ACC v CIT: Judicial Review of Comptroller's Decision on Withholding Tax for Payments to Overseas Subsidiaries
In ACC v CIT, the Singapore High Court heard an application by ACC, a Singapore-incorporated parent company, for leave to quash the Comptroller of Income Tax's decision that withholding tax applied to payments made by ACC to its overseas subsidiaries (SPCs) in the Cayman Islands. The payments were related to interest rate swap agreements. The court, presided over by Andrew Ang J, granted ACC leave to seek a quashing order, finding that the matter was amenable to judicial review, ACC had sufficient interest, and there was an arguable case that the Comptroller's decision was ultra vires the Income Tax Act.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Leave granted to the Applicant to seek a quashing order.
1.3 Case Type
Tax
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court reviews Comptroller's decision on withholding tax for payments from ACC to overseas subsidiaries, focusing on interest rate swaps.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| ACC | Applicant | Corporation | Leave granted to seek a quashing order | Won | |
| CIT | Respondent | Government Agency | Application for leave granted to applicant | Lost | Jimmy Oei of Inland Revenue Authority of Singapore Usha Chandradas of Inland Revenue Authority of Singapore |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Tan Shao Tong | WongPartnership LLP |
| Leung Yew Kwong | WongPartnership LLP |
| Jimmy Oei | Inland Revenue Authority of Singapore |
| Usha Chandradas | Inland Revenue Authority of Singapore |
4. Facts
- The Applicant is a Singapore-incorporated parent company.
- The Applicant's subsidiaries (SPCs) are in the business of leasing machinery.
- Most SPCs are offshore companies incorporated in the Cayman Islands.
- Each SPC owns only one machine and enters into a loan agreement with offshore banks.
- The Applicant entered into interest rate swap agreements with onshore banks on behalf of the SPCs.
- The Applicant entered into Offshore Swaps Agreements with each relevant SPC mirroring those which the Applicant entered into on such SPC’s behalf.
- The Comptroller determined that withholding tax was applicable to payments made by the Applicant to the SPCs.
5. Formal Citations
- ACC v CIT, OS 510/2009, [2009] SGHC 211
6. Timeline
| Date | Event |
|---|---|
| Applicant wrote to the Comptroller for confirmation that withholding tax was not applicable. | |
| Comptroller replied that withholding tax was applicable. | |
| Decision Date |
7. Legal Issues
- Applicability of Withholding Tax to Swap Payments
- Outcome: The court found that there was an arguable case that swap payments do not fall within the definition of 'interest, commission, fee or any other payment' under s 12(6)(a) of the Income Tax Act.
- Category: Substantive
- Locus Standi in Judicial Review
- Outcome: The court held that the Applicant did have locus standi to seek judicial review.
- Category: Procedural
- Related Cases:
- [1982] AC 617
8. Remedies Sought
- Quashing Order
9. Cause of Actions
- Judicial Review
10. Practice Areas
- Tax Litigation
- Commercial Litigation
11. Industries
- Finance
- Leasing
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Public Service Commissioner v Lai Swee Lin Linda | Court of Appeal | Yes | [2001] 1 SLR 644 | Singapore | Cited for the test to determine whether a decision made by a body or authority is amenable to judicial review. |
| R v Panel on Take-overs and Mergers, ex p Datafin plc | N/A | Yes | [1987] QB 815 | N/A | Cited for the principle that the source of power is a key test for determining amenability to judicial review. |
| R v National Joint Council for the Craft of Dental Technicians (Dispute Committee), ex p Neate | N/A | Yes | [1953] 1 QB 704 | N/A | Cited as an example of a case where the arbitrator is not subject to judicial review because the source of power is contractual. |
| Leong Kum Fatt v Attorney General | N/A | Yes | [1984–5] SLR 367 | Singapore | Cited for the principle that judicial review is concerned with the process by which a decision has been made, not the merits of the decision. |
| Lines International Holding (S) Pte Ltd v Singapore Tourist Promotion Board | N/A | Yes | [1997] 2 SLR 584 | Singapore | Cited for the principle that judicial review is concerned with the process by which a decision has been made, not the merits of the decision. |
| JD Ltd v Comptroller of Income Tax | Court of Appeal | Yes | [2006] 1 SLR 484 | Singapore | Cited as an example where the Court of Appeal considered the ambit of a word in the Income Tax Act. |
| Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd | N/A | Yes | [1982] AC 617 | N/A | Cited for the principle that the question of sufficiency of interest must be considered within the legal and factual context of the case. |
| R v Paddington Valuation Officer, ex parte Preachy Property Corporation | N/A | Yes | [1966] 1 QB 380 | N/A | Cited for the principle that a ratepayer challenging the validity of valuation lists has standing to do so. |
| Chan Hiang Leng Colin v Ministry for Information and the Arts | Court of Appeal | Yes | [1996] 1 SLR 609 | Singapore | Cited for the principle that the material before the court must disclose an arguable or prima facie case of reasonable suspicion in favour of granting the public law remedies sought. |
| Ung Yoke Hooi v Attorney General | High Court | Yes | [2008] SGHC 139 | Singapore | Cited for the principle that bare allegations will not suffice for granting leave for judicial review. |
| Chai Chwan v Singapore Medical Council | High Court | Yes | [2009] SGHC 115 | Singapore | Cited for the principle that an application for leave to apply for judicial review is usually considered on the papers by the judge. |
13. Applicable Rules
| Rule Name |
|---|
| O 53 r 1 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Income Tax Act (Cap 134, 2008 Rev Ed) | Singapore |
| s 12(6)(a) of the Income Tax Act | Singapore |
| s 45 of the Income Tax Act | Singapore |
| s 4(3) of the Income Tax Act | Singapore |
| s 92(2) of the Income Tax Act | Singapore |
| s 13(4) of the Income Tax Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Withholding Tax
- Interest Rate Swap
- Special Purpose Company
- Offshore Swaps Agreement
- Onshore Swaps Setup
- ISDA Agreement
- Locus Standi
- Judicial Review
- Comptroller of Income Tax
15.2 Keywords
- Withholding Tax
- Interest Rate Swap
- Judicial Review
- Singapore
- Income Tax Act
- Overseas Subsidiaries
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Revenue Law | 90 |
| Administrative Law | 60 |
| Contract Law | 30 |
16. Subjects
- Taxation
- Withholding Tax
- Interest Rate Swaps
- Judicial Review