PART 7 | ASCERTAINMENT OF CERTAIN INCOME |
| 26.—(1) Subject to sections 34A, 34AA and 34AAA, this section has effect despite anything to the contrary in this Act, except that nothing in this section affects the chargeability to tax of any income of an insurer under section 10. [39/2017] [Act 33 of 2022 wef 04/11/2022] | Separate accounts to be maintained for various businesses |
(2) An insurer must maintain separate accounts for income derived by it from carrying on each of the following businesses:| (a) | onshore life business; | | (b) | offshore life business; | | (c) | the business (other than the business of life assurance) of insuring and reinsuring onshore risks; | | (d) | the business (other than the business of life assurance) of insuring and reinsuring offshore risks. [39/2017] |
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| Insurers other than life insurers |
(3) In the case of an insurer whether mutual or proprietary (other than a life insurer) where the gains or profits accrue in part outside Singapore, the gains or profits on which tax is payable are to be ascertained by —| (a) | taking the gross premiums and interest and other income received or receivable in Singapore (less any premiums returned to the insured and premiums paid on reinsurances); | | (b) | either —| (i) | deducting from the balance so arrived at the net increase between the beginning and ending values of the period for which the gains or profits are ascertained, of the liabilities of the insurer in respect of policies other than life policies, both values being determined in accordance with the Insurance Act 1966 after deducting any liability in respect of reinsurance ceded to a reinsurer; or | | (ii) | adding to the balance so arrived at the net decrease between the beginning and ending values of the period for which the gains or profits are ascertained, of the liabilities of the insurer in respect of policies other than life policies, both values being determined in accordance with the Insurance Act 1966 after deducting any liability in respect of reinsurance ceded to a reinsurer; and |
| | (c) | [Deleted by Act 39 of 2017] | | (d) | from the net amount so arrived at, deducting the actual losses (less the amount recovered in respect thereof under reinsurance), the distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office. [39/2017; 32/2019] |
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(4) For the purposes of subsection (3), in ascertaining the gains or profits derived by an insurer from carrying on the business (other than the business of life assurance) of insuring and reinsuring any risks for the purposes of any concessionary rate of tax or exemption from tax prescribed by regulations made under section 43C —| (a) | no income other than underwriting income or income from such dividends, interest and gains or profits realised from the sale of investments as may be specified in those regulations is to be included; | | (b) | income in respect of dividends, interest and gains or profits realised from the sale of investments must be apportioned in such manner as may be prescribed by those regulations; and | | (c) | any item of expenditure not directly attributable to that business must be apportioned in such manner as may be prescribed by those regulations. [39/2017] |
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(5) For the purposes of subsection (3)(b), if, during the period for which the gains or profits are ascertained, any insurance business (excluding life business) is transferred by or to the insurer, then —| (a) | in a case where the business is transferred by the insurer, the liabilities of the insurer immediately before the date of the transfer, in respect of policies that form part of that business, are to be added to the ending value mentioned in that provision; and | | (b) | in a case where the business is transferred to the insurer, the liabilities of the transferor immediately before the date of the transfer, in respect of policies that form part of that business, are to be added to the beginning value mentioned in that provision. [39/2017] |
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(6) In the case of a life insurer, whether mutual or proprietary, the gains or profits on which tax is payable are to be ascertained by taking the aggregate of —| (a) | in the case of insurance funds established and maintained for Singapore policies, the amount computed in the following manner:| (i) | taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 16(7)(b) of the Insurance Act 1966; | | (ii) | adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 16(7)(c) of the Insurance Act 1966; | | (iii) | deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act; | | (iv) | adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account of the participating fund, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; | | (iva) | adding thereto an amount allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, being an amount that does not exceed 1/9th of the tax payable at the rate under section 43(9) on the amount mentioned in sub‑paragraph (i); | | (ivb) | adding thereto any amount (other than the amounts mentioned in sub‑paragraphs (iv) and (iva)) allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, but excluding any portion that is not chargeable to tax; | | (v) | adding thereto the balance so arrived at the onshore life insurance surplus in relation to the non‑participating fund and the investment‑linked fund; |
| | (b) | in the case of shareholders’ fund established in Singapore, the income therein less any expenses (including management expenses) incurred in the production of such income; and | | (c) | in the case of insurance funds established and maintained for offshore policies, the amount computed in the following manner:| (i) | taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 16(7)(b) of the Insurance Act 1966; | | (ii) | adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 16(7)(c) of the Insurance Act 1966; | | (iii) | deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act; | | (iv) | adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account of the participating fund, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; | | (iva) | adding thereto an amount allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, being an amount that does not exceed 1/9th of the tax payable at the rate under section 43(9) on the amount mentioned in sub‑paragraph (i); | | (ivb) | adding thereto any amount (other than the amounts mentioned in sub‑paragraphs (iv) and (iva)) allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, but excluding any portion that is not chargeable to tax; | | (v) | adding thereto the offshore life insurance surplus in relation to the non‑participating fund and the investment‑linked fund. [39/2017; 27/2021] |
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(7) Despite subsection (6), where a life insurer is approved under section 43C before 1 June 2017 and its income is subject to tax at the concessionary rate by regulations made under section 43C(1)(a), the following paragraphs apply for the purposes of ascertaining that income:| (a) | only such part of the following income as may be specified in those regulations is to be included:| (i) | the amount in relation to insurance funds established and maintained for offshore policies, computed in the following manner:| (A) | taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 16(7)(b) of the Insurance Act 1966; | | (B) | adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 16(7)(c) of the Insurance Act 1966; | | (C) | deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act; | | (D) | adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account of the participating fund, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; | | (DA) | adding thereto an amount allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, being an amount that does not exceed 1/9th of the tax payable at the rate under section 43(9) on the amount mentioned in sub‑paragraph (A); | | (DB) | adding thereto any amount (other than the amounts mentioned in sub‑paragraphs (D) and (DA)) allocated to the surplus account of the participating fund by the insurer in accordance with regulations made under section 16(8) of the Insurance Act 1966, but excluding any portion that is not chargeable to tax; | | (E) | adding thereto the offshore life insurance surplus in relation to the non‑participating fund and the investment‑linked fund; and |
| | (ii) | the income of the shareholders’ fund established in Singapore as is attributable to the offshore life business; and |
| | (b) | the income referred to in paragraph (a) and any item of expenditure not directly incurred in the production of such income must be apportioned in such manner as may be prescribed by those regulations. [39/2017; 27/2021] |
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(7A) Despite subsection (6), where a life insurer is approved under section 43C on or after 1 June 2017 and its income is subject to tax at a concessionary rate by regulations made under section 43C(1)(aa), the following paragraphs apply for the purposes of ascertaining that income:| (a) | only such part of the following income relating to reinsurance policies as may be specified in those regulations may be included:| (i) | the onshore life insurance surplus, and offshore life insurance surplus (as the case may be), of the insurer; | | (ii) | the income of the shareholders’ fund established in Singapore attributable to the insurer’s onshore life reinsurance business and offshore life reinsurance business, as the case may be; |
| | (b) | the income in paragraph (a) and any item of expenditure not directly incurred in the production of such income must be apportioned in the manner prescribed (if any) by those regulations. [39/2017] |
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(8) In ascertaining the gains or profits of a life insurer whether mutual or proprietary —| (a) | the Comptroller must determine the manner and extent to which —| (i) | any allowances under section 19, 19A, 20, 21, 22 or 23 and expenses and donations allowable under this Act are to be deducted; and | | (ii) | any losses incurred by the insurer may be deducted under section 37; |
| | (aa) | allowances under section 19, 19A, 20, 21, 22 or 23 or losses or donations allowable under section 37 may be deducted against any part of the income of the insurer from a participating fund that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C if, and only if, the allowances, losses or donations are —| (i) | allowances, losses or donations in respect of such income; or | | (ii) | allowances, losses or donations in respect of any income of the insurer from another participating fund that is also apportioned to policyholders in accordance with those regulations; |
| | (b) | the allowances under section 19, 19A, 20, 21, 22 or 23 or the losses or donations under section 37 in respect of such part of the income of the insurer from a participating fund as is apportioned to policyholders of the insurer in accordance with regulations made under section 43(9) or 43C in any year of assessment —| (i) | is only available for deduction against any part of the insurer’s income from any participating fund that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C for that year of assessment, as the case may be; and | | (ii) | the balance of such allowances, losses or donations under sub‑paragraph (i) may, subject to section 23 or 37 (as the case may be), only be deducted against any part of the insurer’s income from any participating fund that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C, for any subsequent year of assessment; |
| | (c) | section 37A applies, with the necessary modifications, in relation to the deduction of allowances under section 19, 19A, 20, 21, 22 or 23 or the losses or donations under section 37 in respect of such part of the income of the insurer (being a company) as is subject to tax at the rate of tax under section 43(1)(a) and of such part of the income of the insurer (being a company) as is apportioned to the shareholders of the insurer in accordance with regulations made under section 43C; and for the purpose of such application any reference in section 37A to income of a company subject to tax at a lower rate of tax or income of the company subject to tax at a lower rate of tax (as the case may be) is a reference to such part of the income of the insurer as is apportioned to the shareholders of the insurer in accordance with regulations made under section 43C; and | | (d) | in a case where, immediately before the life insurer ceases business permanently without transferring the business to any person in Singapore, there is an amount remaining in the participating fund which is not allocated by way of bonus to any participating policy, the Comptroller may make such adjustment to the tax liability of the life insurer as the Comptroller thinks fit. [27/2021] |
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| (9) In the case of an insurer carrying on life insurance business in conjunction with any other insurance business, the assessment of the gains or profits on which tax is payable must be made in one sum, but the gains or profits arising from the life insurance business are to be computed in accordance with subsections (6), (7), (7A) and (8) as if such life insurance business were a separate business from the other insurance business carried on by the insurer. [39/2017] |
(10) For the purposes of this section, the Minister may make regulations —| (a) | to provide for such transitional, supplementary and consequential matters as the Minister may consider necessary or expedient; and | | (b) | generally to give effect to or for carrying out the purposes of this section. |
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| (11) Despite the amendment of this section by the Income Tax (Amendment) Act 2007, section 26 in force immediately before the amendment applies to the income of an insurer derived before the year of assessment 2006. |
(12) In this section, and section 43C (except in relation to the definition of “insurer”) —| “accident and health policy” has the meaning given by the Insurance Act 1966; |
“income of the shareholders’ fund” means —| (a) | gains or profits on the sale of investments of the shareholders’ fund, whether derived from Singapore or elsewhere; and | | (b) | investment income and other income of the shareholders’ fund derived from Singapore or received in Singapore from outside Singapore; |
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“insurer” means —| (a) | a company licensed under the Insurance Act 1966 to carry on insurance business in Singapore; or | | (b) | a person (including a partnership) permitted under the Insurance Act 1966 to carry on insurance business in Singapore under a foreign insurer scheme; |
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| “investment‑linked fund” means an insurance fund for investment‑linked policies established and maintained under section 16(2) of the Insurance Act 1966; |
| “investment‑linked policies”, “non‑participating policies” and “participating policies” have the meanings given by the First Schedule to the Insurance Act 1966; |
| “life insurance fund” means the insurance fund established and maintained by an insurer under section 16(1) of the Insurance Act 1966 for its life business; |
| “life policy” has the meaning given by the Insurance Act 1966; |
| “non‑participating fund” means an insurance fund established and maintained under section 16(3) of the Insurance Act 1966 which comprises wholly of non‑participating policies; |
| “offshore life business” means the business of insuring or reinsuring the liability of a life policy, or accident and health policy, of any life insurance fund, not being a Singapore policy within the meaning of the Insurance Act 1966; |
“offshore life insurance surplus”, in relation to the non‑participating fund and the investment‑linked fund of an insurer, means the amount ascertained —| (a) | by taking the aggregate of —| (i) | the gross premiums (including consideration paid or payable for the purchase of annuities) from offshore non‑participating and offshore investment‑linked policies of any life insurance fund (less any premiums returned to the insured and premiums paid or payable on reinsurance); | | (ii) | the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund relating to offshore non‑participating and offshore investment‑linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; and | | (iii) | the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of any life insurance fund relating to offshore non‑participating and offshore investment‑linked policies; and |
| | (b) | by deducting from that aggregate —| (i) | distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office; | | (ii) | policy moneys paid or payable in respect of offshore non‑participating and offshore investment‑linked policies (less any amount recovered or recoverable in respect thereof under reinsurance); | | (iii) | moneys paid or payable on the surrender of offshore non‑participating and offshore investment‑linked policies; and | | (iv) | the net increase between the beginning and ending values of the policy liabilities of any life insurance fund relating to offshore non‑participating and offshore investment‑linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; |
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“offshore life insurance surplus”, in relation to an insurer under subsection (7A)(a)(i), means the amount ascertained by taking the following steps:| (a) | add the following:| (i) | the gross premiums (including consideration paid or payable for the purchase of annuities) from its offshore non‑participating reinsurance policies of any life insurance fund (less any premiums returned to the insured and premiums paid or payable on reinsurance); | | (ii) | the net decrease between the beginning and ending values of the policy liabilities of the part of any life insurance fund relating to its offshore non‑participating reinsurance policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; | | (iii) | the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of the part of any life insurance fund relating to its offshore non‑participating reinsurance policies; |
| | (b) | subtract from the total under paragraph (a), all of the following:| (i) | distribution expenses and management expenses incurred in the production of the income in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office; | | (ii) | policy moneys paid or payable in respect of its offshore non‑participating reinsurance policies (less any amount recovered or recoverable in respect of those policies under reinsurance); | | (iii) | moneys paid or payable on the surrender of its offshore non‑participating reinsurance policies; | | (iv) | the net increase between the beginning and ending values of the policy liabilities of the part of any life insurance fund relating to its offshore non‑participating reinsurance policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; |
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| “offshore life reinsurance business” means the business of reinsuring the liability of a life policy, or an accident and health policy, of any life insurance fund, not being a Singapore policy within the meaning of the Insurance Act 1966; |
| “offshore risk” means a risk or liability that is insured by a policy of any general insurance fund established and maintained under the Insurance Act 1966, not being a Singapore policy within the meaning of that Act; |
| “onshore life business” means the business of insuring or reinsuring the liability of a life policy, or accident and health policy, of any life insurance fund, being a Singapore policy within the meaning of the Insurance Act 1966; |
“onshore life insurance surplus”, in relation to an insurer under subsection (7A)(a)(i), means the amount ascertained by taking the following steps:| (a) | add the following:| (i) | the gross premiums (including consideration paid or payable for the purchase of annuities) from its Singapore non‑participating reinsurance policies of any life insurance fund (less any premiums returned to the insured and premiums paid or payable on reinsurance); | | (ii) | the net decrease between the beginning and ending values of the policy liabilities of the part of any life insurance fund relating to its Singapore non‑participating reinsurance policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; | | (iii) | the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of the part of any life insurance fund relating to its Singapore non‑participating reinsurance policies; |
| | (b) | subtract from the total under paragraph (a), all of the following:| (i) | distribution expenses and management expenses incurred in the production of the income in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office; | | (ii) | policy moneys paid or payable in respect of its Singapore non‑participating reinsurance policies (less any amount recovered or recoverable in respect of those policies under reinsurance); | | (iii) | moneys paid or payable on the surrender of its Singapore non‑participating reinsurance policies; | | (iv) | the net increase between the beginning and ending values of the policy liabilities of the part of any life insurance fund relating to its Singapore non‑participating reinsurance policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; |
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“onshore life insurance surplus”, in relation to the non‑participating fund and the investment‑linked fund of an insurer, means the amount ascertained by taking the following steps:| (a) | add the following:| (i) | the gross premiums (including consideration paid or payable for the purchase of annuities) from Singapore non‑participating and Singapore investment‑linked policies of any life insurance fund (less any premiums returned to the insured and premiums paid or payable on reinsurance); | | (ii) | the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund relating to Singapore non‑participating and Singapore investment‑linked policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; | | (iii) | the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of any life insurance fund relating to Singapore non‑participating and Singapore investment‑linked policies; |
| | (b) | subtract from the total under paragraph (a), all of the following:| (i) | distribution expenses and management expenses incurred in the production of the income in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office; | | (ii) | policy moneys paid or payable in respect of Singapore non‑participating and Singapore investment‑linked policies (less any amount recovered or recoverable in respect of those policies under reinsurance); | | (iii) | moneys paid or payable on the surrender of Singapore non‑participating and Singapore investment‑linked policies; | | (iv) | the net increase between the beginning and ending values of the policy liabilities of any life insurance fund relating to Singapore non‑participating and Singapore investment‑linked policies for the period for which the gains or profits are ascertained, both values being determined in accordance with the Insurance Act 1966 and after deducting any liability in respect of reinsurance ceded to a reinsurer; |
