A Inc. (AI) is a company incorporated and resident in the US. A Pte Ltd (APL)...

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A Inc. ("AI") is a company incorporated and resident in the US. A Pte Ltd ("APL") is a company incorporated and resident in Singapore and a wholly-owned subsidiary of AI. Its principal activities are providing marketing services to its customers in Singapore and internationally. During the financial year ended 31 December 2021, APL entered into the following transactions: Transaction 1- Loan to APL from Al APL is keen to expand its market share in Southeast Asia, thus, would require additional working capital. As the parent company, AI decided to grant an interest-bearing loan to APL of $500,000. The annual interest rate to be charged by AI to APL is 5%, which is reflective of the market rate. Interest is payable by APL to AI annually, and the first interest payment was due and payable on 31 December 2021. The principal amount of the loan would be fully repaid by APL to Al on 31 December 2023. Transaction 2 - Software contract concluded between APL and BPL During the year ended 31 December 2021, APL concluded a contract with B Pte Ltd ("BPL"), a company incorporated and resident in Country B. Under this contract, BPL is responsible for designing an application software for APL's business operations. The proprietary rights of this software remain with BPL. APL cannot reproduce, modify or distribute this software to anyone without BPL's expressed consent and authorization. On 31 December 2021, APL paid $100,000 to BPL. For your information, Singapore does not have a comprehensive Double Tax Agreement with Country B. Transaction 3 - Interim dividend payment by APL to AI On 1 April 2021, APL declared and paid an interim dividend of $50,000 to AI from its retained earnings. Required: (a) (b) (b) Determine the Singapore withholding tax ("WHT") implications for APL arising from its transaction with AI (under Transaction 1) during the financial year ended 31 December 2021. In your answer, include the following: The applicable WHT rate under the Singapore income tax law. The amount of the interest payment that is subject to WHT. The amount of WHT to be deducted and remitted to the Comptroller of Income Tax ("CIT"). The due date for notifying the CIT of the WHT deduction and payment. The amount of penalty to be imposed by the CIT for non-compliance with the WHT provisions assuming APL was to deduct the WHT 10 days after the due date. (10 marks) Determine the Singapore WHT implications for APL from its transaction with BPL (under Transaction 2). (10 marks) Determine the Singapore income tax implications for APL and AI and the WHT implications for APL arising from the interim dividend payment to AI (under Transaction 3). (5 marks) A Inc. ("AI") is a company incorporated and resident in the US. A Pte Ltd ("APL") is a company incorporated and resident in Singapore and a wholly-owned subsidiary of AI. Its principal activities are providing marketing services to its customers in Singapore and internationally. During the financial year ended 31 December 2021, APL entered into the following transactions: Transaction 1- Loan to APL from Al APL is keen to expand its market share in Southeast Asia, thus, would require additional working capital. As the parent company, AI decided to grant an interest-bearing loan to APL of $500,000. The annual interest rate to be charged by AI to APL is 5%, which is reflective of the market rate. Interest is payable by APL to AI annually, and the first interest payment was due and payable on 31 December 2021. The principal amount of the loan would be fully repaid by APL to Al on 31 December 2023. Transaction 2 - Software contract concluded between APL and BPL During the year ended 31 December 2021, APL concluded a contract with B Pte Ltd ("BPL"), a company incorporated and resident in Country B. Under this contract, BPL is responsible for designing an application software for APL's business operations. The proprietary rights of this software remain with BPL. APL cannot reproduce, modify or distribute this software to anyone without BPL's expressed consent and authorization. On 31 December 2021, APL paid $100,000 to BPL. For your information, Singapore does not have a comprehensive Double Tax Agreement with Country B. Transaction 3 - Interim dividend payment by APL to AI On 1 April 2021, APL declared and paid an interim dividend of $50,000 to AI from its retained earnings. Required: (a) (b) (b) Determine the Singapore withholding tax ("WHT") implications for APL arising from its transaction with AI (under Transaction 1) during the financial year ended 31 December 2021. In your answer, include the following: The applicable WHT rate under the Singapore income tax law. The amount of the interest payment that is subject to WHT. The amount of WHT to be deducted and remitted to the Comptroller of Income Tax ("CIT"). The due date for notifying the CIT of the WHT deduction and payment. The amount of penalty to be imposed by the CIT for non-compliance with the WHT provisions assuming APL was to deduct the WHT 10 days after the due date. (10 marks) Determine the Singapore WHT implications for APL from its transaction with BPL (under Transaction 2). (10 marks) Determine the Singapore income tax implications for APL and AI and the WHT implications for APL arising from the interim dividend payment to AI (under Transaction 3). (5 marks)

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