1. The United Kingdom (UK) was effectively leave the European Union (EU) at 11 pm on 31 January 2020. From this date, the UK will enter a transition period from 1 February 2020 to 31 December 2020;
  2. The EU has sent a diplomatic note to more than 160 countries with whom the EU has international agreements including Singapore. The EU has notifying Singapore that during the UK Brexit transition period, the UK will be treated functionally as an EU Member State and remain a party to EU international agreements until the end of the transition period;
  3. The Withdrawal Agreement signed between the UK and the EU is only binding between the EU and UK. Hence, Non-EU countries could decide not to treat the UK as part of the EU. However, Singapore has responded to the EU on 29 January 2020 in confirming Singapore agreement with the EU, for the duration of the UK Brexit transition period, to treat the UK as a Member State of the EU and of Euratom for the purposes EU international agreements with Singapore;
  4. Given that, the EU-Singapore Free Trade Agreement (EUSFTA), which entered into force on 21 November 2019, will continue to apply to the UK during the transition period; for Singapore companies that are interested to find out more about the EUSFTA may visit to the Enterprise Singapore website at https://www.enterprisesg.gov.sg/
  5. The UK Brexit and the EU directive on the UK Brexit transition period will not change the provisions ratified in the existing UK-Singapore Avoidance of Double Taxation Agreement (UK-Singapore DTA) which was signed and in effective since 1 January 1998. The Multilateral Convention to Implement Tax Treaty Related Measure to Prevent Base Erosion and Profit Shifting (commonly known as “Multilateral Instrument” or in short, the “MLI”) signed on 7 June 2017 and entered into force on 1 April 2019, shall continue apply to the UK;
  6. For Singapore companies with business presence in the UK may want to take note of the followings:
    • The EU tax directives, which apply between the EU Member States, continue to apply to the UK and that the UK falls within the directives during the transition period as the UK is treated as a Member State of the EU; However, once the UK Brexit transition period ends, the UK companies will need to rely on the UK’s double taxation agreement (DTA) with Individual Member States of the EU to limit the domestic withholding taxes that can be levied by those Member States. This is because the UK recipient companies, upon the expiry of the transition period, will no longer benefit from the EU directives in respect of payments made from the EU Member States; and
    • HM Revenue & Customs (HMRC) has notified VAT-registered businesses trading with the EU and/or the rest of the world, highlighted the need to obtain a UK Economic Operator Registration and Identification (EORI) number for custom declaration from 1 January 2021. The notification also highlighted that registration and use of Transitional Simplified Procedures (TSP) for imports from the EU is currently suspended.

IBP hopes the above summaries are helpful in your business planning. We are keen to hear from you if you do have any comments or any clarification required in relation to the above summaries.

Thank you, and wishing you a prosperous year 2020.

Contact Info:

Mr Eric Leaw
Accredited Tax Advisor, SIATP (Membership no.ATA017)
Call: +65 6323 1928
Email: ericleaw@ibpgroup.com.sg

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