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“onshore life reinsurance business” means the business of reinsuring the liability of —| (a) | a life policy of any life insurance fund; or | | (b) | an accident and health policy of any life insurance fund, |
| being a Singapore policy within the meaning of the Insurance Act 1966; |
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| “onshore risk” means a risk or liability that is insured by a policy of a general insurance fund established and maintained under the Insurance Act 1966, being a Singapore policy within the meaning of that Act; |
| “participating fund” means an insurance fund established and maintained under section 16(3) of the Insurance Act 1966 which comprises wholly or partly of participating policies; |
| “policy liabilities”, in relation to the non‑participating fund and the investment‑linked fund of an insurer, means liabilities in respect of policies for which the non‑participating fund and investment‑linked fund are established and maintained under section 16 of the Insurance Act 1966, but excludes liabilities ceded to a reinsurer; |
| “policy moneys” has the meaning given by the Insurance Act 1966; |
| “reinsurer” has the meaning given by section 2 of the Insurance Act 1966; |
| “surplus account”, in relation to a participating fund of a life insurer, means the surplus account established and maintained under section 16(7)(a) of the Insurance Act 1966 as part of that fund. [39/2017; 32/2019] |
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(13) For the purposes of paragraphs (a)(ii) and (b)(iv) of both definitions of “onshore life insurance surplus”, and paragraphs (a)(ii) and (b)(iv) of both definitions of “offshore life insurance surplus” in subsection (12), if, during the period for which the gains or profits are ascertained, any life insurance business is transferred by or to the insurer, then —| (a) | in a case where the business is transferred by the insurer, the liabilities of the insurer immediately before the date of the transfer, in respect of policies that form part of that business, are to be added to the ending value mentioned in each of those provisions; and | | (b) | in a case where the business is transferred to the insurer, the liabilities of the transferor immediately before the date of the transfer, in respect of policies that form part of that business, are to be added to the beginning value mentioned in each of those provisions. [39/2017] |
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| Ascertainment of income of member of Lloyd’s syndicate |
26A.—(1) Where a business of insuring and reinsuring risks is carried on by any member of Lloyd’s through a syndicate formed to carry on the business in Singapore —| (a) | the income of the member of Lloyd’s from the syndicate in the basis period for any year of assessment is deemed to be the share to which the member was entitled during that period in the income of the syndicate; and | | (b) | the statutory income of the member of Lloyd’s from the syndicate is to be computed in accordance with section 35 by treating the member’s share of the income of the syndicate as if it were income of a trade, business, profession or vocation carried on or exercised by the member. |
| (2) Sections 36 (as it applies by the operation of section 36C(1)) and 36C do not apply to any Lloyd’s Scottish limited partnership carrying on a business of insuring and reinsuring risks in Singapore, and sections 35 and 43(1)(c) apply, with the necessary modifications, to such partnership as if it were a person (other than a company or an individual) not resident in Singapore. |
| (2A) Sections 36 (as it applies by the operation of section 36A(2)) and 36A do not apply to any Lloyd’s limited liability partnership carrying on a business of insuring and reinsuring risks in Singapore, and sections 35 and 43(1)(c) apply, with the necessary modifications, to such partnership as if it were a person (other than a company or an individual) not resident in Singapore. [32/2019] |
(2B) For the year of assessment 2015 and every subsequent year of assessment, section 37A applies, with the necessary modifications, to —| (a) | any Lloyd’s limited liability partnership; or | | (b) | any Lloyd’s Scottish limited partnership, |
| carrying on a business of insuring and reinsuring risks in Singapore whose income for that year of assessment is subject to tax at different rates, as that section applies to a company whose income for any year of assessment is subject to tax at different rates. |
[37/2014] |
| (2C) To avoid doubt, subsection (2B) applies to any amount of allowance, loss or donation of the Lloyd’s limited liability partnership or the Lloyd’s Scottish limited partnership carried forward to the year of assessment from an earlier year of assessment. [37/2014] |
| (3) Section 53 applies, with the necessary modifications, to any non‑resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on that business in Singapore as that section applies to a person not resident in Singapore. |
| (4) The tax chargeable for any year of assessment on the income of any non‑resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through all syndicates formed to carry on the business in Singapore of which the non‑resident member is a member must be aggregated with that of all other non‑resident members of Lloyd’s of those syndicates, and is assessable in the name of the agent. |
(5) The agent must —| (a) | when required by the Comptroller by notice in the Gazette under section 62(1) or by written notice under section 62(3), make a return of income for the year of assessment specified in the notice and furnish such particulars as may be required for the purpose of ascertaining the income (if any) for which any member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on the business in Singapore, is chargeable to tax; and | | (b) | if a return is not made under paragraph (a) for any year of assessment, furnish to the Comptroller an estimate of the aggregate amount of chargeable income of every non‑resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on the business in Singapore, within 3 months after the end of the accounting period relating to that year of assessment of that member, or such extended time as the Comptroller may allow. [Act 33 of 2022 wef 04/11/2022] |
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(6) In this section —| “agent” means Lloyd’s of London (Asia) Pte Ltd or such other person as the Comptroller may determine; |
| “Council of Lloyd’s” means the Council of Lloyd’s established by the Lloyd’s Act 1982 of the United Kingdom; |
| “Lloyd’s” means the society of underwriters known in the United Kingdom as Lloyd’s and incorporated by the Lloyd’s Act 1871 of the United Kingdom; |
| “Lloyd’s limited liability partnership” means any limited liability partnership formed under the law of any part of the United Kingdom which is a member of Lloyd’s; |
| “Lloyd’s Scottish limited partnership” means a limited partnership formed under the laws of the Scotland which is a member of Lloyd’s; |
| “member of Lloyd’s” means a person admitted to membership of Lloyd’s as an underwriting member and includes, where the context so requires, any person who has ceased to be a member of Lloyd’s and any administrator, administrative receiver, committee, curator bonis, executor, liquidator, manager, personal representative, supervisor or trustee in bankruptcy, or any other person by law entitled or bound to administer the affairs of the member or former member concerned; |
| “syndicate” means a member of Lloyd’s or a group of members of Lloyd’s underwriting insurance business at Lloyd’s through the agency of a Lloyd’s underwriting agent to which member or group a particular syndicate number is assigned by or under the authority of the Council of Lloyd’s. |
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| Profits of non‑resident shipowner or charterer |
27.—(1) Where a non‑resident person carries on the business of shipowner or charterer, the income on which tax is payable is to be ascertained as provided in this section.(2) Where, for any period, the non‑resident person produces a certificate complying with subsection (3) —| (a) | the profits accruing in Singapore from the business for that period are deemed to be a sum bearing the same ratio to the sums receivable in respect of the carriage of passengers, mail, livestock and goods shipped in Singapore as the total profits for that period bear to the total sum receivable by the non‑resident person in respect of the carriage of passengers, mail, livestock and goods, as shown by the certificate; and | | (b) | the depreciation allowable against such profits is similarly deemed to be a sum bearing the same ratio to the sums receivable in respect of the carriage of passengers, mail, livestock and goods shipped in Singapore as the total depreciation for that period bears to the total sum receivable by the non‑resident person in respect of the carriage of passengers, mail, livestock and goods, as shown by the certificate. |
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(3) The certificate referred to in subsection (2) —| (a) | must be one issued by or on behalf of the income tax authority of the place of residence of the non‑resident person; | | (b) | is acceptable for the purposes of this section only where the Comptroller is satisfied that the relevant income tax authority —| (i) | computes and assesses the full profits of the non‑resident person from the non‑resident person’s shipping business on a basis not materially different from the basis of assessment provided by this Act for the assessment of a resident of Singapore carrying on a similar business; and | | (ii) | accepts any certificate issued by the Comptroller for the purpose of computing the profits derived by a resident of Singapore from carrying on the business of a shipowner or charterer and assesses the income of that resident on the basis of and without making any adjustment to the profits or loss or the allowance for depreciation as stated in the certificate issued by the Comptroller and in the same manner as the income of the non‑resident person is assessed under subsection (2); and |
| | (c) | must contain, in respect of the relevant accounting period, the following information:| (i) | the ratio of the profits or, where there are no profits, of the loss, as computed for the purposes of income tax by that authority, without making any allowance by way of depreciation, to the total sum receivable in respect of the carriage of passengers, mail, livestock and goods; | | (ii) | the ratio of the allowance for depreciation as computed by that authority to that total sum receivable in respect of the carriage of passengers, mail, livestock and goods. |
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| (4) Where, for any period, a non‑resident person does not, for any reason, produce a certificate complying with subsection (3), the profits accruing in Singapore are deemed to be a sum equal to 5% of the full sum receivable on account of the carriage of passengers, mail, livestock and goods shipped in Singapore. |
| (5) Where a non‑resident person has been assessed under subsection (4) because a certificate had not been issued at the time of assessment, the non‑resident person is entitled, on the subsequent production of such a certificate to claim at any time within 2 years after the end of such year of assessment, or such further time as the Comptroller may consider reasonable in the circumstances, that the non‑resident person’s liability to tax for the year be determined on the basis provided by subsection (2). |
| (6) Where the Comptroller decides that the call of a ship (within the meaning of section 2(1) of the Merchant Shipping Act 1995) belonging to a particular non‑resident shipowner or charterer at a port in Singapore is casual and that further calls by that ship or others in the same ownership are improbable, this section does not apply to the profits of that ship and no tax is chargeable on them. [2/2016] |
| (7) Despite anything in subsections (1) to (6), if in computing the profits derived by a resident in Singapore from carrying on the business of a shipowner or charterer, the tax authority of a foreign country determines such profits to be an amount which exceeds 5% of the full sum receivable on account of the carriage of passengers, mail, livestock and goods shipped in that foreign country, the Minister may if he or she thinks fit direct that, in computing the profits derived in Singapore by a non‑resident shipowner or charterer who is resident in that foreign country, the Comptroller must determine the amount of such profits in such manner as may be substantially similar to that adopted by the tax authority of that foreign country. |
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| Profits of non‑resident air transport and cable undertakings |
| 28. Where a non‑resident person carries on the business of air transport or of transmission of messages by cable or by any form of wireless apparatus, the non‑resident person is assessable to tax as if the non‑resident person were a non‑resident shipowner and section 27 applies, with the necessary modifications, to the computation of the gains or profits of the business. |
| 29. [Repealed by Act 19 of 2013] |
| 30. [Repealed by Act 19 of 2013] |
| Income arising from settlements |
31.—(1) Where under the terms of any settlement and during the life of the settlor any income, or assets representing it, will or may become payable or applicable to or for the benefit of any relative of the settlor and at the commencement of the year of assessment such relative is unmarried and has not attained 21 years of age, such income or assets are deemed to be income of the settlor and not income of any other person.(2) If and so long as the terms of any settlement are such that —| (a) | any person has or may have power, whether immediately or in the future, and whether with or without the consent of any other person, to revoke or otherwise determine the settlement or any provision thereof; and | | (b) | in the event of the exercise of the power, the settlor or the wife or husband of the settlor will or may become beneficially entitled to the whole or any part of the property then comprised in the settlement, or of the income arising from the whole or any part of the property so comprised, |
| all income arising under the settlement from the property comprised in the settlement is deemed to be income of the settlor and not income of any other person. |
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| (3) Subsection (2) does not apply by reason only that the settlor or the wife or husband of the settlor will or may become beneficially entitled to any income or property relating to the interest of any beneficiary under the settlement in the event that the beneficiary should die before him or her. |
| (4) Where in any year of assessment the settlor or any relative of the settlor or any person under the direct or indirect control of the settlor or of any of the settlor’s relatives, whether by borrowing or otherwise, makes use of any income arising or of any accumulated income which has arisen under a settlement to which he or she is not entitled thereunder, then the amount of such income or accumulated income so made use of is deemed to be income of the settlor for that year of assessment and not income of any other person. |
| (5) Where under the terms of any settlement to which this section applies, any tax is charged on and paid by the person by whom the settlement is made, that person is entitled to recover from any trustee or other person to whom income is paid under the settlement the amount of the tax so paid, and for that purpose to require the Comptroller to furnish a certificate specifying the amount of tax so paid; and any certificate so furnished is conclusive evidence of the facts appearing therein. |
| (6) If any question arises as to the amount of any payment of income or as to any apportionment of income under this section that question must be decided by the Comptroller whose decision is final. |
| (7) This section applies to every settlement wheresoever it was made or entered into and whether it was made or entered into before or after 1 January 1960 and (where there is more than one settlor or more than one person who made the settlement) has effect in relation to each settlor as if he or she were the only settlor. |
(8) In this section —| “child” includes a stepchild, a child who has been de facto adopted by the settlor or by the husband or by the wife of the settlor, whether or not such adoption has been registered in accordance with the provisions of any written law, and a child of whom the settlor has the custody or whom the settlor maintains wholly or partly at his or her own expense; |
| “relative” means any person who is a wife, grandchild, child, brother, sister, uncle, aunt, nephew, niece or cousin of the settlor; |
“settlement” includes any disposition, trust, covenant, agreement, whether reciprocal or collateral, arrangement or transfer of assets or income, but does not include —| (a) | a settlement which in the Comptroller’s opinion is made for valuable and adequate consideration; | | (b) | a settlement resulting from an order of a court; or | | (c) | any agreement made by an employer to pay to an employee or to the widow or any relative or dependant of such employee after the employee’s death such remuneration or pension or lump sum as in the Comptroller’s opinion is fair and reasonable; |
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| “settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into, directly or indirectly, and any person who has provided or undertaken to provide funds or credit, directly or indirectly, for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement. |
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| Valuation of trading stock on discontinuance or transfer of trade or business |
32.—(1) In computing for any purpose of this Act the gains or profits of a trade or business which has been discontinued or transferred, any trading stock belonging to the trade or business at the discontinuance or transfer thereof is valued as follows:| (a) | in the case of any such trading stock —| (i) | which is sold or transferred for valuable consideration to a person who carries on or intends to carry on a trade or business in Singapore; and | | (ii) | the cost whereof may be deducted by the purchaser as an expense in computing for any such purpose the gains or profits of that trade or business, |
| the value thereof is taken to be the amount realised on the sale or the value of the consideration given for the transfer; and |
| | (b) | in the case of any other such trading stock, the value thereof is taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance or transfer of the trade or business. |
| (2) In computing for any purpose of this Act the gains or profits of the purchaser of the trading stock of any trade or business which has been discontinued or transferred, such trading stock is valued as provided in subsection (1). |
| (3) Any question arising under subsection (1) regarding the value attributable to the trading stock belonging to any trade or business which has been discontinued or transferred is to be determined by the Comptroller. |
(4) In this section, “trading stock”, in relation to any trade or business, means property of any description, whether movable or immovable, being either —| (a) | property such as is sold in the ordinary course of trade or business or would be so sold if it were mature or if its manufacture, preparation or construction were complete; or | | (b) | materials such as are used in the manufacture, preparation or construction of any such property as is referred to in paragraph (a). |
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| Valuation of cost of trading stock converted from non‑trade or capital asset |
| 32A.—(1) Where, at any time on or after 16 November 2021, any property of a person that is not trading stock becomes wholly or in part trading stock of the person’s trade or business, then, in computing the gains or profits arising from the sale or disposal of such trading stock, the open market value of the property or part of the property as at the date it becomes trading stock is treated as the cost of the trading stock. [27/2021] | (2) For the purpose of subsection (1), property is treated as having become trading stock if the property is held for sale or disposal in the ordinary course of a trade or business. [27/2021] |
| (3) To avoid doubt, the reference to trading stock in subsection (1) does not include property the sale or disposal of which results in a gain or loss that is capital in nature. [27/2021] |
| (4) Where property has become wholly or in part trading stock under subsection (1), then the person must, at the time of lodgment of the person’s return of income for the year of assessment relating to the basis period in which the property becomes trading stock, or such later time as the Comptroller may allow, give notice of the occurrence and specify the particulars of the occurrence in such form and manner as the Comptroller may specify. [27/2021] |
| (5) The Minister may by rules made under section 7, exempt any person or class of persons from subsection (4), subject to such conditions as may be specified in the rules. [27/2021] |
| (6) Rules made for the purposes of subsection (5) may be made to take effect from (and including) 16 November 2021. [27/2021] |
(7) In this section —“open market value”, in relation to any property, means —| (a) | the amount that would be realised if the property had been sold in the open market; or | | (b) | where the Comptroller is satisfied by reason of the special nature of the property that it is not practicable to determine the amount mentioned in paragraph (a), such other value as appears to the Comptroller to be reasonable in the circumstances; |
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“trading stock”, in relation to a trade or business —| (a) | means property of any description (whether movable or immovable) —| (i) | that is sold in the ordinary course of trade or business; or | | (ii) | that would be so sold if it were mature or if its manufacture, preparation or construction were complete; but |
| | (b) | does not include any material used in the manufacture, preparation or construction of any property mentioned in paragraph (a). [27/2021] |
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| Comptroller to disregard certain transactions and dispositions |
33.—(1) Subsection (2) applies where the Comptroller is satisfied that the purpose or effect of any arrangement is directly or indirectly —| (a) | to alter the incidence of any tax that is payable by or that would otherwise have been payable by any person; | | (b) | to relieve any person from any liability to pay tax or to make a return under this Act; or | | (c) | to reduce or avoid any liability imposed or which would otherwise have been imposed on any person by this Act. [41/2020] |
