PART 8 | Interpretation of this Part |
41.—(1) In this Part, unless the context otherwise requires —| “approved project” means a project approved by the Minister under section 43(2); |
| “chargeable concessionary income” means concessionary income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act 1947 against the concessionary income; |
| “chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act 1947 against the normal income; |
| “concessionary income” means income subject to tax at the concessionary rate of tax under section 43A, 43C, 43D, 43E, 43F, 43G, 43H, 43I, 43J, 43K, 43L, 43M, 43N, 43O, 43P, 43Q, 43R, 43S, 43T, 43U, 43V, 43W or 43X of the Income Tax Act 1947, or the regulations made under any of those provisions, as the case may be; |
| “concessionary investment allowance” means an investment allowance given to a company for an approved project from which the concessionary income of the company is derived; |
| “concessionary investment allowance account” means an account kept by a company for the purpose of calculating the amount of concessionary investment allowance granted under this Part; |
“construction operations” means —| (a) | construction, alteration, repair, extension or demolition of buildings and structures; | | (b) | construction, alteration, repair, extension or demolition of any works forming, or to form, part of any land; or | | (c) | any operations which form an integral part of, or are preparatory to, or are for rendering complete the operations described in paragraph (a) or (b) including site clearance, earth‑moving excavation, laying of foundations, site restoration, landscaping and the provision of drains and of roadways and other access works; |
|
| “corporate partnership” means a partnership, limited liability partnership or limited partnership comprising solely of partners that are companies; |
“fixed capital expenditure” means capital expenditure to be incurred on an approved project by a company on the following items that are used for carrying out the project —| (a) | factory building (excluding land) in Singapore and, in relation to any project under section 43(1)(b), (c), (d), (f), (g) or (k), includes a building or structure specially designed for carrying out the project; | | (b) | the acquisition of any know-how or patent rights; and | | (c) | any new productive equipment (and, subject to the approval of the Minister, any secondhand productive equipment) to be used in Singapore and, in relation to any project under section 43(1)(h) or (k), includes any productive equipment to be used outside Singapore as approved under section 43(3); [Act 39 of 2023 wef 29/12/2023] |
|
| “greenhouse gas” means any greenhouse gas specified in the first column of the First Schedule to the Carbon Pricing Act 2018; [Act 9 of 2022 wef 01/04/2021] |
| “investment day”, in relation to a company, means the date specified in its certificate as the date from which the company qualifies for the investment allowance; |
| “normal income” means income subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act 1947; |
| “normal investment allowance” means an investment allowance given to a company for an approved project from which the normal income of the company is derived; |
| “normal investment allowance account” means an account kept by a company for the purpose of calculating the amount of normal investment allowance granted under this Part; |
“relevant income”, in relation to a company, means any income which —| (a) | does not form part of the statutory income of the company or is exempt from tax under the provisions of this Act (other than this Part) or the Income Tax Act 1947; or | | (b) | is subject to tax at the concessionary rate under Part IIIA in force immediately before 28 April 2004 or Part 4; |
|
| “research and development” has the meaning given by section 2(1) of the Income Tax Act 1947; |
| “space satellite” means an apparatus placed in orbit relative to the earth for any economic, scientific or technological purpose; |
| “submarine cable system” means a network of interconnected submarine cables, and includes its submarine landing terminating equipment, terrestrial or submarine optical fibre systems, network equipment and any other equipment ancillary to the submarine cable system. [14/2007; 53/2007; 34/2008; 29/2010; 22/2011; 19/2013; 2/2016; 34/2016; 39/2017; 20/2020] |
(2) For the purposes of this Part, fixed capital expenditure is not to be deemed to be incurred by a company unless —| (a) | in the case of any factory building or productive equipment to be constructed or installed on site, the expenditure is attributable to payment against work done in the construction of the building or the construction or installation of the productive equipment; | | (b) | in the case of any productive equipment, other than that to which paragraph (a) or (c) applies, the company has received delivery of the equipment in Singapore; | | (c) | in the case of any productive equipment to be used in relation to a project under section 43(1)(h) or (k), the company has received delivery of the equipment. [14/2007; 20/2020] [Act 39 of 2023 wef 29/12/2023] |
|
| (3) For the purposes of this Part, fixed capital expenditure incurred by a company in relation to a project under section 43(1)(k) excludes any such expenditure to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board. [66 [20/2020] |
|
| Application of Parts 8 and 10 and section 3 in relation to corporate partnerships and partners of corporate partnerships |
