1. Shanker Iyer Shanker Iyer & Co 30 th May 2008 NEXIA INTERNATIONAL – TAX CONFERENCE Cross Border Transactions

2. Agenda  Case Study I  Case Study II  Questions

3. 1 Case Study I

4. Case Study – 1 Singapore Company (Singapore Co.) Liberian Holding Company (Liberian Co.) 100% Share ownership Loan Loan = 30% of (Capital + Loan) 2 Switzerland Cos. (Swiss Co.) 100% Share Ownership i.e. 70% of (Capital + Loan) Dividend Interest Dividend Interest

5. Case Study – 1 Singapore Company (Singapore Co.) Liberian Holding Company (Liberian Co.) 100% Share ownership Loan Loan = 30% of (Capital + Loan) 2 Switzerland Cos. (Swiss Co.) 100% Share Ownership i.e. 70% of (Capital + Loan) Dividend Interest Dividend Interest  Without Singapore SPV - Swiss distribution WHT 35%  Singapore tax treaty benefits  Singapore territorial tax system  Singapore foreign income exemption scheme  Singapore’s one tier dividend system

6. Dividends Case Study – 1 Singapore Company (Singapore Co.) Liberian Holding Company (Liberian Co.) 100% Share ownership Loan Loan = 30% of (Capital + Loan) 2 Switzerland Cos. (Swiss Co.) 100% Share Ownership i.e. 70% of (Capital + Loan) Dividend Interest Dividend Interest

7. Case Study – 1 Singapore Company (Singapore Co.) Liberian Holding Company (Liberian Co.) 100% Share ownership Loan Loan = 30% of (Capital + Loan) 2 Switzerland Cos. (Swiss Co.) 100% Share Ownership i.e. 70% of (Capital + Loan) Dividend Interest Dividend Interest

8. Case Study – 1 Singapore Company (Singapore Co.) Liberian Holding Company (Liberian Co.) 100% Share ownership Loan Loan = 30% of (Capital + Loan) 2 Switzerland Cos. (Swiss Co.) 100% Share Ownership i.e. 70% of (Capital + Loan) Dividend Interest Dividend Interest Capital gain

9. 1 Case Study II

10. Case Study – 1I Marshall Islands (“MI Co.”) Singapore (“Sing Co.”) Netherlands (‘Dutch Co.) Ukrainian Properties Bank Loan Finance US$ 53mn Investment US$ 9mn Investment US$ 62mn

11.  Singapore tax treaty benefits  Singapore territorial tax system  Singapore foreign income exemption scheme Marshall Island (“MI Co.”) Singapore (“Sing Co.”) Netherland (‘Dutch Co.) Ukrainian Properties Bank Loan Finance US$ 53mn Investment US$ 9mn Investment US$ 62mn Case Study – 1I

12. Marshall Island (“MI Co.”) Singapore (“Sing Co.”) Netherland (‘Dutch Co.) Ukrainian Properties Bank Loan Finance US$ 53mn Investment US$ 9mn Investment US$ 62mn  Where it went wrong in this structure  One condition to foreign source income exemption : not in favor  “Exemption with Progression” not incentive

13. Marshall Island (“MI Co.”) Singapore (“Sing Co.”) Netherland (‘Dutch Co.) Ukrainian Properties Bank Loan Finance US$ 53mn Investment US$ 9mn Investment US$ 62mn  Negative Ruling by IRAS  Proper planning and interpretation of law at preliminary stage  Additional cost burden for client Case Study – 1I

14. Questions