| (2) Without affecting any validity that the arrangement may have in any other respect or for any other purpose, the Comptroller must disregard or vary the arrangement and make any adjustment that the Comptroller considers appropriate, including (but not limited to) the computation or recomputation of gains or profits, or the imposition of liability to tax, so as to counteract any tax advantage obtained or obtainable by that person from or under that arrangement. [41/2020] |
| (3) Subsection (1)(c) includes increasing any qualifying deduction by a transferor company to be transferred to a claimant company under section 37B, in order to reduce or avoid any liability imposed or which would otherwise have been imposed on the claimant company by this Act. [41/2020] |
| (4) Nothing in this section prevents the applicability of subsection (1) to a case, or any action of the Comptroller under subsection (2) in a case, from being questioned in an appeal against an assessment in accordance with Part 18. [41/2020] |
(5) In this section —| “arrangement” means any scheme, trust, grant, covenant, agreement, disposition and transaction and includes all steps by which it is carried into effect; |
| “claimant company” and “transferor company” have the meanings given by section 37B(19); |
| “qualifying deduction” has the meaning given by section 37B(14). [41/2020] |
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| (6) This section applies to any arrangement made or entered into before, on or after 7 December 2020, but not one made or entered into before 29 January 1988. [41/2020] |
| (7) This section does not apply to any arrangement carried out for bona fide commercial reasons and had not as one of its main purposes the avoidance or reduction of tax. [41/2020] |
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| Surcharge on adjustments under section 33 |
33A.—(1) This section applies where, in the year of assessment 2023 or a subsequent year of assessment —| (a) | the Comptroller imposes a liability to tax or an additional amount of tax on a person for that year of assessment under section 33; | | (b) | the Comptroller recomputes any gain, profit or loss of, any capital allowance allowed to, or any deduction for a donation made by, a person for that year of assessment under section 33 which results in the imposition of a liability to tax or an additional amount of tax on that person for any year of assessment; or | | (c) | as a result of an adjustment under section 33, any qualifying deduction that has been transferred under section 37B by a transferor company to a claimant company is reduced or disregarded, and the Comptroller makes an assessment on the claimant company for an amount of tax or an additional amount of tax. [41/2020] |
| (2) In a case mentioned in subsection (1)(a) or (b), a surcharge equal to 50% of the amount of tax or the additional amount of tax is imposed on the person, and is recoverable by the Comptroller from the person as a debt due to the Government. [41/2020] |
| (3) In a case mentioned in subsection (1)(c), a surcharge equal to 50% of the amount of tax or the additional amount of tax assessed on the claimant company is imposed on the transferor company, and is recoverable by the Comptroller from the transferor company as a debt due to the Government. [41/2020] |
(4) Despite any objection under section 76 to or an appeal lodged under Part 18 against an adjustment made under section 33 or any assessment, the surcharge must be paid —| (a) | within one month after the date a written notice of the surcharge is served in accordance with section 8(1) on the person to whom the surcharge is imposed; and | | (b) | in the manner stated in the notice. [41/2020] |
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| (5) The Comptroller may, in the Comptroller’s discretion, and subject to any term and condition (including the imposition of interest on the surcharge) as the Comptroller may impose, extend the time within which payment is to be made. [41/2020] |
| (6) Sections 86(1) to (6), 87(1) and (2), 89, 90 and 91 apply to the collection and recovery of a surcharge and any interest imposed under subsection (5), as they apply to the collection and recovery of tax. [41/2020] |
| (7) The Comptroller may, for good cause, remit wholly or in part any surcharge or interest payable under this section. [41/2020] |
(8) If, upon an objection under section 76 to or an appeal lodged under Part 18, an assessment made pursuant to any adjustment made under section 33 is varied or annulled, then the surcharge is correspondingly increased, reduced or annulled (as the case may be), and —| (a) | if the surcharge is increased, subsection (2) or (3) (as the case may be) and subsections (4), (5), (6) and (7) apply to the increased amount of the surcharge as they apply to the surcharge; or | | (b) | if the surcharge is reduced or annulled and it has already been paid to the Comptroller, the amount of the reduction or the entire amount (including any interest paid on the amount) must be refunded. [41/2020] |
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| (9) In this section, “claimant company”, “qualifying deduction” and “transferor company” have the meanings given by section 33(5). [41/2020] |
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| Decision of Comptroller no bar to appeal |
| 34. Nothing in section 32 prevents the decision of the Comptroller in the exercise of any discretion given to him or her by that section from being questioned in an appeal against an assessment in accordance with Part 18. [41/2020] |
| Adjustment on change of basis of computing profits of financial instruments resulting from FRS 39 or SFRS for Small Entities |
| 34A.—(1) Despite the provisions of this Act, the amount of any profit or loss (as the case may be) or expense to be brought into account for the basis period for any year of assessment in respect of any financial instrument of a qualifying person for the purposes of sections 10, 14, 14G and 37 is that which, in accordance with FRS 39 or SFRS for Small Entities (as the case may be), is recognised in determining any profit or loss (as the case may be) or expense in respect of that financial instrument for that year of assessment. [39/2017] (2) Despite subsection (1), the profit or loss or expense in respect of the financial instrument referred to in the following paragraphs is, for the purposes of sections 10, 14, 14G and 37, to be computed as follows:| (a) | where a qualifying person to whom section 10(12)(b) applies derives interest from a negotiable certificate of deposit or derives a gain or profit from the sale thereof, the qualifying person’s income therefrom is treated in the manner set out in section 10(12); | | (b) | where a qualifying person derives interest from debt securities or loans, and the interest is chargeable to tax under section 10(1)(d), such interest is to be computed based on the contractual interest rate and not the effective interest rate; [Act 33 of 2022 wef 04/11/2022] | | (c) | any amount of profit or expense in respect of a loan for which no interest is payable is disregarded; | | (d) | where the creditor and debtor of a loan agreement are not dealing with each other at arm’s length, only the interest income or the interest expense based on the contractual interest rate is chargeable to tax or allowed as a deduction, as the case may be; | | (e) | in a case where section 14(1)(a) applies, only the interest expense incurred based on the contractual interest rate is allowed as a deduction under section 14(1)(a); | | (f) | any amount of profit or loss in respect of a hedging instrument where the underlying asset or liability is employed or intended to be employed as capital is disregarded; | | (g) | where a bank or qualifying finance company within the meaning of section 14G is unable to make provision for the amount of impairment losses in respect of a group of financial assets in accordance with FRS 39, but is required to make such provision by the Monetary Authority of Singapore, section 14G applies for a period of 5 years, or such further period as the Minister may allow, beginning from the year of assessment relating to the basis period in which the bank or qualifying finance company is first required to prepare financial accounts in respect of its trade or business in accordance with FRS 39; | | (h) | a gain from discounts or premiums on debt securities, being a gain chargeable to tax under section 10(1)(d), is deemed —| (i) | to accrue only on the maturity or redemption of the debt securities; and | | (ii) | to be equal to the difference between the amount received on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; |
| | (i) | in a case where a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium, and section 14(1)(a) applies in respect of the outgoing represented by such discount or premium, such outgoing is deemed to be incurred and deductible only when it is paid on the maturity or redemption of the debt securities and —| (i) | in the case of debt securities issued in the basis period relating to the year of assessment 2008 or subsequent years of assessment, to be equal to the difference between the amount paid on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; or | | (ii) | in the case of debt securities issued before the basis period relating to the year of assessment 2008, to be equal to such part of the difference referred to in sub‑paragraph (i) that would be attributable to the year of assessment 2008 and subsequent years of assessment; |
| | (j) | in a case where —| (i) | a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium; | | (ii) | the debt securities were issued with an embedded derivative to acquire shares or units in the qualifying person; and | | (iii) | the outgoing represented by such discount or premium is deductible under section 14(1), |
| such part of the outgoing that is attributable to the embedded derivative is not deductible. |
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| (3) A person who is required to prepare or maintain financial accounts in accordance with FRS 39 may, subject to such conditions as the Comptroller may specify, elect in accordance with subsection (4) not to be subject to this section; and if the person so elects, the person is not treated as a qualifying person from the year of assessment relating to the basis period during which the person is first required to prepare financial accounts in accordance with FRS 39. |
| (3A) A person who prepares or maintains financial accounts in accordance with SFRS for Small Entities may, subject to such conditions as the Comptroller may specify, elect in accordance with subsection (4A) not to be subject to this section; and if the person so elects, the person is not treated as a qualifying person from the year of assessment relating to the basis period during which the person first prepares financial accounts in accordance with SFRS for Small Entities. |
| (3B) A person is not entitled to make an election under subsection (3) if the person is already subject to this section because the person did not make an election in accordance with subsection (4A), or the person had revoked under subsection (5) the person’s election made in accordance with subsection (4A). |
| (3C) A person is not entitled to make an election under subsection (3A) if the person is already subject to this section because the person did not make an election in accordance with subsection (4), or the person had revoked under subsection (5) the person’s election made in accordance with subsection (4). |
(4) The election referred to in subsection (3) must be made by the person by written notice to the Comptroller —| (a) | at the time of lodgment of the return of income for the year of assessment referred to in subsection (3); or | | (b) | within such further time as the Comptroller may allow. |
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(4A) The election referred to in subsection (3A) must be made by the person by written notice to the Comptroller —| (a) | at the time of lodgment of the return of income for the year of assessment referred to in that subsection; or | | (b) | within such further time as the Comptroller may allow. |
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| (5) A person who has made an election under subsection (3) or (3A) may at any time revoke the election by written notice to the Comptroller; and if the person so revokes, the person is treated as a qualifying person from the year of assessment relating to the basis period during which the revocation is made or such year of assessment as the Comptroller may approve. |
| (6) The revocation under subsection (5) is irrevocable. |
| (7) A person who is not required to prepare or maintain financial accounts in accordance with FRS 39 or SFRS for Small Entities may apply to the Comptroller in writing for approval to be subject to this section and, if the Comptroller approves the application, that person is treated as a qualifying person from the year of assessment relating to the basis period during which the approval is granted or such later year of assessment as the Comptroller may approve. |
| (8) The provisions of this section pertaining to FRS 39 have effect for any basis period beginning on or after 1 January 2005; and the provisions of this section pertaining to SFRS for Small Entities have effect for any basis period beginning on or after 1 January 2011. |
(9) For the purposes of this section, the Minister may make regulations —| (a) | to provide for such transitional, supplementary and consequential matters as the Minister may consider necessary or expedient; and | | (b) | generally to give effect to or for carrying out the purposes of this section. |
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(10) In this section —| “contractual interest rate”, in relation to any financial instrument, means the interest rate specified in the financial instrument; |
| “debt securities” has the meaning given by section 43H(4); |
| “FRS 39” means the financial reporting standard known as Financial Reporting Standard 39 (Financial Instruments: Recognition and Measurement) that is treated as made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time; [Act 36 of 2022 wef 01/04/2023] |
| “Monetary Authority of Singapore” means the Monetary Authority of Singapore established under section 3 of the Monetary Authority of Singapore Act 1970; |
“qualifying person”, in relation to any year of assessment, means —| (a) | a person who is required to prepare or maintain financial accounts in accordance with FRS 39 and who has not made an election under subsection (3) for that year of assessment; | | (b) | a person who prepares or maintains financial accounts in accordance with SFRS for Small Entities and who has not made an election under subsection (3A) for that year of assessment; or | | (c) | a person who is treated as a qualifying person under subsection (5) or (7) for that year of assessment, |
| as the case may be, but excludes a person who is treated under section 34AA(6) as a qualifying person for that year of assessment for the purposes of section 34AA; |
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| “SFRS for Small Entities” means the financial reporting standard known as Singapore Financial Reporting Standard for Small Entities made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time. [45/2018] [Act 36 of 2022 wef 01/04/2023] |
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| (11) Any term used in this section and not defined in this section but defined in FRS 39 or SFRS for Small Entities (as the case may be) has the same meaning as in FRS 39 or SFRS for Small Entities (as the case may be). |
| (12) This section does not apply to any profit, loss or expense in respect of any financial instrument of an insurer as defined in section 34AAA(1), to be brought into account for the basis period for a year of assessment, being a basis period that begins on or after 1 January 2023, or such earlier basis period as may be approved by the Comptroller in a particular case. [Act 33 of 2022 wef 04/11/2022] |
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| Adjustment on change of basis of computing profits of financial instruments resulting from FRS 109 or SFRS(I) 9 |
| 34AA.—(1) Despite the provisions of this Act but subject to section 34G(3), (4) and (5), the amount of any profit, loss or expense to be brought into account for the basis period for any year of assessment in respect of any financial instrument of a qualifying person for the purposes of sections 10, 14, 14G and 37, respectively, is that which, in accordance with FRS 109 or SFRS(I) 9 (as the case may be), is recognised in determining any profit, loss or expense in respect of that financial instrument for that year of assessment. [39/2017; 45/2018] | (2) To avoid doubt, subsection (1) does not apply to anything recognised in accordance with FRS 109 or SFRS(I) 9 (as the case may be), that is capital in nature. [39/2017; 45/2018] |
(3) Despite subsection (1), for the purposes of sections 10, 14, 14G and 37, the profit, loss or expense in respect of a financial instrument mentioned in each of the following paragraphs must be dealt with in accordance with that paragraph:| (a) | where a qualifying person to whom section 10(12)(b) applies derives interest from a negotiable certificate of deposit or derives a gain or profit from the sale of that certificate, the person’s income from that certificate or sale must be treated in the manner set out in section 10(12); | | (b) | where a qualifying person derives interest from debt securities or loans, the interest that is chargeable to tax under section 10(1)(d) is the amount computed at the contractual interest rate and not at the effective interest rate; [Act 33 of 2022 wef 04/11/2022] | | (c) | any amount of profit or expense in respect of a loan for which no interest is payable must be disregarded; | | (d) | where the creditor and debtor of a loan did not deal with each other at arm’s length, the interest income chargeable to tax, and the interest expense allowable as a deduction, are the amounts of such income and expense that are computed at the contractual interest rate and not at the effective interest rate; | | (e) | in a case where section 14(1)(a) applies, only interest expense incurred in respect of the money borrowed and computed at the contractual interest rate is allowed as a deduction under that provision; | | (f) | any amount of profit or loss in respect of a hedging instrument acquired under a bona fide commercial arrangement for the sole purpose of hedging against any risk associated with the underlying asset or liability must be disregarded, if the underlying asset or liability is employed or intended to be employed as capital; | | (g) | any amount of expected credit losses of a financial instrument that is not credit‑impaired, being losses that are recognised in accordance with FRS 109 or SFRS(I) 9 (as the case may be) in determining the profit or loss of such instrument, must be disregarded; | | (h) | in a case where the qualifying person is a bank or qualifying finance company, the provisions in section 14G apply in relation to a provision made by the qualifying person for an expected credit loss arising from loans or securities that are not credit‑impaired, as those provisions apply in relation to a provision for doubtful debts arising from the person’s loans or for diminution in the value of the person’s investments in securities; | | (i) | where an equity instrument on revenue account of a qualifying person that is measured at fair value through other comprehensive income is disposed of, an amount prescribed as the gain or loss to the qualifying person on such disposal, is chargeable to tax, or is to be allowed as a deduction; | | (j) | a gain from discounts or premiums on debt securities, being a gain chargeable to tax under section 10(1)(d) —| (i) | is treated as accruing only on the maturity or redemption of the debt securities; and | | (ii) | is treated as equal to the difference between the amount received on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; |
| | (k) | in a case where a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium, and section 14(1)(a) applies in respect of the outgoing represented by such discount or premium, such outgoing is treated to be incurred and deductible only when it is paid on the maturity or redemption of the debt securities and —| (i) | for debt securities issued in the basis period relating to the year of assessment 2008 or subsequent years of assessment, is treated as equal to the difference between the amount paid on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; or | | (ii) | for debt securities issued before the basis period relating to the year of assessment 2008, is treated as equal to the part of the difference in sub‑paragraph (i) that would be attributable to the year of assessment 2008 and subsequent years of assessment; |
| | (l) | in a case where —| (i) | a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium; | | (ii) | the debt securities were issued with an embedded derivative to acquire shares or units in the qualifying person; and | | (iii) | the outgoing represented by such discount or premium is deductible under section 14(1), |
| such part of the outgoing that is attributable to the embedded derivative is not deductible; |
| | (m) | where a financial instrument on revenue account of a qualifying person (being a financial liability measured at fair value through profit or loss) matures or is sold, bought back or redeemed, any gain or loss to the qualifying person that is realised on such maturity or from such sale, buy back or redemption (being a gain or loss that is recognised in other comprehensive income in accordance with FRS 109 or SFRS(I) 9 (as the case may be)) is chargeable to tax, or is to be allowed as a deduction. [39/2017; 45/2018] |
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| (4) To avoid doubt, subsection (3)(d) does not affect the operation of section 34D. [39/2017] |
(5) In a case where —| (a) | a loan on revenue account is transferred by a qualifying person (called in this subsection the transferor) to another person (called in this subsection the transferee); [Act 30 of 2023 wef 30/10/2023] | | (b) | the transfer is not pursuant to a qualifying amalgamation within the meaning of section 34C(2) in relation to which an election is made under section 34C(4); | | (c) | a provision for an expected credit loss arising from that loan that is credit‑impaired, being a loss that is recognised in accordance with FRS 109 or SFRS(I) 9 (as the case may be) in determining the profit or loss of such loan, is also transferred by the transferor to the transferee; and | | (d) | a deduction of an amount in respect of the provision mentioned in paragraph (c) was previously allowed under section 14 (read with this section or section 34A) to the transferor, |
| then, despite any provision in this Act — |