42.—(1) Regulations may be made under section 64(1) to apply the provisions of Parts 8 and 10 and section 3 (called in this section the applied provisions) for the following purposes:| (a) | to enable an investment allowance to be given to a corporate partnership; | | (b) | to apportion the investment allowance given to the corporate partnership to its partners. [20/2020] |
(2) Without limiting section 64(1), the regulations mentioned in subsection (1) may make provision —| (a) | to make any modification to any of the applied provisions that is necessary or expedient for the purposes mentioned in subsection (1); | | (b) | to specify the circumstances under which a corporate partnership is considered to have sold, leased out or otherwise disposed of any assets in respect of which an investment allowance has been given; and | | (c) | for the recovery of an investment allowance given to a corporate partnership from its partners, and the waiver of any liability of a partner to repay any part of the investment allowance. [66A [20/2020] |
|
|
| Capital expenditure investment allowance |
43.—(1) Where a company proposes to carry out a project —| (a) | for the manufacture or increased manufacture of any product; | | (b) | for the provision of specialised engineering or technical services; | | (c) | for research and development; | | (d) | for construction operations; | | (e) | for reducing the consumption of water; | | (f) | in relation to any qualifying activity as defined in section 16; | | (g) | for the promotion of the tourist industry (other than a hotel) in Singapore; | | (h) | for the operation of any space satellite; | | (i) | [Deleted by Act 39 of 2023 wef 29/12/2023] | | (j) | for improving energy efficiency; [Act 9 of 2022 wef 01/04/2021] | | (k) | for the construction and operation by the company of any submarine cable system with one or more landing stations in Singapore, and any such landing station; or [Act 9 of 2022 wef 01/04/2021] | | (l) | for reducing greenhouse gas emissions, |
| the company may apply in the prescribed form to the Minister for the approval of an investment allowance in respect of the fixed capital expenditure for the project. |
[14/2007; 33/2010; 20/2020] [Act 9 of 2022 wef 01/04/2021] | (2) Where the Minister considers it expedient, having regard to the economic, technical and other merits of the project, the Minister may approve the project and issue the company with a certificate which qualifies the company for an investment allowance as stipulated in the certificate in respect of the fixed capital expenditure for the approved project subject to such terms and conditions as the Minister thinks fit. |
| (3) For the purposes of subsection (2), the Minister may approve any investment allowance in respect of the fixed capital expenditure to be incurred on any productive equipment to be used outside Singapore for any project under subsection (1)(h) or (k). [14/2007; 20/2020] [Act 39 of 2023 wef 29/12/2023] |
| (4) Every certificate issued under this section must specify a date as the investment day from which the company is entitled to an investment allowance under this Part. |
| (5) The Minister may upon the application of a company, amend its certificate by substituting for the investment day specified therein such earlier or later date as the Minister thinks fit and thereupon the provisions of this Part have effect as if the date so substituted were the investment day in relation to that certificate. |
| (6) [Deleted by Act 39 of 2023 wef 29/12/2023] |
| (7) Approval under this section may only be granted during the period between 1 April 2010 and 31 December 2026 (both dates inclusive) to any company in respect of any project under subsection (1)(j). [Act 9 of 2022 wef 01/04/2021] |
| (8) Approval under this section may not be granted to any company in respect of any project under subsection (1)(a) to (h) on or after 1 January 2029. [11/2016] [Act 39 of 2023 wef 29/12/2023] |
| (9) Approval under this section may only be granted during the period between 20 February 2018 and 31 December 2028 (both dates inclusive) to a company in respect of any fixed capital expenditure incurred by the company on or after 20 February 2018 on a submarine cable system or a landing station mentioned in subsection (1)(k), for a project under that subsection. [Act 39 of 2023 wef 29/12/2023] [20/2020] |
| (10) Approval under this section may only be granted during the period between 1 April 2021 and 31 December 2026 (both dates inclusive) to a company in respect of any fixed capital expenditure incurred by the company on or after 1 April 2021 on a project mentioned in subsection (1)(l). [67 [Act 9 of 2022 wef 01/04/2021] |
|
44.—(1) The investment allowance granted under section 43 must be a specified percentage, not exceeding 100% of the amount (which may be subject to a specified maximum) of the fixed capital expenditure incurred on each item specified by the Minister under subsection (2) on an approved project if the fixed capital expenditure is incurred —| (a) | within such period as the Minister may determine (called in this Part the qualifying period), being a period commencing from the investment day and —| (i) | not exceeding 5 years; or | | (ii) | not exceeding 8 years where the specified item is acquired under a hire‑purchase agreement made on or after 15 February 2007; and |
| | (b) | in the case of a project under section 43(1)(g), within such period (hereinafter called the qualifying period), not exceeding 10 years, commencing from the investment day as the Minister may determine. [33/2010] |
