What are the tax implications of increasing paid-up share capital in a small Singapore-based Company?
Generally, under the Singapore tax regime, capital gains are not taxable and capital expenditure are non deductible for tax purposes. As in this case, the cost (i.e. professional/legal fees etc) of increasing the share captial is non deductible as provided under Section 14 &15 of the Singapore Income Tax Act where for expenses to be deductible for tax purposes, these expenses have to be incurred to generate business/trade income. In addition, the cost of increase of share capital does not form a direct nexus with the income stream of the company, hence such expenses will not be deductible. Futher, in the event if there is a new entrant of shareholder/exit of sharesholder, this circumstance will indirectly affect the amount of tax losses and capital allowances (if any) available to be brought forward provided certain conditions are satisfied (i.e. shareholders test). However, depending on the circumstances of increasing the share capital, an appeal can be made to the Comptroller in orde