| (e) | in a case where both the transferor and the transferee are on the date of the transfer in the business of lending money, the deduction previously allowed to the transferor is treated, for the purposes of section 14, as having been allowed to the transferee under that section; and | | (f) | in any other case, the provision for the expected credit loss mentioned in paragraph (c) that is transferred by the transferor and allowed a deduction under paragraph (d) is treated as a trading receipt of the transferor for the basis period in which the date of transfer falls. [39/2017; 45/2018] [Act 30 of 2023 wef 30/10/2023] |
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| (6) A person who is not a qualifying person under paragraph (a) or (b) of the definition of that term in subsection (15), may apply to the Comptroller for approval to be a qualifying person; and if the Comptroller approves the application, that person is a qualifying person starting from the year of assessment of the basis period in which the approval is granted or such later year of assessment as the Comptroller may approve. [39/2017] |
(7) If —| (a) | any gain, loss or expense in respect of a financial instrument of a qualifying person to which subsection (1) applies is recognised under FRS 109 or SFRS(I) 9 (as the case may be) on a certain date; | | (b) | it is not possible to determine, on the date the Comptroller makes an assessment of the amount of chargeable income of that person for the year of assessment of the basis period in which the date mentioned in paragraph (a) falls, whether that gain, loss or expense is capital or revenue in nature; | | (c) | because of this, the gain was not charged with tax or a deduction was allowed for that loss or expense, as the case may be; and | | (d) | the Comptroller later discovers (called the discovery time) that the gain ought to have been charged with tax as it is revenue in nature, or a deduction ought not to have been allowed for the loss or expense as it is capital in nature, as the case may be, |
| then, and despite anything in this Act but subject to subsection (9), the amount of the gain, loss or expense, together with the additional amount mentioned in subsection (8), is treated as the person’s income for the year of assessment within which the discovery time falls. |
[39/2017; 45/2018] |
(8) The additional amount in subsection (7) is the amount of any other gain, loss or expense in respect of the same financial instrument —| (a) | that was not charged with tax, or for which a deduction was allowed, for one or more past years of assessment, for the same reason as that in subsection (7)(b); and | | (b) | that is ascertained in accordance with the regulations made under subsection (13). [39/2017] |
|
| (9) For any qualifying person, no assessment may be made in respect of the income mentioned in subsection (7) more than 4 years immediately after the end of the year of assessment of the basis period in which the financial instrument is disposed of by the qualifying person. [39/2017] |
(10) If —| (a) | any gain, loss or expense in respect of a financial instrument of a qualifying person to which subsection (1) applies is recognised under FRS 109 or SFRS(I) 9 (as the case may be) on a certain date; | | (b) | it is not possible to determine, on the date the Comptroller makes an assessment of the amount of chargeable income of that person for the year of assessment of the basis period in which the date mentioned in paragraph (a) falls, whether that gain, loss or expense is capital or revenue in nature; | | (c) | because of this, the gain was charged with tax or a deduction was not allowed for that loss or expense, as the case may be; and | | (d) | the Comptroller later discovers (called the discovery time), with or without a claim made by the qualifying person, that the gain ought not to have been charged with tax as it is capital in nature, or a deduction ought to have been allowed for the loss or expense as it is revenue in nature, as the case may be, |
| then, and despite anything in this Act but subject to subsection (12), the amount of the gain, loss or expense, together with the additional amount mentioned in subsection (11), is to be allowed as a deduction against the income of the person for the year of assessment within which the discovery time falls. |
[39/2017; 45/2018] |
(11) The additional amount in subsection (10) is the amount of any other gain, loss or expense in respect of the same financial instrument —| (a) | that was charged with tax, or for which a deduction was not made, for one or more past years of assessment, for the same reason as that in subsection (10)(b); and | | (b) | that is ascertained in accordance with the regulations made under subsection (13). [39/2017] |
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| (12) For any qualifying person, no claim mentioned in subsection (10)(d) may be made more than 4 years immediately after the end of the year of assessment of the basis period in which the financial instrument is disposed of by the qualifying person. [39/2017] |
(13) For the purposes of this section, the Minister may make regulations to give effect to this section, including —| (a) | [Deleted by Act 45 of 2018] | | (b) | providing for the computation of the additional amounts mentioned in subsections (8) and (11); and | | (c) | providing for any transitional, supplementary or consequential matter, including —| (i) | treating a specified amount of any profit in respect of a financial instrument of a person, being an amount recognised under FRS 109 or SFRS(I) 9 (as the case may be) as such profit as of a date before the date the person becomes a qualifying person, as the person’s income for a specified year of assessment; and | | (ii) | allowing a specified amount of any loss or expense in respect of a financial instrument of a person, being an amount recognised under FRS 109 or SFRS(I) 9 (as the case may be) as such loss or expense as of a date before the date the person becomes a qualifying person, as a deduction against the person’s income for a specified year of assessment. [39/2017; 45/2018] |
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| (14) The regulations under subsection (13) may prescribe different amounts for the purposes of subsection (3)(i) for different descriptions of instruments. [39/2017] |
(15) In this section —| “bank”, “loan” and “qualifying finance company” have the meanings given by section 14G(7); |
| “contractual interest rate”, in relation to any financial instrument, means the applicable interest rate specified in the financial instrument; |
| “debt securities” has the meaning given by section 43H(4); |
| “FRS 109” means the financial reporting standard known as Financial Reporting Standard 109 (Financial Instruments) that is made, and amended from time to time, under Part 3 of the Accounting Standards Act 2007; |
“qualifying person”, in relation to any year of assessment, means —| (a) | in the case of a year of assessment for a basis period beginning on or after 1 January 2018, a person who is required to prepare or maintain financial accounts in accordance with FRS 109 or SFRS(I) 9 for that basis period; | | (b) | in the case of a year of assessment for a basis period beginning on a date before 1 January 2018, a person mentioned in paragraph (a) who prepares or maintains financial accounts in accordance with FRS 109 or SFRS(I) 9 (as the case may be) for that basis period; or | | (c) | in any case, a person who is treated as a qualifying person under subsection (6); |
|
| “SFRS(I) 9” means the financial reporting standard known as Singapore Financial Reporting Standard (International) 9 (Financial Instruments) that is made, and amended from time to time, under Part 3 of the Accounting Standards Act 2007. [39/2017; 45/2018] |
|
| (16) Any term used in this section and not defined in this section but defined in FRS 109 or SFRS(I) 9, has the same meaning as in FRS 109 or SFRS(I) 9, as the case may be. [45/2018] |
| (17) This section does not apply to any profit, loss or expense in respect of any financial instrument of an insurer as defined in section 34AAA(1), to be brought into account for the basis period for a year of assessment, being a basis period that begins on or after 1 January 2023, or such earlier basis period as may be approved by the Comptroller in a particular case. [Act 33 of 2022 wef 04/11/2022] |
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| Change of basis for computing profits from financial instruments for insurers |
34AAA.—(1) Despite the provisions of this Act but subject to section 34G(3), (4) and (5), the amount of any profit, loss or expense in respect of any financial instrument of a company licensed under the Insurance Act 1966 to carry on insurance business in Singapore (called in this section an insurer), to be brought into account for the basis period for a year of assessment (being a basis period beginning on or after 1 January 2023, or such earlier basis period as may be approved by the Comptroller in a particular case) for the purposes of sections 10, 14 and 37, is that which —| (a) | is recognised and valued in accordance with the Insurance Act regulations; and | | (b) | is reflected in the statement of profit and loss that is part of the insurer’s MAS return for that basis period. |
| (2) Subsection (1) does not apply to anything recognised and valued in accordance with the Insurance Act regulations that is capital in nature. |
(3) Without limiting subsection (1), that subsection applies to any financial instrument of —| (a) | the shareholders’ fund established in Singapore of an insurer; or | | (b) | the surplus account of a participating fund of an insurer that is a life insurer. |
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| (4) Subsection (1) does not apply to any financial instrument of a participating fund (other than the surplus account of the participating fund) of an insurer that is a life insurer. |
(5) Despite subsection (1), for the purposes of sections 10, 14 and 37, the profit, loss or expense of an insurer in respect of a financial instrument mentioned in each of the following paragraphs must be dealt with or computed (as the case may be) in accordance with that paragraph:| (a) | where the insurer derives interest from debt securities or loans, the interest that is chargeable to tax under section 10(1)(d) is the amount computed at the contractual interest rate and not at the effective interest rate; | | (b) | any amount of profit or expense in respect of a loan for which no interest is payable must be disregarded; | | (c) | where the creditor and debtor of a loan did not deal with each other at arm’s length, the interest income chargeable to tax, and the interest expense allowable as a deduction, are the amounts of such income and expense that are computed at the contractual interest rate and not at the effective interest rate; | | (d) | where the insurer incurs interest expense on loans or debt securities to which section 14(1)(a) would otherwise apply, only such part of the interest expense that is incurred in respect of the moneys borrowed and computed at the contractual interest rate is allowed as a deduction under that provision; | | (e) | any amount of profit or loss in respect of a hedging instrument acquired under a bona fide commercial arrangement for the sole purpose of hedging against any risk associated with the underlying asset or liability must be disregarded, if the underlying asset or liability is employed or intended to be employed as capital; | | (f) | where a loan (whether on revenue or capital account) is not reflected as a credit-impaired financial asset in the insurer’s audited financial statements for the accounting period the last day of which falls within the basis period concerned, any amount of impairment losses in respect of that loan, being losses that are recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return, must be disregarded; | | (g) | where a loan (being one on capital account) is reflected as a credit-impaired financial asset in the insurer’s audited financial statements for the accounting period the last day of which falls within the basis period concerned, any amount of impairment losses in respect of that loan, being losses that are recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return, must be disregarded; | | (h) | where a loan (whether on revenue or capital account) and interest receivable on that loan are not reflected as a credit‑impaired financial asset in the insurer’s audited financial statements for the accounting period the last day of which falls within the basis period concerned, any amount of impairment losses in respect of the interest receivable on that loan, being losses that are recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return, must be disregarded; | | (i) | where a receivable (other than interest receivable on a loan) is not reflected as a credit-impaired financial asset in the insurer’s audited financial statements for the accounting period the last day of which falls within the basis period concerned, any amount of impairment losses in respect of that receivable, being losses that are recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return, must be disregarded; | | (j) | a gain from discounts or premiums on debt securities, being a gain chargeable to tax under section 10(1)(d) —| (i) | is treated as accruing only on the maturity or redemption of the debt securities; and | | (ii) | is treated as equal to the difference between the amount received on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; |
| | (k) | in a case where the insurer issues debt securities at a discount or redeems issued debt securities at a premium, and section 14(1)(a) applies in respect of the outgoing represented by such discount or premium, such outgoing is treated —| (i) | to be incurred and deductible only when it is paid on the maturity or redemption of the debt securities; and | | (ii) | as equal to the difference between the amount paid on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; |
| | (l) | in a case where —| (i) | the insurer issues debt securities at a discount or redeems issued debt securities at a premium; | | (ii) | the debt securities were issued with an embedded derivative to acquire shares or units in the insurer; and | | (iii) | the outgoing represented by such discount or premium is deductible under section 14(1), |
| such part of the outgoing that is attributable to the embedded derivative, must be disregarded. |
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| (6) To avoid doubt, subsection (5)(c) does not affect the operation of section 34D. |
(6A) In a case where —| (a) | a loan on revenue account is transferred by an insurer (called in this subsection the transferor) to another person (called in this subsection the transferee); | | (b) | the transfer is not pursuant to a transfer of businesses by the transferor to the transferee in relation to which section 34CA applies; | | (c) | a provision for an impairment loss arising from that loan, being a loss that is recognised and valued in accordance with the Insurance Act regulations in determining the profit or loss of such loan and reflected in the transferor’s statement of profit and loss that is part of an MAS return, is also transferred by the transferor to the transferee; and | | (d) | a deduction of an amount in respect of the provision mentioned in paragraph (c) was previously allowed under section 14 (read with this section) to the transferor, |
| then, despite any provision of this Act — |
| (e) | in a case where both the transferor and transferee are on the date of the transfer in the business of lending money, the deduction previously allowed to the transferor is treated, for the purposes of section 14, as having been allowed to the transferee under that section; and | | (f) | in any other case, the provision for the impairment loss mentioned in paragraph (c) that is transferred by the transferor and allowed a deduction under paragraph (d) is treated as a trading receipt of the transferor for the basis period in which the date of transfer falls. [Act 30 of 2023 wef 30/10/2023] |
|
(7) If —| (a) | any gain, loss or expense in respect of a financial instrument of an insurer was (by reason of subsection (1)) that which was recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that was part of an MAS return on a certain date; | | (b) | it was not possible to determine, on the date the Comptroller made an assessment of the amount of chargeable income of that insurer for the year of assessment of the basis period in which the date mentioned in paragraph (a) fell, whether that gain, loss or expense was capital or revenue in nature; | | (c) | because of this, the gain was not charged with tax or a deduction was allowed for that loss or expense, as the case may be; and | | (d) | the Comptroller later discovers (called in this subsection the discovery time) that the gain ought to have been charged with tax as it was revenue in nature, or a deduction ought not to have been allowed for the loss or expense as it was capital in nature, as the case may be, |
| then, and despite anything in this Act but subject to subsection (9), the amount of the gain, loss or expense, together with the additional amount mentioned in subsection (8), is treated as the insurer’s income for the year of assessment within which the discovery time falls. |
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(8) The additional amount in subsection (7) is the amount of any other gain, loss or expense in respect of the same financial instrument —| (a) | that was not charged with tax, or for which a deduction was allowed, for one or more past years of assessment, for the same reason as that in subsection (7)(b); and | | (b) | that is ascertained in accordance with the regulations made under subsection (13). |
|
| (9) No assessment may be made in respect of the income mentioned in subsection (7) more than 4 years immediately after the end of the year of assessment of the basis period in which the financial instrument is disposed of by the insurer. |
(10) If —| (a) | any gain, loss or expense in respect of a financial instrument of an insurer was (by reason of subsection (1)) that which was recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that was part of an MAS return on a certain date; | | (b) | it was not possible to determine, on the date the Comptroller made an assessment of the amount of chargeable income of that insurer for the year of assessment of the basis period in which the date mentioned in paragraph (a) fell, whether that gain, loss or expense was capital or revenue in nature; | | (c) | because of this, the gain was charged with tax or a deduction was not allowed for that loss or expense, as the case may be; and | | (d) | the Comptroller later discovers (called in this subsection the discovery time), with or without a claim made by the insurer, that the gain ought not to have been charged with tax as it was capital in nature, or a deduction ought to have been allowed for the loss or expense as it was revenue in nature, as the case may be, |
| then, and despite anything in this Act but subject to subsection (12), the amount of the gain, loss or expense, together with the additional amount mentioned in subsection (11), is to be allowed as a deduction against the insurer’s income for the year of assessment within which the discovery time falls. |
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(11) The additional amount in subsection (10) is the amount of any other gain, loss or expense in respect of the same financial instrument —| (a) | that was charged with tax, or for which a deduction was not made, for one or more past years of assessment, for the same reason as that in subsection (10)(b); and | | (b) | that is ascertained in accordance with the regulations made under subsection (13). |
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| (12) No claim mentioned in subsection (10)(d) may be made more than 4 years immediately after the end of the year of assessment of the basis period in which the financial instrument is disposed of by the insurer. |
(13) For the purposes of this section, the Minister may make regulations to give effect to this section, including —| (a) | providing for the computation of the additional amounts mentioned in subsections (8) and (11); and | | (b) | providing for any transitional, supplementary or consequential matter, including —| (i) | treating a specified amount of any profit in respect of a financial instrument of a specified insurer, being an amount recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return as such profit as of the day immediately before the first day of the basis period in relation to which this section first applies to the insurer, as the insurer’s income for a specified year of assessment; and | | (ii) | allowing a specified amount of any loss or expense in respect of a financial instrument of a specified insurer, being an amount recognised and valued in accordance with the Insurance Act regulations and reflected in the statement of profit and loss that is part of an MAS return as such loss or expense as of the day immediately before the first day of the basis period in relation to which this section first applies to the insurer, as a deduction against the insurer’s income for a specified year of assessment. |
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(14) In this section —| “contractual interest rate”, in relation to any financial instrument, means the applicable interest rate specified in the financial instrument; |
| “credit-impaired financial asset” has the meaning given by FRS 109 or SFRS(I) 9, as the case may be; |
| “debt securities” has the meaning given by section 43H(4); |
| “FRS 109” and “SFRS(I) 9” have the meanings given by section 34AA(15); |
| “Insurance Act regulations” means regulations made for the purposes of section 16(5) of the Insurance Act 1966; |
| “MAS return”, in relation to an insurer, means the statements of account and other statements relating to the insurer’s business prepared and lodged with the Monetary Authority of Singapore under section 94(3) of the Insurance Act 1966; |
| “Monetary Authority of Singapore” means the Monetary Authority of Singapore established under section 3 of the Monetary Authority of Singapore Act 1970; |
| “participating fund” and “surplus account” have the meanings given by section 26(12). [Act 33 of 2022 wef 04/11/2022] |
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| Chargeability of profit or loss from foreign exchange differences |
| 34AB.—(1) This section applies where a person is a party to a transaction that is or is to be settled in a currency that is different from the functional currency in which the person’s financial statements are kept. [45/2018] (2) Despite the provisions of this Act, for the purpose of sections 10 and 14, any change in the value of any receivable or payable from the transaction that is reflected in the person’s financial statements, being a change arising from movements in the rates of the 2 currencies, is treated as —| (a) | a gain accruing to the person; or | | (b) | a deductible expense, |
| as the case may be, in the basis period in which the change is recognised as a gain or loss (as the case may be) in the profit and loss account that is part of those financial statements. |
[45/2018] |
