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Reference is made to the above and the recent Budget for (YA 2008) annoucement, we wish to highlight and eleborate the following matters to you.

DIVIDEND

Presently, every Company is tax on profits under imputation system. Hence, a single tier company tax system be introduced to replace the existing imputation system. Therefore, tax on profits of companies is a final tax and dividend distribute will be exmpted from tax on profits of companies is a final tax and dividend distributed will be exempted from tax in the hands of shareholders.

It is propose that there is a 6 year transitional period for companies to move on to the single tier system as below and would be effrective from the Year of Assessment (YA) 2008: –

  • Companies with no credit balance of Section 108 account on 1 January 2008 will be automatically be allowed to move to the single tier system.
  • Companies with credit balance in the Section 108 account on 1 January 2008 will be given an option to make an irrecoverable election to move to a single tier system. Companies which do not make this election are allowed to use its Section 108 balance for the purpose of dividend distribution until the balance is fully utilized or latest by 31 December 2013. Companies that have fully utilized the credit balance of Section 108 account at any time during the transitional period will automatically move to the single tier system.
  • All Companies will automatically move to the single tier system on 1 January 2014 regardless whether they have credit balance of Section 108 account as at 31 December 2013.

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Phone: 603-9281 1588
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Website: http://www.fswongco.com
Email: tan@fswongco.com

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