Precision Pte Ltd (PPL) is incorporated and tax resident in Singapore. PPL is a health drink manufacturer and has a manufacturing plant in Singapore. Recently, PPL is in the midst of negotiating a contract with Healthier Ltd (HL), a company which manufactures Powerup, a health drink that has a known effect of boosting ones energy level after consumption. HL is incorporated and tax resident in Country A and Country A does not have a double tax agreement with Singapore. At present, HL does not have any operations in Singapore. The key terms of the contract between PPL and HL are as follows: HL will provide PPL with the following:

Know-how and formulation of Powerup;

Drawing of blueprints for the bottling equipment of Powerup;

Bottling equipment for bottling of Powerup;

4 engineers for a duration of eight weeks for the installation of the equipment; and 2 engineers for a duration of 3 months for the training of PPLs staff on the operation and maintenance of the equipment. PPL agrees to pay HL a total sum of Singapore Dollars Three Million (S$3,000,000).

The payment shall be on a net of tax basis and shall be credited to a bank account designated by HL.

For the financial year ended 31 December 2018, PPL recorded the following foreign sourced income in its Profit or Loss account.

All foreign sourced income were remitted to PPLs Singapore bank account on 31 December 2018.

Foreign sourced income Country of Source Corporate tax rate in country of source Withholding tax in country of source Net amount (S$) Interest income X 20% 5% 9,500 Royalty income Y 10% 10% 4,500 Dividend Income from a subsidiary Z 25% 5% 57,000

Foreign Sourced Income	Country of source	corporate tax rate in country of source	withholding tax rate in country source	net amount
interest income	x	20%	5%	$9500
royalty	y	10%	10%	$4500
dividend from subsidiary	z	25%	5%	57000

(a) Formulate an advice for PPL on its Singapore withholding tax implications based on the contract with HL. Your advice should include a description of the payment, withholding tax rate, the payment due date to IRAS and/or reason(s) why Singapore withholding tax is not applicable to any payment. Discussion of penalties for non-compliance is not required. (13 marks)

(b) Discuss how your answer in part (a) will differ if Country A and Singapore has concluded a double tax agreement that is identical to the 2017 OECD model tax convention. (5 marks)

(c) Explain whether PPL should elect for foreign tax credit pooling for Year of Assessment 2019 with reference to appropriate tax computations, taking into account partial exemption of chargeable income for companies as follows: Chargeable Income Exemption Exemption First $10,000 75% $7,500 Next $290,000 50% $145,000 $152,500 You can ignore any applicable corporate tax rebate. (10 marks)