(3) To avoid doubt, subsection (2) —| (a) | applies whether or not the gain or loss is realised; and | | (b) | does not apply to a transaction the gain or loss from which is capital in nature. [45/2018] |
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| (4) Subsection (2) does not apply to a transaction relating to a financial instrument to which section 34A, 34AA or 34AAA applies. [45/2018] [Act 33 of 2022 wef 04/11/2022] |
| (5) This section does not apply to a person who made an election to the Comptroller, at the time of lodgment of the person’s return of income for the year of assessment 2004, for any of the person’s recognised gains or losses mentioned in subsection (2) that were unrealised, not to be treated as the person’s gain or loss for that year of assessment and every subsequent year of assessment, for the purposes of this Act. [45/2018] |
| (6) However, the person mentioned in subsection (5) may in the person’s return of income for any year of assessment, make an irrevocable election to the Comptroller to be subject to this section, and, if the election is approved by the Comptroller, this section applies to that person for that year of assessment and every subsequent year of assessment. [45/2018] |
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| Islamic financing arrangements |
34B.—(1) This section applies to any prescribed Islamic financing arrangement entered into on or after 17 February 2006 between any person and a financial institution.| (2) Subject to such exceptions, adaptations and modifications as may be prescribed, sections 10, 12, 13, 14, 15 and 45 and regulations made under section 43J apply in relation to any prescribed Islamic financing arrangement as if a reference in any of those provisions to interest accrued, derived, received or incurred in relation to any loan, deposit or mortgage were a reference to the effective return of the arrangement. |
| (3) Where under a prescribed Islamic financing arrangement, an asset is sold by one party to the arrangement to the other party, the effective return of the arrangement must be excluded in determining for the purposes of this Act the consideration for the sale and purchase of the asset. |
| (4) Subsection (3) does not affect the operation of any provision of this Act which provides that the consideration for a sale or purchase is to be taken for any purpose to be an amount other than the actual consideration. |
(5) For the purposes of this section, the Minister may make regulations —| (a) | to prescribe anything that is required or authorised to be prescribed under this section; | | (b) | to provide for such transitional, supplementary and consequential matters as the Minister may consider necessary or expedient; and | | (c) | generally to give effect to or for carrying out the purposes of this section. |
|
(6) In this section —| “effective return”, in relation to a prescribed Islamic financing arrangement, means the prescribed return in lieu of interest that has or is accrued, derived, received or incurred under the arrangement; |
“financial institution” means —| (a) | any institution in Singapore that is licensed or approved by the Monetary Authority of Singapore, or exempted from such licensing or approval, under any written law administered by the Monetary Authority of Singapore; or | | (b) | any institution outside Singapore that is licensed or approved, or exempted from such licensing or approval, under any written law administered by its financial supervisory authority for the carrying on of financial activities; |
|
“Islamic financing arrangement” means a financing arrangement which is —| (a) | endorsed by any Shari’ah council or body, or by any committee formed for the purpose of providing guidance on compliance with Shari’ah law; and | | (b) | permitted under any written law in Singapore or elsewhere. |
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| Amalgamation of companies |
34C.—(1) This section only applies to a qualifying amalgamation.(2) In this section —| “first 2 years of assessment”, in relation to an amalgamating company, means the year of assessment relating to the basis period during which the company is incorporated and the year of assessment immediately following that year of assessment; |
“FRS 38”, “FRS 103”, “SFRS(I) 1‑38” and “SFRS(I) 3” mean the financial reporting standards known respectively as —| (a) | Financial Reporting Standard 38 (Intangible Assets); | | (b) | Financial Reporting Standard 103 (Business Combinations); | | (c) | Singapore Financial Reporting Standard (International) 1‑38 (Intangible Assets); and | | (d) | Singapore Financial Reporting Standard (International) 3 (Business Combinations), |
| that are made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time; |
[Act 36 of 2022 wef 01/04/2023] |
“qualifying amalgamation” means —| (a) | any amalgamation of companies where the notice of amalgamation under section 215F of the Companies Act 1967 or a certificate of approval under section 14A of the Banking Act 1970 is issued on or after 22 January 2009; and | | (b) | such other amalgamation of companies as the Minister, or such person as the Minister may appoint, may approve. [32/2019] |
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(3) For the purpose of this section, the date of amalgamation of companies is —| (a) | the date shown on the notice of amalgamation under section 215F of the Companies Act 1967; | | (b) | the date of lodgment mentioned in section 14A(4) of the Banking Act 1970; or | | (c) | such date as specified in the letter of approval issued under paragraph (b) of the definition of “qualifying amalgamation” in subsection (2), |
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| Election for section to apply |
| (4) An amalgamated company in a qualifying amalgamation must, within 90 days from the date of amalgamation or such further period as the Comptroller may allow, elect for this section to apply to it and all the amalgamating companies in the qualifying amalgamation. |
| (5) An election under subsection (4) must be made by an amalgamated company by written notice to the Comptroller and is irrevocable. |
(6) Upon such election, the trades and businesses carried on in Singapore of all the amalgamating companies are treated as carried on in Singapore by the amalgamated company beginning from the date of amalgamation and —| (a) | any property on revenue account of each amalgamating company is, subject to subsection (14), treated as property on revenue account of the amalgamated company; and | | (b) | any property on capital account of each amalgamating company is, subject to subsection (16), treated as property on capital account of the amalgamated company, |
| and the amalgamated company is treated as having acquired the property on the date on which the amalgamating company acquired it for an amount that was incurred by the amalgamating company in respect of that property. |
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| Effect of cancellation of shares |
(7) Where an amalgamating company (called the firstmentioned company) holds shares in another amalgamating company (called the second‑mentioned company), and the shares of the second‑mentioned company are cancelled on the amalgamation, the following provisions apply:| (a) | the firstmentioned company is treated as having disposed of the shares in the second‑mentioned company immediately before the amalgamation for an amount equal to the cost of the shares to the firstmentioned company; | | (b) | if —| (i) | the firstmentioned company has borrowed money to acquire shares in the second‑mentioned company; and | | (ii) | the liability arising from the money borrowed referred to in sub‑paragraph (i) is transferred to and becomes the liability of the amalgamated company, |
| no deduction may be given for any interest or other borrowing costs incurred by the amalgamated company on or after the date of amalgamation on such liability. |
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| (8) Where there is a transfer of property from any amalgamating company to the amalgamated company on the date of amalgamation in respect of which allowances or writing‑down allowances have been made to the amalgamating company under sections 16 to 21, the amalgamating company and the amalgamated company are, subject to section 24(4), deemed to have made an election under section 24(3), and section 24(3)(a) to (e) applies, with the necessary modifications, whether or not the amalgamated company is a company over which the amalgamating company has control, or the amalgamating company is a company over which the amalgamated company has control, or both the amalgamating company and amalgamated company are companies under the control of a common person. |
| (8A) Where there is a transfer of a building or structure from any amalgamating company to the amalgamated company on the date of amalgamation for which an allowance has been made to the amalgamating company under section 18C, the annual allowances provided under that section continue to be available to the amalgamated company as if it had incurred the qualifying capital expenditure that was incurred in carrying out the approved construction or approved renovation (as the case may be) referred to in that section. |
| (8B) Subsection (8A) does not apply unless the building or structure is used before the transfer by the amalgamating company and after the transfer by the amalgamated company, in the production of income chargeable under the provisions of this Act. |
(9) In the application of section 24(3)(a) to (e) under subsection (8) —| (a) | a reference in that provision to a buyer is a reference to the amalgamated company; and | | (b) | a reference in that provision to a seller is a reference to the amalgamating company. |
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(10) Where —| (a) | there is a transfer of property, being intellectual property rights in respect of which writing‑down allowances have been made to an amalgamating company under section 19B, from that amalgamating company to the amalgamated company on the date of amalgamation; and | | (b) | before the transfer in the case of that amalgamating company and from any time on or after the transfer in the case of that amalgamated company, the property is used in the production of income chargeable under the provisions of this Act, |
| the following provisions, subject to subsection (18), apply: |
| (c) | section 19B(4) and (5) does not apply to the amalgamating company; | | (d) | the writing‑down allowances under section 19B continue to be available to the amalgamated company as if no transfer had taken place; | | (e) | the charge under section 19B(4) and (5) is to be made on the amalgamated company on any event occurring on or after the date of amalgamation as would have fallen to be made on the amalgamating company if the amalgamating company had continued to own the intellectual property rights and had done all such things and been allowed all such allowances as were done by or allowed to the amalgamated company. |
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(11) Despite section 32 but subject to subsection (18), where there is a transfer of property, being trading stock to both an amalgamating company and the amalgamated company, from that amalgamating company to the amalgamated company on the date of amalgamation —| (a) | the net book value of the trading stock of the amalgamating company is deemed to be the value of the consideration given by the amalgamated company to the amalgamating company for such transfer on the date of amalgamation for the purpose of deducting the cost of trading stock to the amalgamated company as an expense in computing the gains or profits of the trade or business of the amalgamated company; and | | (b) | only the amount of provision of diminution in value computed by reference to the net book value referred to in paragraph (a) of the trading stock (if any) may be allowed as a deduction to the amalgamated company. |
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(12) Despite subsection (11), the value as reflected in the financial accounts of the amalgamated company on the date of amalgamation is taken as the value of the consideration given by the amalgamated company to the amalgamating company for the transfer of the trading stock on the date of amalgamation for the purpose of —| (a) | computing the gains or profits of the trade or business of that amalgamating company; and | | (b) | deducting the cost of trading stock to the amalgamated company as an expense in computing the gains or profits of the trade or business of the amalgamated company, |
| if the amalgamated company has made an irrevocable election to that effect. |
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| (13) Any gains or profits of the trade or business of the amalgamating company referred to in subsection (12) are chargeable to tax for the year of assessment which relates to the basis period in which the date of amalgamation falls. |
| (14) Where there is a transfer of property from an amalgamating company to the amalgamated company, being property on revenue account of the amalgamating company but not on revenue account of the amalgamated company, the consideration for the transfer by the amalgamating company is taken as the amount which it would have realised if the property had been sold in the open market on the date of amalgamation. |
| (15) The amount of consideration referred to in subsection (14) is to be used to compute the gains or profits of the trade or business of the amalgamating company and such gains or profits are chargeable to tax for the year of assessment which relates to the basis period in which the date of amalgamation falls. |
| (16) Where there is a transfer of property from an amalgamating company to the amalgamated company, being property not on revenue account of the amalgamating company but on revenue account of the amalgamated company, the consideration for the acquisition by the amalgamated company is taken as the amount which it would have incurred if the property had been purchased in the open market on the date of amalgamation or the actual amount paid, whichever is the lower. |
| (17) The amount of consideration referred to in subsection (16) is to be deducted as an expense in computing the gains or profits of the trade or business of the amalgamated company. |
(18) Where the amalgamated company ceases to carry on the trade and business in Singapore after the date of amalgamation but instead carries on that trade and business outside Singapore —| (a) | in the case of trading stock which has been transferred at net book value under subsection (11)(a), section 32(1)(b) applies as if that trade and business has been discontinued or transferred on the date of cessation of the trade and business in Singapore, and any gain is chargeable to tax for the year of assessment relating to the basis period in which the amalgamated company ceases to carry on that trade and business in Singapore; | | (b) | in the case of property, being intellectual property rights in respect of which subsection (10) applies, the charge under section 19B(4) or (5) (as the case may be) is to be made on the amalgamated company as if the property has been sold on the date of cessation of the trade and business in Singapore; and for the purpose of computing the charge under section 19B(5), the value thereof is the amount which it would have realised if the property had been sold in the open market on the date of cessation of such trade and business in Singapore. |
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| (19) Any question arising under subsections (14), (16) and (18) regarding the open market value attributable to property or trading stock (as the case may be) is to be determined by the Comptroller. |
| Deductions for intellectual property rights |
| (20) No deduction under section 19B is allowed to the amalgamated company for any intellectual property rights recognised in accordance with FRS 38 and FRS 103, or with SFRS(I) 1‑38 and SFRS(I) 3, as a result of the amalgamation but which were not in existence prior to the amalgamation. [32/2019] |
| Deductions for bad debts, expenditure, losses, etc. |
(21) Where —| (a) | an amalgamating company ceases to exist on the date of amalgamation; and | | (b) | the amalgamated company continues to carry on the trade and business of the amalgamating company and at any time —| (i) | writes off as bad the amount of a debt, or provides impairment loss in respect of a debt, that it acquires from the amalgamating company on the date of amalgamation; | | (ii) | incurs an expenditure, other than the expenditure to which prescribed sections of this Act apply; or | | (iii) | incurs a loss, |
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| the amalgamated company — |
| (c) | is allowed a deduction for the amount of the debt, expenditure or loss (as the case may be) if —| (i) | the amalgamating company would have been allowed the deduction but for the amalgamation; and | | (ii) | the amalgamated company is not otherwise allowed the deduction; and |
| | (d) | is chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if —| (i) | the amalgamating company would have been chargeable to tax on such amount but for the amalgamation; and | | (ii) | the amalgamated company is not otherwise chargeable to tax on such amount. |
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(22) Where —| (a) | an amalgamating company has been allowed a deduction in respect of any debt written off as bad or impairment loss, and it ceases to exist on the date of amalgamation; and | | (b) | the amalgamated company continues to carry on the trade and business of the amalgamating company, |
| the amalgamated company is chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if — |
| (c) | the amalgamating company would have been chargeable to tax on such amount but for the amalgamation; and | | (d) | the amalgamated company is not otherwise chargeable to tax on such amount. |
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(23) Where —| (a) | an amalgamating company ceases to exist on the date of amalgamation; and | | (b) | the amalgamating company has any capital allowance, donation or loss remaining unabsorbed on the date of amalgamation, |
| sections 23 and 37 apply, with the necessary modifications, as if the amalgamated company is the amalgamating company for the purposes of deducting the unabsorbed capital allowance, donation or loss against the income or the statutory income (as the case may be) of the amalgamated company, subject to conditions specified in subsection (24). |
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(24) The conditions referred to in subsection (23) are —| (a) | the amalgamating company was carrying on a trade or business until the amalgamation; and | | (b) | the amalgamated company continues to carry on the same trade or business on the date of amalgamation as that of the amalgamating company from which the unabsorbed capital allowance, donation or loss was transferred. |
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| (25) Any deduction referred to in subsection (23) may only be made against the income of the amalgamated company from the same trade or business as that of the amalgamating company immediately before the amalgamation. |
| Amalgamating company as qualifying person under section 34A |
(26) Where any of the amalgamating companies is a qualifying person to which section 34A applies —| (a) | the amalgamated company is deemed to be a qualifying person for the purpose of section 34A, and section 34A has effect on the amalgamated company; and | | (b) | the rules on the adjustment on change of basis of computing profits of financial instruments set out in regulations made under section 34A have effect on any amalgamating company which before the amalgamation is not a qualifying person to which section 34A applies, and any positive or negative adjustment which is not of a capital nature as a result of the application of such rules is to be assessed on or allowed to the amalgamated company. |
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| Amalgamated company as qualifying company under section 43(6C) |
(27) Where all the amalgamating companies cease to exist on the date of amalgamation, and the amalgamated company is a qualifying company for the purpose of section 43(6C) in any year of assessment, then, for that year of assessment —| (a) | in a case where the date of amalgamation does not fall within either of the basis periods of the first 2 years of assessment of any of the amalgamating companies, section 43(6) rather than section 43(6C) applies to the amalgamated company; and | | (b) | in a case where the date of amalgamation falls within either of the basis periods of the first 2 years of assessment of any of the amalgamating companies, section 43(6C) applies to the amalgamated company if, and only if, the firstmentioned year of assessment falls within such period as may be prescribed by the Minister, and if it does not, then section 43(6) applies to the amalgamated company. [45/2018] |
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| (28) The Minister may, for different descriptions of amalgamations or companies, prescribe different periods for the purposes of subsection (27)(b). |
| Rights and obligations of amalgamated company |
| (29) Where any amalgamating company ceases to exist on the date of amalgamation, the amalgamated company must comply with all obligations, meet all liabilities, and is entitled to all rights, powers and privileges, of the amalgamating company under this Act with respect to the year of assessment relating to the basis period in which the amalgamation occurs and all preceding years of assessment as if the amalgamated company is the amalgamating company. |
(30) The Minister may by regulations provide —| (a) | for the deduction of expenses, allowances, losses, donations and any other deductions otherwise than in accordance with this Act; | | (b) | the manner and extent to which expenses, allowances, losses, donations and any other deductions may be allowed under this Act; | | (c) | the manner and extent to which any qualifying deduction may be allowed under section 37B or 37D; | | (d) | the rate of exchange to be used for the purpose of section 62B; | | (e) | for the modification and exception to any prescribed section of this Act or the Economic Expansion Incentives (Relief from Income Tax) Act 1967 as it applies to an amalgamated company and an amalgamating company; and | | (f) | generally for giving full effect to or for carrying out the purposes of this section. |
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| Transfer of businesses by insurer |
