Precision Pte Ltd is an 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 that manufactures “Powerup is”, a health drink that has a known effect of boosting one’s energy level after consumption.
HL is an 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 PPL’s 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.
