by companies.

While at this moment, the impact is limited to IPPs. But should the government’s fiscal conditions worsen, will this “martial law” be suddenly applied on other sectors that too are doing well.

Such laws confuse investors. They blur visibility in investing in a country. While the law has been around since 1998 (apparently), it was not implemented.
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by Edgar

HK outranked Singapore

my ketchup-filled fish ball noodle

ACCA released a report in BT today after conducting a survey among ACCA members in Singapore, HK, UK, US, Canada and Australia to rank their respective tax system in terms of fairness, simplicity and transparent.

The good news is that Singapore and Hong Kong have the fairest, simplest and most transparent tax systems, out of six major developed countries.

The bad news is that Hong Kong ranked better than Singapore in all 3 areas.

The question that matters is whether having a tax system that is fair, simple and transparent translates to real comparative advantage against these big economies.

Or is it a hollow victory for Singapore and HK as it basically reflects the smallness of its geographic size and economic complexities?

by Edgar

SME Rebate Scheme

I quote…

“The SME Rebate Scheme is a 2-year assistance scheme to help locally registered SMEs* adjust to rising business costs.
You are invited to apply for the SME rebate at our website http://www.smerebate.gov.sg/ if your firm meets the following criteria:-
i. For a non-manufacturing firm:
– Business must be registered in Singapore
– Fixed Asset Investment (FAI) of less than S$15 million
– Not more than 200 employees
ii. For a manufacturing firm:
– Business must be registered in Singapore
– Fixed Asset Investment (FAI) of less than S$15 million
Please be reminded to submit your application by 31 July 2008 to receive cash rebates pegged to the total employer and employee CPF contributions made by your firm over two years for the period July 2007 to June 2009.

Firms that apply after 31 July 2008 will only qualify for the rebate for the period July 2008 to June 2009.
Eligible firms will receive notification letters from CPF Board indicating the date and amount of payment.
Please visit the SME Rebate Scheme website (http://www.smerebate.gov.sg/) for more information.” Unquote…