(2) The Minister —| (a) | must specify the items of the fixed capital expenditure for the purposes of subsection (1); and | | (b) | may specify the maximum amount of the investment allowance granted for the approved project. |
|
| (3) Where any question arises as to whether a particular item qualifies as one of the items under subsection (2)(a), it is to be determined by the Minister whose decision is final. |
| (4) In subsection (1), “specified” means specified by the Minister. [68 |
|
| Crediting of investment allowance |
45.—(1) Where in the basis period for a year of assessment a company has incurred fixed capital expenditure, the company is to be given for that year of assessment an investment allowance in respect of such amount of the fixed capital expenditure as qualifies for the investment allowance under the terms and conditions of its certificate and in accordance with section 44.| (2) Despite subsection (1), no investment allowance may be given to a company for an approved project from which relevant income of the company is derived. |
| (3) Where any investment allowance is given to a company for an approved project from which only normal income of the company is derived, the investment allowance is to be credited to an account to be called a “normal investment allowance account” which must be kept by the company for the purposes of this Part. |
| (4) Where any investment allowance is given to a company for an approved project from which only concessionary income of the company is derived, the investment allowance is to be credited to an account to be called a “concessionary investment allowance account” which must be kept by the company for the purposes of this Part. |
| (5) Where a company derives both normal income and concessionary income at the same time from an approved project, the investment allowance is to be credited wholly to the normal investment allowance account or wholly to the concessionary investment allowance account as the Minister may direct. [Act 9 of 2022 wef 22/04/2022] |
| (6) Despite subsections (1) to (5), where a company has incurred, on or after 1 January 1996, fixed capital expenditure for a project approved under section 43(1)(e), the Minister may, if the Minister is satisfied that it is expedient in the public interest to do so, direct that an investment allowance be given to the company for such expenditure, and the investment allowance is to be credited into a normal investment allowance account. |
(7) Despite section 47, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as concessionary income instead of as normal income —| (a) | subject to paragraph (d), any balance in the normal investment allowance account at the end of the basis period for the year of assessment before the transitional year may only be used for deduction against the chargeable normal income of the company for the transitional year; | | (b) | where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the normal investment allowance account; | | (c) | where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the concessionary investment allowance account; and | | (d) | the normal investment allowance account for the transitional year is to be debited with the amount of chargeable normal income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year is to be debited from that account and credited to the concessionary investment allowance account for use against the chargeable concessionary income of the company for the transitional year and subsequent years of assessment. |
|
(8) Despite section 47, as from the relevant date, where the income of a company which is derived from an approved project is subject to tax as normal income instead of as concessionary income —| (a) | subject to paragraph (d), any balance in the concessionary investment allowance account at the end of the basis period for the year of assessment before the transitional year may only be used for deduction against the chargeable concessionary income of the company for the transitional year; | | (b) | where the company has incurred any fixed capital expenditure before the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the concessionary investment allowance account; | | (c) | where the company has incurred any fixed capital expenditure on or after the relevant date, any investment allowance given to the company for the fixed capital expenditure is to be credited to the normal investment allowance account; and | | (d) | the concessionary investment allowance account for the transitional year is to be debited with the amount of chargeable concessionary income for the transitional year not exceeding the credit in that account; and any remaining balance in that account for that year is to be debited from that account and credited to the normal investment allowance account for use against the chargeable normal income of the company for the transitional year and subsequent years of assessment. |
|
(9) Despite section 47(4), where the Comptroller is satisfied that a company has permanently ceased to derive any concessionary income in the basis period for any year of assessment —| (a) | the concessionary investment allowance account is to be debited with the amount of chargeable concessionary income of the company for that year of assessment not exceeding the credit in that account; | | (b) | any remaining balance in the concessionary investment allowance account is to be debited from that account; and | | (c) | an adjusted amount of any remaining balance referred to in paragraph (b) is to be credited to the normal investment allowance account for use against the chargeable normal income of the company for that year of assessment and subsequent years of assessment, and for this purpose “adjusted amount” means the amount ascertained in accordance with the formula | | is the amount of any remaining balance referred to in paragraph (b); |