34CA.—(1) This section applies to a case where —| (a) | a licensed insurer that is a company incorporated in Singapore (called in this section the transferor) transfers the whole of its insurance business along with all businesses ancillary to it if any (collectively called in this section the insurance business), to another company incorporated in Singapore (called in this section the transferee) under Division 1 of Part 3AA of the Insurance Act 1966, and the scheme for the transfer under section 117 of that Act takes effect on a single date (called in this section date A) that is on or after 1 November 2021; | | (b) | the conditions for the application of this section to the transfer in paragraph (a) as set out in subsection (3) are satisfied; | | (c) | the transferor also transfers all of its other trades and businesses (each called in this section a non‑insurance business), if any, to the transferee, and the transfer of every non‑insurance business takes effect on a single date (called in this section date B) that is no earlier than 12 months before date A and no later than 12 months after date A; | | (d) | the transferee has obtained approval under subsection (4) to the application of this section to the transfer of every non‑insurance business in paragraph (c); | | (e) | the conditions of the approval in subsection (5) are satisfied; and | | (f) | the transferee makes an election under subsection (6) for the application of this section to the transfer of those businesses. |
(2) In this section —“effective date”, in relation to a transferred business, means —| (a) | where the transferred business is the insurance business — date A; and | | (b) | where the transferred business is any non-insurance business — date B; |
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| “first 2 years of assessment”, in relation to a transferor, means the year of assessment relating to the basis period during which the transferor is incorporated and the year of assessment immediately following that year of assessment; |
“FRS 38”, “FRS 103”, “SFRS(I) 1-38” and “SFRS(I) 3” mean the financial reporting standards known respectively as —| (a) | Financial Reporting Standard 38 (Intangible Assets); | | (b) | Financial Reporting Standard 103 (Business Combinations); | | (c) | Singapore Financial Reporting Standard (International) 1-38 (Intangible Assets); and | | (d) | Singapore Financial Reporting Standard (International) 3 (Business Combinations), |
| that are made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time; |
[Act 36 of 2022 wef 01/04/2023] |
| “licensed insurer” has the meaning given by section 2 of the Insurance Act 1966; |
| “transferred business” means the insurance business or any of the non‑insurance businesses, as the case may be. |
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| Conditions for transfer of insurance business |
(3) In subsection (1)(b), the conditions are —| (a) | all the properties, rights and privileges of the insurance business are transferred to and vest in the transferee on date A; | | (b) | all the liabilities and obligations of the insurance business are transferred to and become the liabilities and obligations of the transferee on date A; | | (c) | the transferor permanently ceases to carry on the insurance business on date A; | | (d) | the transferor is wound up or dissolved before the prescribed date; and | | (e) | such other conditions as may be prescribed by regulations under subsection (31). |
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| Approval for transfer of non-insurance business |
| (4) The transferee must, within 90 days from date A or date B (whichever is earlier) or such further period as the Minister or such person as the Minister may appoint may allow, apply to the Minister or person for approval for this section to apply to the transfer of the non‑insurance business or businesses in subsection (1)(c). |
| (5) The Minister or appointed person may give his or her approval subject to such conditions (including conditions subsequent) as he or she considers appropriate. |
| (6) The transferee must, within 90 days from date A or date B (whichever is later) or such further period as the Comptroller may allow, elect for this section to apply to the transfers of businesses in subsection (1). |
| (7) An election under subsection (6) must be made by the transferee by written notice to the Comptroller and is irrevocable. |
(8) From (and including) the effective date, the transferred business is treated as carried on in Singapore by the transferee and —| (a) | subject to subsection (14), any property on revenue account of the transferor relating to the transferred business is treated as property on revenue account of the transferee; and | | (b) | subject to subsection (16), any property on capital account of the transferor relating to the transferred business is treated as property on capital account of the transferee, |
| and the transferee is treated as having acquired the property on the date on which the transferor acquired it for the amount that was incurred by the transferor in respect of that property. |
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(9) Where there is a transfer of property in respect of the transferred business from the transferor to the transferee on the effective date in respect of which allowances or writing-down allowances have been made to the transferor under sections 18C to 21 (other than section 19D), the transferor and the transferee are, subject to section 24(4), considered as having made an election under section 24(3), and section 24(3)(a) to (e) applies with the necessary modifications, whether or not —| (a) | the transferee is a company over which the transferor has control; | | (b) | the transferor is a company over which the transferee has control; or | | (c) | both the transferor and transferee are companies under the control of a common person. |
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(10) In the application of section 24(3)(a) to (e) under subsection (9) —| (a) | a reference in that provision to a buyer is to the transferee; and | | (b) | a reference in that provision to a seller is to the transferor. |
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| (11) Where there is a transfer of a building or structure in respect of the transferred business from the transferor to the transferee on the effective date for which an allowance has been made to the transferor under section 18C, the annual allowances provided under that section continue to be available to the transferee as if the transferee had incurred the qualifying capital expenditure that was incurred in carrying out the approved construction or approved renovation (as the case may be) mentioned in that section. |
| (12) Subsection (11) does not apply unless the building or structure is used before the transfer by the transferor and after the transfer by the transferee, in the production of income chargeable under the provisions of this Act. |
(13) Where —| (a) | there is a transfer of property in respect of the transferred business (being intellectual property rights in respect of which writing-down allowances have been made to the transferor under section 19B) from that transferor to the transferee on the effective date; and | | (b) | before the transfer in the case of that transferor and from any time on or after the transfer in the case of that transferee, the property is used in the production of income chargeable under the provisions of this Act, |
| the following provisions apply but subject to subsection (18): |
| (c) | section 19B(4) and (5) does not apply to the transferor; | | (d) | the writing-down allowances under section 19B continue to be available to the transferee as if no transfer had taken place; | | (e) | the charge under section 19B(4) and (5) is to be made on the transferee on any event occurring on or after the effective date as would have fallen to be made on the transferor if the transferor had continued to own the intellectual property rights and had done all such things and been allowed all such allowances as were done by or allowed to the transferee. |
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| (14) Where there is a transfer of property in respect of the transferred business from the transferor to the transferee, being property on revenue account of the transferor but not on revenue account of the transferee, the consideration for the transfer of the property by the transferor is taken as the amount which it would have realised if the property had been sold in the open market on the effective date. |
| (15) The amount of consideration mentioned in subsection (14) is to be used to compute the gains or profits of the transferred business of the transferor and such gains or profits are chargeable to tax for the year of assessment which relates to the basis period in which the effective date falls. |
| (16) Where there is a transfer of property in respect of the transferred business from the transferor to the transferee, being property not on revenue account of the transferor but on revenue account of the transferee, the consideration for the acquisition of the property by the transferee is taken as the amount which it would have incurred if the property had been purchased in the open market on the effective date or the actual amount paid, whichever is lower. |
| (17) The amount of consideration mentioned in subsection (16) is to be deducted as an expense in computing the gains or profits of the transferred business of the transferee. |
| (18) Where the transferee ceases to carry on the transferred business in Singapore after the effective date but instead carries on that business outside Singapore, then in the case of intellectual property rights transferred pursuant to the transfer of that business and in respect of which subsection (13) applies, the charge under section 19B(4) or (5) (as the case may be) is to be made on the transferee as if the property has been sold on the date of cessation of the transferred business in Singapore; and for the purpose of computing the charge under section 19B(5), the value thereof is the amount which it would have realised if the property had been sold in the open market on the date of cessation of the transferred business in Singapore. |
| (19) Any question arising under subsections (14), (16) and (18) regarding the open market value attributable to property is to be determined by the Comptroller. |
| (20) No deduction under section 19B is allowed to the transferee for any intellectual property rights in respect of the transferred business that are recognised in accordance with FRS 38 and FRS 103, or with SFRS(I) 1‑38 and SFRS(I) 3, as a result of the transfer of the business but which were not in existence prior to the transfer of the business. |
(21) Where the transferee continues to carry on the transferred business and at any time —| (a) | writes off as bad the amount of a debt in respect of the transferred business, or provides impairment loss in respect of such debt, that the transferee acquires from the transferor on the effective date; | | (b) | incurs an expenditure in respect of the transferred business, other than the expenditure to which prescribed sections of this Act apply; or | | (c) | incurs a loss in respect of the transferred business, |
| (d) | is allowed a deduction for the amount of the debt, expenditure or loss (as the case may be) if —| (i) | the transferor would have been allowed the deduction but for the transfer of the business; and | | (ii) | the transferee is not otherwise allowed the deduction; and |
| | (e) | is chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if —| (i) | the transferor would have been chargeable to tax on such amount but for the transfer of the business; and | | (ii) | the transferee is not otherwise chargeable to tax on such amount. |
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(22) Where —| (a) | the transferor has been allowed a deduction in respect of any debt written off as bad, or any impairment loss, in respect of the transferred business; and | | (b) | the transferee continues to carry on the transferred business, |
| the transferee is chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if — |
| (c) | the transferor would have been chargeable to tax on such amount but for the transfer of the business; and | | (d) | the transferee is not otherwise chargeable to tax on such amount. |
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| (23) Where the transferor has any capital allowance, donation or loss attributable or apportioned to the transferred business remaining unabsorbed on the effective date, then sections 23 and 37 apply, with the necessary modifications, as if the transferee is the transferor for the purposes of deducting the unabsorbed capital allowance, donation or loss against the income or the statutory income (as the case may be) of the transferee, subject to the conditions in subsection (24). |
(24) The conditions in subsection (23) are —| (a) | the transferor was carrying on the transferred business until the effective date; and | | (b) | the transferee continues to carry on the transferred business on the effective date. |
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| (25) Any deduction mentioned in subsection (23) may only be made against the income of the transferee from the transferred business. |
(26) For the purpose of bringing into account the profit, loss or expense for the basis period for a year of assessment beginning before 1 January 2023 in respect of any financial instrument that has been transferred by the transferor to the transferee as part of the transfer of a business —| (a) | where the transferor was a qualifying person to which section 34AA applies (called in this subsection a section 34AA qualifying person) for the year of assessment of the basis period in which the effective date falls — the transferee is (unless the transferee was already one) deemed to be a section 34AA qualifying person for that year of assessment, and section 34AA has effect on the transferee from (and including) the effective date; | | (b) | where the transferor was not a section 34AA qualifying person for the year of assessment of the basis period in which the effective date falls, but the transferee was a section 34AA qualifying person for that year of assessment — the regulations under section 34AA that provide for the transition of a person to the tax treatment under section 34AA have effect on the transferor for that year of assessment as if the transferor and transferee were a single section 34AA qualifying person, and any positive or negative adjustment which is not of a capital nature as a result of the application of such regulations is to be assessed on or allowed to the transferee; | | (c) | where the transferor was a qualifying person to which section 34A applies (called in this subsection a section 34A qualifying person) for the year of assessment of the basis period in which the effective date falls — the transferee is (unless the transferee was already a section 34A qualifying person, or a section 34AA qualifying person, for that year of assessment) deemed to be a section 34A qualifying person for that year of assessment, and section 34A has effect on the transferee from (and including) the effective date; or | | (d) | where the transferor was neither a section 34A qualifying person, nor a section 34AA qualifying person, for the year of assessment of the basis period in which the effective date falls, but the transferee was a section 34A qualifying person for that year of assessment — the regulations under section 34A that provide for the transition of a person to the tax treatment under section 34A have effect on the transferor for that year of assessment as if the transferor and the transferee were a single section 34A qualifying person, and any positive or negative adjustment which is not of a capital nature as a result of the application of such regulations is to be assessed on or allowed to the transferee. |
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| Transferee as qualifying company under section 43(6C) |
(27) Where the transferee is a qualifying company for the purpose of section 43(6C) in any year of assessment, then, for that year of assessment —| (a) | in a case where the earlier of date A and date B does not fall within either of the basis periods of the first 2 years of assessment of the transferor, section 43(6) rather than section 43(6C) applies to the transferee; and | | (b) | in a case where the earlier of date A and date B falls within either of the basis periods of the first 2 years of assessment of the transferor, section 43(6C) applies to the transferee if, and only if, the firstmentioned year of assessment falls within such period as may be prescribed by the Minister, and if it does not, then section 43(6) applies to the transferee. |
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| (28) The Minister may, for different descriptions of transfers of businesses or companies, prescribe different periods for the purposes of subsection (27)(b). |
| (29) Starting on the effective date for the transferred business, the transferee must comply with all obligations, meet all liabilities, and is entitled to all rights, powers and privileges, of the transferor under this Act in respect of the business with respect to the year of assessment relating to the basis period in which the effective date falls, and all preceding years of assessment as if the transferee is the transferor. |
| Application of section 26(5) and (13) |
| (30) To avoid doubt, section 26(5) and (13) (if applicable) applies in relation to the transfer of the insurance business in subsection (1)(a). |
(31) The Minister may make regulations to —| (a) | provide for the deduction of expenses, allowances, losses, donations and any other deductions otherwise than in accordance with this Act; | | (b) | provide for the manner and extent to which expenses, allowances, losses, donations and any other deductions may be allowed under this Act; | | (c) | provide for the manner and extent to which any qualifying deduction may be allowed under section 37B or 37D; | | (d) | provide for the rate of exchange to be used for the purpose of section 62B; | | (e) | provide for the modification and exception to any prescribed section of this Act or the Economic Expansion Incentives (Relief from Income Tax) Act 1967 as it applies to a transferee and a transferor; | | (f) | provide, in a case where a requirement in subsection (1) is yet to be satisfied, for this section (or any part of it) to nevertheless apply to that case (with or without modification), and for the reversal of any such application, and the amendment of any assessments previously made, if that requirement is not met; and [Act 30 of 2023 wef 30/10/2023] | | (g) | prescribe any matter required or permitted to be prescribed under this section. |
|
| (32) Regulations made under subsection (31) may be made to take effect from (and including) a date no earlier than 1 November 2021. [Act 33 of 2022 wef 01/11/2021] |
|
| Transactions not at arm’s length |
34D.—(1) Subsection (1A) applies where —| (a) | 2 persons are related parties; | | (b) | conditions are made or imposed between them in their commercial or financial relations (called in this section actual commercial or financial relations) which differ from conditions which would be made or imposed if they were not related parties and dealing independently with one another in comparable circumstances (called in this section arm’s length conditions); and | | (c) | had the arm’s length conditions been made or imposed —| (i) | the amount of the income of one of those persons for a year of assessment that accrued in or is derived from Singapore, or is received in Singapore from outside Singapore, would be greater; | | (ii) | the amount of any deduction that may be allowed to one of those persons for a year of assessment would be less; or | | (iii) | the amount of any loss of one of those persons for a year of assessment would be less. [39/2017] |
|
(1A) The Comptroller may make one or more of the following adjustments in that case, as appropriate:| (a) | increase the amount of the income of the person mentioned in subsection (1)(c)(i) for the year of assessment; | | (b) | reduce the amount of the deduction that may be allowed to the person mentioned in subsection (1)(c)(ii) for the year of assessment; | | (c) | reduce the amount of the loss of the person mentioned in subsection (1)(c)(iii) for the year of assessment. [39/2017] |
|
(1B) The identification of the arm’s length conditions in subsection (1)(b) must be carried out —| (a) | on the basis of the actual commercial or financial relations between the 2 persons; and | | (b) | by taking into account both the form and substance of those relations, but disregarding the form of those relations to the extent it is inconsistent with their substance. [39/2017] |
|
(1C) Despite subsection (1B) —| (a) | if persons who were not related parties would in comparable circumstances enter into substantially different commercial or financial relations than the actual commercial or financial relations, then the identification of the arm’s length conditions must be carried out on the basis of the firstmentioned relations; and | | (b) | if persons who were not related parties would in comparable circumstances not enter into commercial or financial relations, then the identification of the arm’s length conditions must be carried out on the basis of the absence of commercial or financial relations. [39/2017] |
|
| (1D) The amount of income that is increased under subsection (1A)(a) is treated as accruing in or derived from Singapore or received in Singapore from outside Singapore, as the case may be. [39/2017] |
| (1E) The amount of loss that is reduced under subsection (1A)(c) is treated as not having been incurred. [39/2017] |
| (2) Where a person carries on business through a permanent establishment, this section applies as if the person and the permanent establishment are 2 separate and distinct persons. |
| (2A) Nothing in this section prevents the applicability of subsection (1) to a case, or the Comptroller’s decision under subsection (1A) on a case, from being questioned in an appeal against an assessment in accordance with Part 18. [39/2017] |
| (3) [Deleted by Act 33 of 2022 wef 04/11/2022] |
|
| Surcharge on transfer pricing adjustments |
34E.—(1) Where the Comptroller, in relation to the year of assessment 2019 or any subsequent year of assessment —| (a) | increases the amount of the income of a person under section 34D(1A)(a); | | (b) | reduces the amount of any deduction allowed to a person under section 34D(1A)(b); or | | (c) | reduces the amount of any loss of a person under section 34D(1A)(c), |
| a surcharge equal to 5% of the amount of the increase or reduction (as the case may be) is recoverable by the Comptroller from the person as a debt due to the Government. |
[39/2017] (2) Despite any objection to or an appeal lodged against an assessment made pursuant to any adjustment under section 34D(1A), the surcharge must be paid —| (a) | within one month after the date a written notice of the surcharge is served in accordance with section 8(1) on the person imposed with the surcharge; and | | (b) | in the manner stated in the written notice. [27/2021] |
|
| (3) The Comptroller may, in the Comptroller’s discretion, and subject to such terms and conditions (including the imposition of interest) as the Comptroller may impose, extend the time within which payment is to be made. [39/2017] |
| (4) Sections 86(1) to (6), 87(1) and (2), 89, 90 and 91 apply to the collection and recovery of a surcharge and any interest imposed under subsection (3), as they apply to the collection and recovery of tax. [39/2017] |
