Income Tax Act - Singapore Statutes Online

Modification of provisions for companies redomiciled in Singapore

34G.—(1) This section applies to a body corporate incorporated outside Singapore —

(a)	that is registered as a company limited by shares under Part XA of the Companies Act (Cap. 50) (called in this section a redomiciled company); and
(b)	[Deleted by Act 45 of 2018 wef 26/10/2017]

Interpretation

(2) In this section —

“FRS 109” and “SFRS(I) 9” have the meanings given to those expressions in section 34AA(15);

[Act 32 of 2019 wef 12/11/2018]

“registration” means registration under section 359(1) of the Companies Act;

“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.

Deductions for bad debts and impairment losses for debts

(3) Despite sections 10(1), 14(1)(d) and 34AA(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. [Act 45 of 2018 wef 26/10/2017]

Deductions for impairment losses

(4) Despite sections 10(1) and 34AA(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.

[Act 45 of 2018 wef 26/10/2017]

(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 [Act 32 of 2019 wef 12/11/2018]
(b)	any amount of that loss that is subsequently reversed is chargeable to tax to the extent of the deduction allowed under paragraph (a). [Act 45 of 2018 wef 26/10/2017]

(6) Subsections (4) and (5) do not apply to an impairment loss from a debt to which subsection (3) applies.

Deductions for expenses

(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).

[Act 45 of 2018 wef 26/10/2017]

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. [Act 45 of 2018 wef 26/10/2017]

(9) Despite anything in sections 14A, 14D, 14Q, 14S and 14U, 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. [Act 45 of 2018 wef 26/10/2017]

(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.

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 [Act 45 of 2018 wef 26/10/2017]
(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).

(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.

(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).

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 [Act 45 of 2018 wef 26/10/2017]
(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).

(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), (2A) to (2K), (9), (9A), (13A), (13B) and (16) to (18) of section 19A do not apply;

(e)

such other modifications as may be prescribed.

(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).

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 [Act 45 of 2018 wef 26/10/2017]
(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).

[Act 45 of 2018 wef 26/10/2017]

(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), (1B) to (1BC), (1C), (1D), (1E), (2B) to (2E), (8), (9), (10D) to (10K) and (12) of section 19B do not apply;

(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.

(19) In subsection (18)(c), “open-market price”, in relation to intellectual property rights, has the meaning given to it in section 19B(10F), with the reference to the acquisition date of those rights substituted with a reference to the registration date of the company.

(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).

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).

[Act 45 of 2018 wef 26/10/2017]

(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).

[Act 45 of 2018 wef 26/10/2017]

(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 (Cap. 142);

(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.

[Act 45 of 2018 wef 26/10/2017]

Section 43(6C) inapplicable

(21) Section 43(6C) does not apply to a redomiciled company.

[Act 45 of 2018 wef 12/11/2018]

Regulations

(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.

[Act 39 of 2017 wef 26/10/2017]

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