| | | is the concessionary rate of tax for that year of assessment at which the concessionary income is subject to tax; and |
| | | is the rate of tax under section 43(1)(a) of the Income Tax Act 1947 for that year of assessment. |
|
|
|
|
(10) In this section —| “relevant date” means the date in the basis period relating to any transitional year on which the income of an approved project is subject to tax as concessionary income instead of as normal income, or vice versa; |
| “transitional year” means any year of assessment relating to the basis period in which the income of an approved project is from the relevant date subject to tax as concessionary income instead of as normal income, or vice versa. [69 |
|
|
| Prohibition to sell, lease out or dispose of assets |
46.—(1) During its qualifying period or within 2 years after the end of its qualifying period, a company must not, without the Minister’s written approval, sell, lease out or otherwise dispose of any assets in respect of which an investment allowance has been given.(2) Where during its qualifying period, or within 2 years after the end of its qualifying period, a company has sold, leased out or otherwise disposed of any assets in respect of which an investment allowance has been given, an amount equal to the aggregate of the investment allowance given in respect of that asset may be recovered in the following manner:| (a) | where the investment allowance given had been credited to the normal investment allowance account —| (i) | the amount is to be deducted from that account; and | | (ii) | where that account is insufficient to give full effect to the recovery, an assessment or additional assessment in respect of the amount unrecovered is to be made upon the company; and |
| | (b) | where the investment allowance given had been credited to the concessionary investment allowance account —| (i) | the amount is to be deducted from that account; and | | (ii) | where that account is insufficient to give full effect to the recovery, an assessment or additional assessment in respect of the amount unrecovered is to be made upon the company. [11/2016] |
|
|
| (3) Despite subsection (2), the Minister may waive wholly or partly the recovery of the investment allowance. [70 |
|
| Exemption from income tax |
47.—(1) Subject to subsection (2), where for any year of assessment a normal investment allowance account of a company is in credit and the company has for that year of assessment any chargeable normal income —| (a) | an amount of the chargeable normal income, not exceeding the credit in the normal investment allowance account, is exempt from tax and the normal investment allowance account is to be debited with such amount; and | | (b) | any remaining balance in the normal investment allowance account is to be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable normal income, and so on for subsequent years of assessment until the credit in the normal investment allowance account has been fully used. |
| (2) Where, for any year of assessment, a company has any chargeable concessionary income and the normal investment allowance account is in credit, the company may elect for any amount of the chargeable concessionary income, not exceeding the credit in the normal investment allowance account, to be exempt from tax and the normal investment allowance account to be debited with such amount. |
| (3) A company must make the election under subsection (2) for any year of assessment at the time of lodgment of the return of income for that year of assessment, except that the election for the year of assessment 1994 must be made before 1 April 1995. |
(4) Where, for any year of assessment, a concessionary investment allowance account of a company is in credit and the company has, for that year of assessment any chargeable concessionary income —| (a) | an amount of the chargeable concessionary income, not exceeding the credit in the concessionary investment allowance account, is exempt from tax and the concessionary investment allowance account is to be debited with such amount; and | | (b) | any remaining balance in the concessionary investment allowance account is to be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable concessionary income, and so on for subsequent years of assessment until the credit in the concessionary investment allowance account has been fully used. |
|
| (5) Any amount of chargeable normal income of a company debited from the normal investment allowance account under section 45(7)(d) or any amount of chargeable concessionary income of a company debited from the concessionary investment allowance account under section 45(8)(d) or (9)(a) is exempt from tax. [71 |
|
| 48. [Repealed by Act 39 of 2023 wef 29/12/2023] |
| No investment allowance for certain expenditure |
| 49. No investment allowance may be granted for any amount of fixed capital expenditure incurred on the acquisition of any know‑how, patent rights or productive equipment for which an allowance has been claimed under section 19A(2A), (2B) or (2BAA) or 19B(1A), (1B) or (1BAA) of the Income Tax Act 1947. [74A [29/2010; 37/2014] |
|