| (5) The Comptroller may, for any good cause, remit wholly or in part any surcharge payable under this section. [39/2017] |
(6) If, upon an objection under section 76 or an appeal under Part 18, an assessment made pursuant to an adjustment under section 34D(1A) is varied or annulled, then the surcharge is correspondingly increased, reduced or annulled (as the case may be), and —| (a) | if the surcharge is increased, subsections (1) to (5) apply to the increased amount of the surcharge as they apply to the surcharge; or | | (b) | if the surcharge is reduced or annulled and it has already been paid to the Comptroller, the amount of the reduction or the entire amount (including any interest paid on the amount) must be refunded. [39/2017] |
|
|
| Transfer pricing documentation |
| 34F.—(1) This section applies to the basis period for the year of assessment 2019 and every subsequent year of assessment. [39/2017] (2) This section applies to a company, firm or trust —| (a) | if the gross revenue of the company, firm or trust derived from its trade or business for the basis period concerned is more than $10 million; or | | (b) | if documentation under subsection (3) is required to be prepared for a transaction undertaken by the company, the firm, or the trustee of the trust on its behalf, in the basis period immediately before the basis period concerned. [39/2017] |
|
(3) Unless exempt by rules made under section 7, each of the following, namely:| (a) | the company; | | (b) | the person making a return of the income of the firm; | | (c) | the trustee of the trust, |
| must prepare documentation (called in this section transfer pricing documentation) that complies with subsection (5) for each transaction undertaken by the company, the firm or the trustee on behalf of the trust (as the case may be), with a related party in the basis period concerned. |
[39/2017] |
| (4) In subsection (3)(b), the person making a return of the income of a firm is, in the case of a partnership, the person responsible for doing so under section 71. [39/2017] |
(5) The transfer pricing documentation —| (a) | must be prepared no later than the time for the making of the return of the income of the company, the firm or the trustee in relation to the trust for the year of assessment; | | (b) | must contain such details as may be prescribed by rules made under section 7 of the commercial or financial relations of the parties as respects the transaction, the conditions made or imposed between them as respects the transaction, as well as an explanation as to whether those conditions are arm’s length conditions within the meaning of section 34D(1)(b); and | | (c) | must comply with all other requirements as to their form and content as may be prescribed by rules made under section 7. [39/2017] |
|
| (6) The person in subsection (3)(a), (b) or (c) must retain in safe custody transfer pricing documentation prepared by the person for each transaction, for a period of at least 5 years from the end of the basis period in which the transaction took place. [39/2017] |
| (7) The Comptroller may, by written notice served on a person in subsection (3)(a), (b) or (c) personally or by registered post, require the person to furnish to the Comptroller a copy of any transfer pricing documentation prepared by the person, and the person must comply with the requirement within 30 days starting from the date the notice is served on the person. [39/2017] |
(8) A person who —| (a) | without reasonable excuse, fails to comply with subsection (3), (6) or (7); or | | (b) | in purported compliance with subsection (7), provides to the Comptroller any documentation that the person knows to be false or misleading in a material particular, |
| shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000. |
[39/2017] |
| (9) The Comptroller may compound any offence under subsection (8). [39/2017] |
| (10) In this section, “firm” includes a partnership. [39/2017] [Act 33 of 2022 wef 04/11/2022] |
|
| Modification of provisions for companies redomiciled in Singapore |
| 34G.—(1) This section applies to a body corporate incorporated outside Singapore that is registered as a company limited by shares under Part 10A of the Companies Act 1967 (called in this section a redomiciled company). [39/2017; 45/2018] (2) In this section —| “FRS 109” and “SFRS(I) 9” have the meanings given by section 34AA(15); |
| “registration” means registration under section 359(1) of the Companies Act 1967; |
| “registration date”, in relation to a redomiciled company, means the date of its registration specified in the notice of transfer of registration issued to it under section 359(3) of the Companies Act 1967. [39/2017; 32/2019] |
|
| Deductions for bad debts and impairment losses for debts |
(3) Despite sections 10(1), 14(1)(d), 34AA(1) and 34AAA(1), where a redomiciled company has any debt owed to it in respect of a trade or business outside Singapore, that was incurred before its registration date and, at any time on or after that date, the debt is written off as bad or impairment loss is provided for that debt —| (a) | no deduction is allowed for the debt or any provision made for it; and | | (b) | any amount recovered from the debt, or any reversal of the impairment loss, is not chargeable to tax. [39/2017; 45/2018] [Act 33 of 2022 wef 04/11/2022] |
|
| Deductions for impairment losses |
| (4) Despite sections 10(1), 34AA(1) and 34AAA(1), where a redomiciled company incurred before its registration date any impairment loss from any financial asset on revenue account acquired for the purpose of any trade or business outside Singapore, any amount of the loss that is reversed after that date is not chargeable to tax. [39/2017; 45/2018] [Act 33 of 2022 wef 04/11/2022] |
(5) Where a redomiciled company incurs on or after its registration date any impairment loss, in the course of carrying on a trade or business in Singapore, from any financial asset on revenue account that was acquired by the company for the purpose of any trade or business outside Singapore before that date —| (a) | the company is allowed a deduction for that loss to the extent that it becomes credit‑impaired within the meaning of FRS 109 or SFRS(I) 9, as the case may be; and | | (b) | any amount of that loss that is subsequently reversed is chargeable to tax to the extent of the deduction allowed under paragraph (a). [39/2017; 45/2018; 32/2019] |
|
| (6) Subsections (4) and (5) do not apply to an impairment loss from a debt to which subsection (3) applies. [39/2017] |
| (7) No deduction is allowed under section 14 for any expense incurred by a redomiciled company before its registration date for the purpose of any trade or business outside Singapore and for which it has been allowed or given any deduction or relief under any law of a country outside Singapore that levies tax of a similar character to income tax (by whatever name called). [39/2017; 45/2018] |
| Deductions for trading stocks |
(8) For the purposes of determining the amount of deduction to be allowed to a redomiciled company under any provision of this Act for any trading stock that it acquired before its registration date for the purpose of any trade or business outside Singapore, the value of the trading stock is the lower of the following:| (a) | the cost of the trading stock to the company; | | (b) | the net realisable value of the trading stock on that date. [39/2017; 45/2018] |
|
| Deductions under sections 14A, 14C, 14EA, 14N, 14P and 14R |
(9) Despite anything in sections 14A, 14C, 14EA, 14N, 14P and 14R, a redomiciled company that has never, at any time before its registration date, carried on any trade or business in Singapore, may only make a claim for a deduction under any of those sections for any cost, payment or expenditure incurred or made before its registration date, if —| (a) | such cost, payment or expenditure is incurred or made for the purpose of a trade or business in Singapore; and | | (b) | the company has not carried on the same trade or business outside Singapore at any time before its registration date. [45/2018] [Act 30 of 2023 wef 30/10/2023] |
|
| (10) The deduction under subsection (9) may only be allowed for the year of assessment relating to the basis period in which the trade or business is commenced in Singapore. [39/2017] |
| Allowances for machinery or plant under section 19 |
(11) Where a redomiciled company —| (a) | incurred capital expenditure before its registration date to acquire any machinery or plant for the purpose of any trade or business outside Singapore; and | | (b) | uses the machinery or plant for the purposes of a trade or business in Singapore on or after that date, |
| then an initial allowance may be made to the company for that capital expenditure, and an annual allowance may be made to the company for the depreciation by wear and tear of that machinery or plant, in accordance with section 19 as modified under subsection (12). |
[39/2017; 45/2018] |
(12) Section 19 applies in relation to the making of initial and annual allowances to a redomiciled company under subsection (11), and to initial and annual allowances so made, subject to the following modifications:| (a) | the allowances may only be made under that section if the trade or business is carried on in Singapore on or after its registration date; | | (b) | the capital expenditure is treated as having been incurred for the provisioning of the machinery or equipment for that trade or business; | | (c) | except as provided under paragraph (d), the allowances under that section may only be made in respect of the lower of the following:| (i) | the net book value of the machinery or plant as of the registration date; | | (ii) | the market value of the machinery or plant as of that date, |
| and that lower amount is treated as the capital expenditure incurred in acquiring that machinery or plant, and the original cost of the machinery or plant; |
| | (d) | for the purposes of making the initial allowance under section 19(1) to the company for any machinery or plant that is acquired under a hire‑purchase agreement, the reference in that provision to the capital expenditure is a reference to an amount computed by the formula  where —| (i) | A is —| (A) | in the first year of claim for that allowance, the sum of all deposits and instalment payments (excluding finance charges) made up to the end of the basis period in which the date of commencement of the trade or business falls; and | | (B) | in each subsequent year of claim for that allowance, the sum of all instalment payments (excluding finance charges) made in the basis period to which the claim relates; |
| | (ii) | B is the sum of all deposits and instalment payments (excluding any finance charges) under the hire‑purchase agreement; and | | (iii) | C is the lower amount of the machinery or plant mentioned in paragraph (c); |
| | (e) | for the purposes of making the initial allowance to the company, the capital expenditure is treated as having been incurred by the company on the first day on which it carries on that trade or business; | | (f) | subsections (1B), (2)(b), (3), (4), (5) and (5B) of section 19 do not apply; | | (g) | such other modifications as may be prescribed. [39/2017] |
|
| (13) Except as provided under subsection (11), no allowance may be made under section 19 to a redomiciled company to which subsection (11)(a) and (b) applies, in relation to any capital expenditure mentioned in subsection (11)(a). [39/2017] |
| Allowances for machinery, plant, etc., under section 19A |
(14) Where a redomiciled company —| (a) | incurred capital expenditure before its registration date to acquire any item mentioned in section 19A(1), (2), (3), (4), (5), (6), (7) or (8) or develop a website mentioned in section 19A(10), for the purpose of any trade or business outside Singapore; and | | (b) | uses such item or website for the purposes of a trade or business in Singapore on or after that date, |
| then an allowance may be made to the company, in lieu of the allowances under section 19 (as applied by subsection (11)), for the capital expenditure under section 19A(1), (2), (3), (4), (5), (6), (7), (8) or (10) (whichever is applicable), as modified under subsection (15). |
[39/2017; 45/2018] |
(15) Section 19A applies in relation to the making of an allowance under subsection (14), and to any allowance so made, subject to the following modifications:| (a) | the allowance may only be made under that section if the trade or business is carried on in Singapore on or after the registration date; | | (b) | the capital expenditure is treated as having been incurred for the provision of the item or website for that trade or business; | | (c) | the allowance may only be made in respect of the lower of the following:| (i) | the net book value of the item or website as of the registration date; | | (ii) | the market value of the item or website as of that date, |
| and that lower amount is treated as the capital expenditure incurred on the provision of the item or website for the trade or business, and the original cost of the item in section 19A(10C) (if applicable); |
| | (d) | subsections (1B), (1C), (1D), (1E), (1F), (1G), (2A) to (2K), (9), (9A), (13A) and (16) to (18) of section 19A do not apply; | | (e) | such other modifications as may be prescribed. [39/2017; 32/2019; 41/2020] |
|
| (16) Except as provided under subsection (14), no allowance may be made under section 19A to a redomiciled company to which subsection (14)(a) and (b) applies, in relation to any capital expenditure mentioned in subsection (14)(a). [39/2017] |
| Writing‑down allowances for intellectual property rights under section 19B |
(17) Where a redomiciled company —| (a) | incurred capital expenditure before its registration date to acquire any intellectual property rights for the purpose of any trade or business outside Singapore; and | | (b) | uses those rights for the purpose of a trade or business in Singapore on or after that date, |
| then writing‑down allowances may be made to the company for the capital expenditure, in accordance with section 19B as modified by subsection (18). |
[39/2017; 45/2018] |
(18) Section 19B applies in relation to the making of writing‑down allowances to a redomiciled company under subsection (17), and to writing‑down allowances so made, subject to the following modifications:| (a) | the allowances may only be made under that section if the trade or business is carried on in Singapore on or after the registration date; | | (b) | the capital expenditure is treated as having been incurred for the acquisition of those intellectual property rights for use in that trade or business; | | (c) | the allowances may only be made in respect of the lower of the following:| (i) | the acquisition cost of the intellectual property rights less accumulated amortisation and impairment losses as of the registration date; | | (ii) | the open‑market price of the rights as of that date, |
| and that lower amount is treated as the capital expenditure incurred in acquiring those rights; |
| | (d) | subsections (1), (1A), (1AA)(b), (1AC) to (1AH), (1B) to (1BC), (1C), (1D), (1E), (2B) to (2E), (8), (9), (10D) to (10K) and (12) of section 19B do not apply; [Act 30 of 2023 wef 30/10/2023] | | (e) | the election under section 19B(1AB) must be made at the time of lodgment of the company’s return of income for the year of assessment relating to the later of the following:| (i) | the basis period in which the registration date falls; | | (ii) | the basis period in which the date of commencement of the trade or business falls; |
| | (f) | such other modifications as may be prescribed. [39/2017] |
|
| (19) In subsection (18)(c), “open‑market price”, in relation to intellectual property rights, has the meaning given by section 19B(10F), with the reference to the acquisition date of those rights substituted with a reference to the registration date of the company. [39/2017] |
| (20) Except as provided under subsection (17), no writing‑down allowance may be made under section 19B to a redomiciled company to which subsection (17)(a) and (b) applies in relation to any capital expenditure mentioned in subsection (17)(a). [39/2017] |
| Ascertainment of profits of insurers |
(20A) Where —| (a) | a body corporate incorporated outside Singapore that is registered as a redomiciled company carried on insurance business (not being life business) outside Singapore at any time before its registration date; | | (b) | the redomiciled company carries on the same insurance business (not being life business) in Singapore on or after its registration date; and | | (c) | the registration date of the redomiciled company falls within a period for which its gains or profits from that insurance business in Singapore are to be ascertained for the purposes of this Act, |
| then, for the purposes of applying section 26(3) to the period mentioned in paragraph (c), the liabilities of the redomiciled company immediately before the registration date in respect of the common policies, are to be added to the beginning value mentioned in section 26(3)(b). |
[45/2018] |
(20B) If —| (a) | a body corporate incorporated outside Singapore that is registered as a redomiciled company carried on life business outside Singapore at any time before its registration date; | | (b) | the redomiciled company carries on the same life business in Singapore on or after its registration date; and | | (c) | the registration date of the redomiciled company falls within a period for which its gains or profits from that life business in Singapore are to be ascertained for the purposes of this Act, |
| then, for the purposes of applying section 26(6) to the period mentioned in paragraph (c), the liabilities of the redomiciled company immediately before the registration date in respect of the common policies, are to be added to the beginning value mentioned in paragraphs (a)(ii) and (b)(iv) of both definitions of “onshore life insurance surplus”, and paragraphs (a)(ii) and (b)(iv) of both definitions of “offshore life insurance surplus” in section 26(12). |
[45/2018] |
(20C) In subsections (20A) and (20B) —| (a) | “life business” means the business of insuring or reinsuring the liability of a life policy or accident and health policy as defined in the Insurance Act 1966; | | (b) | a redomiciled company carries on the same insurance business (not being life business) or life business in Singapore that it carried on outside Singapore if the policies which it assumes the risks or undertakes the liabilities of, or for which it collects or receives premiums, when carrying on life business or an insurance business (not being life business) in Singapore —| (i) | are policies that are, or are part of; or | | (ii) | include policies that are, or are part of, |
| the policies which it assumed the risks or undertook the liabilities of, or for which it collected or received premiums, when carrying on life business or an insurance business (not being life business) outside Singapore; and |
| | (c) | a reference to common policies is a reference to the policies mentioned in sub‑paragraph (b)(i) or (ii), as the case may be. [45/2018] |
|
| Section 43(6C) inapplicable |
| (21) Section 43(6C) does not apply to a redomiciled company. [39/2017; 45/2018] |
| (22) The Minister may make regulations necessary or convenient to be prescribed for carrying out or giving effect to this section and section 34H, and in particular, make regulations to provide for such transitional, supplementary or consequential matters as the Minister considers necessary or expedient. [39/2017] |
|
| Tax credits for approved redomiciled companies |
34H.—(1) This section applies where —| (a) | an approved redomiciled company has income (called in this section income A) that is chargeable to tax in one or more years of assessment beginning with the year of assessment for the basis period in which its registration date falls; and | | (b) | the company’s place of incorporation levies on the company tax of a similar character to income tax (by whatever name called) on an estimate of income A (called in this section income B). [39/2017] |
| (2) The approved redomiciled company must be allowed, in accordance with subsection (4), a tax credit against tax payable in respect of the part of income A that is derived or received in the basis period for each year of assessment specified by the Minister to the company at the time of its approval (called in this section a specified year of assessment). [39/2017] |
(3) The total amount of tax credits to be allowed to the approved redomiciled company for all of its specified years of assessment is an amount C that is computed by the formula (B ‑ B1) × D, where —| (a) | B is the amount of income B; | | (b) | B1 is the part of income B which is derived wholly from any agreement or arrangement entered into on or after the registration date, as well as any other income prescribed by regulations made under section 34G; and | | (c) | D is the lower of the following:| (i) | the rate by which the part of income A derived or received in the basis period in which its registration date falls is chargeable to tax; | | (ii) | the rate by which income B is chargeable to the tax described in subsection (1)(b). [39/2017] |
|
|
(4) Where, throughout a basis period for a specified year of assessment, the approved redomiciled company —| (a) | is resident in Singapore; and | | (b) | satisfies all of the conditions specified by the Minister to it at the time of its approval, |
| then there is to be allowed, against the amount of tax chargeable on income E, a credit of an amount that is the lower of the following: |
| (c) | the amount of tax; | | (d) | an amount computed by deducting from the amount C, the total amount of tax credits previously allowed under this section against the tax chargeable on the income of the company. [39/2017] |
|
(5) In subsection (4), a company’s income E for a year of assessment is the amount of the part of income A derived or received in the basis period for that year of assessment after deducting the following:| (a) | the expenses and donations allowable under this Act for that year of assessment that are attributable to or apportioned to the part of income A; | | (b) | any capital allowances for that year of assessment attributable to the part of income A whether or not any claim for those allowances has been made; | | (c) | any balance of the expenses, allowances and donations which have not been deducted under this subsection for the purpose of determining income E for any previous year of assessment. [39/2017] |
|
| (6) The balance of any expenses, allowances or donations mentioned in subsection (5) may only be used to determine the company’s income E for a subsequent specified year of assessment, and is not available as a deduction against any other income of the company. [39/2017] |
(7) However, any balance mentioned in subsection (6) that remains —| (a) | after ascertaining the company’s income E for the last of the specified years of assessment; or | | (b) | as of the date of revocation of the approval of the company, |
| may be deducted against any other income of the company for a subsequent year of assessment, or the year of assessment for the basis period in which the approval is revoked or a subsequent basis period (whichever is applicable), in accordance with section 23 or 37, as the case may be. |
[39/2017] |
| (8) Any balance of the amount C after a tax credit has been allowed for the last of the specified years of assessment must be disregarded. [39/2017] |
(9) If, at any time after the registration date, and during a period specified by the Minister to it at the time of its approval, the approved redomiciled company ceases to carry on any trade or business in Singapore, an amount computed using the formula  is recoverable by the Comptroller from the company as a debt due to the Government, where —| (a) | F is the total number of its specified years of assessment or 5, whichever is larger; | | (b) | G is the total number of complete years where the company carried on a trade or business in Singapore; and | | (c) | H is the total amount of tax credits already allowed against the tax chargeable on the income of the company under this section. [39/2017] |
|
(10) If the Comptroller is satisfied that —| (a) | the approved redomiciled company gave to the Comptroller information that is false in any material particular, or omitted any material particular from any information or document given to the Comptroller; and | | (b) | as a result of the false information or omission, an amount of tax credit was allowed against tax chargeable on the company’s income under this section, |
| then an amount equal to the amount of tax credit so allowed is recoverable by the Comptroller from the company as a debt due to the Government. |
[39/2017] |
| (11) The amount recoverable under subsection (9) or (10) must be paid at the place stated in the notice served by the Comptroller on the approved redomiciled company within 30 days after the service of the notice. [39/2017] |
| (12) The Comptroller may, in the Comptroller’s discretion, and subject to such terms and conditions as the Comptroller may impose, extend the time within which payment is to be made. [39/2017] |
| (13) Sections 86(1) to (6), 87(1) and (2), 89, 90 and 91 apply to the collection and recovery by the Comptroller of the amount recoverable under subsection (9) or (10) as they apply to the collection and recovery of tax. [39/2017] |
(14) In this section —| “approved redomiciled company” means a redomiciled company within the meaning of section 34G(1) that is approved by the Minister for the purposes of this section; |
| “place of incorporation”, in relation to an approved redomiciled company, means the jurisdiction where the company was domiciled at the time it applied for registration under Part 10A of the Companies Act 1967; |
| “registration” means registration under section 359(1) of the Companies Act 1967; |
| “registration date”, in relation to an approved redomiciled company, means the date of its registration specified in the notice of transfer of registration issued to it under section 359(3) of the Companies Act 1967. [39/2017] |
|
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| Adjustments arising from adoption of FRS 115 or SFRS(I) 15 |
34I.—(1) This section applies where —| (a) | a person prepares or maintains the person’s financial accounts for any basis period for a year of assessment in accordance with FRS 115 or SFRS(I) 15 for the first time (called in this section the initial year of assessment); | | (b) | as a result of the application of FRS 115 or SFRS(I) 15 (as the case may be), an adjustment has to be made to the amount of revenue in the person’s financial accounts in any previous basis period (called in this section the adjusted revenue amount); and | | (c) | the amount W of the person (or, if the person is a partnership, a partner of the person) for the year of assessment for that previous basis period arrived at using an amount of profit that includes the adjusted revenue amount (called in this section amount A) as the starting point, is different from the amount arrived at using an amount of profit that does not include the adjusted revenue amount (called in this section amount B) as the starting point. [39/2017; 45/2018] |
(1A) In subsection (1)(c), the amount W of a person or partner for a year of assessment is ascertained by the formula X + Y – Z, where —| (a) | X is the chargeable income of the person or partner for that year of assessment; | | (b) | Y is all exempt income of the person or partner for that year of assessment; and | | (c) | Z is the sum of each deduction or allowance for any expenditure, donation or loss, that remains unabsorbed after ascertaining the chargeable income or any exempt income. [45/2018] |
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| (2) Despite any provision of this Act, if amount A exceeds amount B, the excess amount is treated as income of the person or partner (as the case may be) for the initial year of assessment and is subject to one or more tax treatments in accordance with subsection (3). [39/2017] |
(3) For the purposes of subsection (2) —| (a) | if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount is subject to that tax treatment; | | (b) | if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount are subject to the different tax treatments, and the part of the excess amount that is subject to each of those tax treatments is computed by the formula  where —| (i) | D is the sum of —| (A) | the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and | | (B) | the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part; |
| | (ii) | E is the sum of —| (A) | the income amount C of the person or partner for that year of assessment; and | | (B) | the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and |
| | (iii) | F is the excess amount. [39/2017; 45/2018] |
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| (4) Despite any provision of this Act, if amount B exceeds amount A, a deduction of the excess amount must be made against the total income of the person or partner (as the case may be) or one or more parts of it for the initial year of assessment according to subsection (5). [39/2017] |
(5) For the purposes of subsection (4) —| (a) | if the income amount C of the person or partner for the initial year of assessment is subject to a single tax treatment, then the excess amount must be deducted against the income amount C; | | (b) | if different parts of the income amount C of the person or partner for the initial year of assessment are subject to different tax treatments, then different parts of the excess amount must be deducted against the different parts of the income amount C, and the part of the excess amount that must be deducted against each part of the income amount C is computed by the formula  where —| (i) | D is the sum of —| (A) | the part of the income amount C of the person or partner for that year of assessment that is subject to that tax treatment; and | | (B) | the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, that part; |
| | (ii) | E is the sum of —| (A) | the income amount C of the person or partner for that year of assessment; and | | (B) | the deduction allowed or allowance made for each expenditure, donation or loss in ascertaining the chargeable income or any exempt income of the person or partner for that year of assessment, and attributable to the production of, or apportioned to, the income amount C or a part of it; and |
| | (iii) | F is the excess amount. [39/2017; 45/2018] |
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| (5A) To avoid doubt, the deduction or allowance mentioned in subsection (3)(b)(i)(B) or (ii)(B), or subsection (5)(b)(i)(B) or (ii)(B), excludes any deduction or allowance (or any part of any deduction or allowance) that remains unabsorbed after ascertaining the chargeable income or exempt income mentioned in that provision. [45/2018] |
(6) In this section —| (a) | income is subject to a tax treatment if it is —| (i) | subject to tax at one rate of tax; or | | (ii) | exempt from tax; |
| | (b) | a reference to the income amount C of a person or partner for a year of assessment is a reference to the amount of income computed by the formula G + H, where —| (i) | G is the part of the chargeable income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and | | (ii) | H is the part of the exempt income of the person or partner for the year of assessment that is of the type of income governed by FRS 115 or SFRS(I) 15, as the case may be; and |
| | (c) | a reference to deducting an amount against any income that is subject to a tax treatment is —| (i) | if the tax treatment is that mentioned in paragraph (a)(i), allowing that amount as a deduction against the income; or | | (ii) | if the tax treatment is that mentioned in paragraph (a)(ii), reducing the income by that amount. [39/2017; 45/2018] |
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(7) In this section —| “FRS 115” means the financial reporting standard known as Financial Reporting Standard 115 (Revenue from Contracts with Customers) issued by the Accounting Standards Committee under the Accounting Standards Act 2007; [Act 36 of 2022 wef 01/04/2023] |
| “person” has the meaning given by section 2(1), and includes a partnership; |
| “SFRS(I) 15” means the financial reporting standard known as Singapore Financial Reporting Standards (International) 15 (Revenue from Contracts with Customers), issued by the Accounting Standards Committee under the Accounting Standards Act 2007. [39/2017; 45/2018] [Act 36 of 2022 wef 01/04/2023] |
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| Tax treatment arising from adoption of FRS 116 or SFRS(I) 16 |
| 34J.—(1) Where an MSI recipient (called in this section an electing recipient) makes an election in accordance with subsection (10) to adopt the tax treatment under this section, then, despite any other provision of this Act, that tax treatment applies in relation to the electing recipient in accordance with this section. [32/2019] | (2) If, in any applicable period, a sublease by the electing recipient of a sublease asset is recognised by the electing recipient as a finance lease in accordance with FRS 116 or SFRS(I) 16, any income of the electing recipient derived under that sublease in that applicable period is taken as having been derived from a finance lease for the purpose of section 10C. [32/2019] |
| (3) If, in any applicable period, a sublease by the electing recipient of a sublease asset is recognised by the electing recipient as an operating lease in accordance with FRS 116 or SFRS(I) 16, any income of the electing recipient derived under that sublease in that applicable period is taken as not having been derived from a finance lease for the purpose of section 10C. [32/2019] |
| (4) The electing recipient is not entitled to any deduction under Part 5 in a year of assessment for any outgoing or expense incurred during an applicable period in relation to a qualifying asset of which it is a lessee, against any income derived by it from any use of that qualifying asset. [32/2019] |
(5) Where the electing recipient makes an election under subsection (10) at the time of lodgment of the return of income for the year of assessment for the basis period in which 12 December 2018 falls, then —| (a) | for the year of assessment for the basis period in which that date falls — the capital allowances to be made to it under section 19, 19A or 22 for any qualifying asset of which it is a lessee, are to be reduced by an amount computed by the formula| (i) | A is the number of days between 12 December 2018 and the last day of the basis period for that year of assessment (both days inclusive); and | | (ii) | B is the amount of the capital allowances for that year of assessment for that qualifying asset; |
| | (b) | for the year of assessment for the basis period in which that date falls — no allowance may be made to, and no charge may be made on, the electing recipient under section 20 or 21 for any event mentioned in section 20(1) that occurs in the period between 12 December 2018 and the last day of the basis period for that year of assessment (both days inclusive), in relation to any qualifying asset of which it is a lessee; and | | (c) | for any subsequent year of assessment other than the last year of assessment —| (i) | the electing recipient is not entitled to any allowance under section 19, 19A or 22; and | | (ii) | no allowance may be made to, and no charge may be made on, the electing recipient under section 20 or 21 for any event mentioned in section 20(1) that occurs in the basis period for that year of assessment, |
| in relation to any qualifying asset of which it is a lessee. |
[32/2019] |
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(6) Where the electing recipient makes the election under subsection (10) at the time of lodgment of the return of income for the year of assessment for any basis period other than that in which 12 December 2018 falls, then, for every year of assessment beginning with the basis period in which it makes the election and before the last year of assessment —| (a) | the electing recipient is not entitled to any allowance under section 19, 19A or 22; and | | (b) | no allowance may be made to, and no charge may be made on, the electing recipient under section 20 or 21 for any event mentioned in section 20(1) that occurs in the basis period for that year of assessment, |
| in relation to any qualifying asset of which it is a lessee. |
[32/2019] |
(7) For the last year of assessment, the capital allowances under section 19, 19A or 22 for any qualifying asset of which the electing recipient is a lessee, and which was leased for its trade or business before the date it ceases to be an MSI recipient, are to be —| (a) | computed on the residue of the capital expenditure or reducing value of the qualifying asset (as the case may be) after deducting all such allowances (including initial and annual allowances) that have or would (but for subsection (5) or (6)) have been made to the electing recipient for all past years of assessment, even if no such allowance was made; and | | (b) | reduced by an amount computed by the formula| (i) | A is the number of days between the first day of the basis period of the last year of assessment and the day before the day the electing recipient ceases to be an MSI recipient (both days inclusive); and | | (ii) | B is the amount of the capital allowances for the last year of assessment as computed in accordance with paragraph (a). [32/2019] |
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| (8) For the last year of assessment, no allowance may be made to, and no charge may be made on, the electing recipient under section 20 or 21 for any event mentioned in section 20(1) that occurs between the first day of the basis period of that year of assessment and the day before the day it ceases to be an MSI recipient (both days inclusive), in relation to any qualifying asset of which it is a lessee. [32/2019] |
(9) For each subsequent year of assessment after the last year of assessment, the capital allowances under section 19, 19A or 22 for any qualifying asset of which the electing recipient is a lessee, and which was leased for its trade or business before the day it ceases to be an MSI recipient, are to be computed on the residue of the capital expenditure or reducing value of the qualifying asset (as the case may be) after deducting —| (a) | all such allowances (including initial and annual allowances) that have or would (but for subsection (5) or (6)) have been made to the electing recipient for all past years of assessment, even if no such allowance was made; and | | (b) | the total amount of such allowances that would have been made to the electing recipient for the last year of assessment without the reduction under subsection (7)(b). [32/2019] |
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(10) An MSI recipient may make an election to adopt the tax treatment under this section by providing a written notice to the Comptroller of this —| (a) | at the time of lodgment of the return of income for the year of assessment relating to a basis period during which its financial accounts are prepared in accordance with FRS 116 or SFRS(I) 16; or | | (b) | within such further time as the Comptroller may allow. [32/2019] |
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| (11) An election made under subsection (10) is irrevocable. [32/2019] |
(12) If —| (a) | the tax treatment under this section has been applied in relation to a ship that is provisionally registered under the Merchant Shipping Act 1995, and that is operated by an electing recipient that is a shipping enterprise (called in this subsection and subsections (12A) and (13) the provisionally‑registered ship); and | | (b) | the electing recipient subsequently fails to obtain a permanent certificate of registry under that Act in respect of that ship, |
| then the Comptroller must, in relation to every year of assessment for which the tax treatment under this section has already been applied in relation to the provisionally‑registered ship — |
| (c) | make an assessment or additional assessment under section 74 on the electing recipient; or | | (d) | revise an assessment already made and give a refund to the electing recipient for any tax overpaid, |
| as the case may be, as if the tax treatment had not been applied for that year of assessment in relation to both the provisionally‑registered ship and relevant assets. |
[32/2019; 41/2020] |
| (12A) Subsection (12) does not apply in relation to a ship in respect of which the electing recipient derives the income mentioned in section 13A(1), (1B), (1CA), (1CD), (1CE), (1CF), (1CG), (1CH), (1CI), (1CJ), (1CK) or (1CL) (modified by replacing a reference to a Singapore ship with a reference to a provisionally registered ship) on or after 19 February 2020, but not before that date. [41/2020] |
(13) In subsection (12), “relevant assets” means —| (a) | if, at the end of the basis period for the year of assessment mentioned in that subsection, the electing recipient operates only the provisionally‑registered ship and no other Singapore ship, all sublease assets and qualifying assets of the electing recipient; or | | (b) | if, at the end of the basis period for the year of assessment mentioned in that subsection, the electing recipient operates one or more other Singapore ships in addition to the provisionally‑registered ship, any on‑board equipment integral to the operation of the provisionally‑registered ship but no other ship. [32/2019] |
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(14) In this section —“applicable period” means —| (a) | the later of the following:| (i) | the period between 12 December 2018 and the last day of the basis period in which that date falls (both days inclusive); | | (ii) | the basis period in which the electing recipient makes the election under subsection (10); |
| | (b) | each basis period that is subsequent to the period mentioned in paragraph (a) and before the period mentioned in paragraph (c); or | | (c) | the period starting on the first day of the basis period in which the electing recipient ceases to be an MSI recipient, and ending on (and including) the day before the day of such cessation; |
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| “approved container investment enterprise” means an approved container investment enterprise mentioned in section 43P; |
| “approved international shipping enterprise” means an approved international shipping enterprise mentioned in section 13E; |
| “approved shipping investment enterprise” means an approved shipping investment enterprise mentioned in section 13P; |
| “container” has the meaning given by section 43P(7); |
| “FRS 116” means the financial reporting standard issued by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007 and known as Financial Reporting Standard 116 (Leases); [Act 36 of 2022 wef 01/04/2023] |
| “intermodal equipment” has the meaning given by section 43P(7); |
| “last year of assessment” means the year of assessment for the basis period in which the electing recipient ceases to be an MSI recipient; |
| “Maritime Sector Incentive recipient” or “MSI recipient” means a shipping enterprise, an approved international shipping enterprise, an approved shipping investment enterprise, or an approved container investment enterprise; |
“qualifying asset” means —| (a) | in the case of an electing recipient that is a shipping enterprise, any of the following:| (i) | any Singapore ship; | | (ii) | any on‑board equipment integral to the operation of Singapore ships; | | (iii) | any container; | | (iv) | any intermodal equipment or any other equipment integral to the operation of containers; |
| | (b) | in the case of an electing recipient that is an approved international shipping enterprise, any of the following:| (i) | any ship; | | (ii) | any on‑board equipment integral to the operation of ships; | | (iii) | any container; | | (iv) | any intermodal equipment or any other equipment integral to the operation of containers; |
| | (c) | in the case of an electing recipient that is an approved shipping investment enterprise, any of the following:| (i) | any ship; | | (ii) | any on‑board equipment integral to the operation of ships; and |
| | (d) | in the case of an electing recipient that is an approved container investment enterprise, any of the following:| (i) | any container; | | (ii) | any intermodal equipment or any other equipment integral to the operation of containers, |
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| but excludes anything that is used solely in the basis period concerned to derive income that is not income that is subject to exemption or a concessionary rate of tax under section 13A, 13E, 13P or 43P; |
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| “SFRS(I) 16” means the financial reporting standard issued by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007 and known as Singapore Financial Reporting Standard (International) 16 (Leases); [Act 36 of 2022 wef 01/04/2023] |
| “ship” has the meaning given by section 2(1) of the Merchant Shipping Act 1995; |
| “shipping enterprise” means a company that owns or operates one or more Singapore ships; |
“Singapore ship” means —| (a) | a ship in respect of which a permanent certificate of registry has been issued under the Merchant Shipping Act 1995 and whose registry is not closed or deemed to be closed or suspended; or | | (b) | a ship that is provisionally registered under that Act; |
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“sublease asset” means —| (a) | in the case of an electing recipient that is a shipping enterprise, any Singapore ship or container; | | (b) | in the case of an electing recipient that is an approved international shipping enterprise, any ship or container; | | (c) | in the case of an electing recipient that is an approved shipping investment enterprise, any ship; and | | (d) | in the case of an electing recipient that is an approved container investment enterprise, any container or intermodal equipment, |
| but excludes anything that is used solely in the basis period concerned to derive income that is not income that is subject to exemption or a concessionary rate of tax under section 13A, 13E, 13P or 43P. |
[32/2019] |
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