Income Tax (Amendment) Act 1993 - Singapore Statutes Online

REPUBLIC OF SINGAPORE

GOVERNMENT GAZETTE

ACTS SUPPLEMENT

Published by Authority

NO. 25]

Friday, September 17

[1993

The following Act was passed by Parliament on 30th August 1993 and assented to by the President on 1st September 1993:—

Income Tax (Amendment) Act 1993

(No. 26 of 1993)

I assent.

WEE KIM WEE

President.

1st September 1993.

Date of Commencement: 13th March 1992

An Act to amend the Income Tax Act (Chapter 134 of the 1992 Revised Edition).

Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:

Short title and commencement

1.—(1) This Act may be cited as the Income Tax (Amendment) Act 1993.

(2) Section 9 shall be deemed to have come into operation on 13th March 1992.

(3) Sections 3(b) and (d), 4, 5(b), 11(a) and (b) and 28(a) shall be deemed to have come into operation on 1st January 1993.

(4) Sections 19(a), 23(c), 26 and 37(b) to (i) shall have effect for the year of assessment 1993 and subsequent years of assessment.

(5) Sections 10, 11(e) and (f), 14, 21, 22, 23(a), (d), (e), (f), (h), (i), (j) and (l), 24 (a) and (c), 25 (a) and (b), 27, 29 (a), 32 (a), 33, 34 and 36 shall have effect for the year of assessment 1994 and subsequent years of assessment.

Amendment of section 2

2. Section 2(1) of the Income Tax Act (referred to in this Act as the principal Act) is amended by inserting, immediately after the definition of “earned income”, the following definition:

“ “employee”, in relation to a company, includes a director of the company and “employer” and other cognate expressions shall be construed accordingly;”.

Amendment of section 10

3. Section 10 of the principal Act is amended —

(a)

by deleting the full-stop at the end of subsection (2)(c)(iii) and substituting a semi-colon;

(b)

by inserting, immediately after paragraph (c) of subsection (2), the following paragraph:

“(d)	any sum standing to the account of any individual in any pension or provident fund or society which the individual is entitled to withdraw upon retirement or which is withdrawn therefrom.”;

(c)

by inserting, immediately after the word “subsection” at the end of subsection (6), the words “or if the annuity is purchased by the employer of the person deriving on or after 1st January 1993 such income in lieu of any pension or other benefit payable during his employment or upon his retirement”; and

(d)

by inserting, immediately after subsection (11), the following subsection:

“(12) For the purposes of subsection (2)(d), the sum standing to the account of any individual in any pension or provident fund or society, other than a pension or provident fund to which section 10C applies, shall be deemed to accrue to the individual on the date he is entitled to the sum upon retirement or on the date he withdraws any sum before his retirement, as the case may be, except that where upon his retirement an individual is entitled to elect under the rules or constitution of the pension or provident fund or society as to the manner and amount of the sum to be withdrawn, only the amount so withdrawn shall be deemed to be income of the individual accruing on the date of withdrawal.”.

Amendment of section 10C

4. Section 10C of the principal Act is amended by deleting subsections (6) and (7) and substituting the following subsection:

“(6) Where in any year from 1st January 1993 contributions have been made by an employer in respect of an employee to any pension or provident fund constituted outside Singapore, the whole of the contributions made to that pension or provident fund shall be deemed to be income accruing to the employee for the year in which the contributions are paid.”.

Amendment of section 13

5. Section 13 (1) of the principal Act is amended —

(a)

by deleting paragraph (h) and substituting the following paragraph:

“(h)

any sum received by way of commutation of pensions granted under any written law relating to pensions in Singapore or, in the case of any other pension scheme, any sum received by way of commutation of pensions by an individual under such a scheme to the extent of such sum as the Comptroller may determine relating to the period of employment of that individual with the employer before 1st January 1993;”;

(b)

by deleting the words “retiring or” in paragraph (i);

(c)

by deleting paragraph (j) and substituting the following paragraphs:

“(j)	sums standing to the account of an individual in the Central Provident Fund or any approved pension or provident fund designated by the Minister under section 39(6)(c) or withdrawn therefrom;
(ja)	sums standing to the account of an individual in an approved pension or provident fund (other than the Central Provident Fund or any approved pension or provident fund designated by the Minister under section 39(6)(c)) to the extent of the sum standing to his account as at 31st December 1992 and of such interest on that sum as the Comptroller may determine for the period 1st January 1993 to the date of his retirement and which are withdrawn only upon or after his retirement in accordance with the rules or constitution of the fund;
(jb)	any retiring gratuity received by an individual from an approved pension or provident fund (other than the Central Provident Fund or any approved pension or provident fund designated by the Minister under section 39(6)(c)) to the extent of such amount of the gratuity as the Comptroller may determine relating to the period of employment of that individual with the employer before 1st January 1993;”;

(d)

by deleting paragraph (x) and substituting the following paragraph:

“(x)

the income derived by a person resident in Singapore from any pension granted under any written law relating to pensions in Singapore, or from any pension paid under such other pensions scheme as may be approved by the Minister by notification in the Gazette to the extent of such amount of the pension as the Comptroller may determine relating to the period of employment of that person with the employer before 1st January 1993;”; and

(e)

by deleting the words “10 years” in paragraph (z) and substituting the words “15 years”.

Amendment of section 13A

6. Section 13A (10) of the principal Act is amended by inserting, immediately after the definition of “income of a shipping enterprise”, the following definition:

“ “operation of Singapore ships” includes the charter of such ships;”.

Amendment of section 13B

7. Section 13B of the principal Act is amended by deleting the words “or 43K” in subsections (1), (2) and (8) (a) and substituting in each case the words “, 43K or 43L”.

Amendment of section 13E

8. Section 13E of the principal Act is amended —

(a)	by deleting the words “any regulations made under section 50A” in paragraph (c) of the definition of “foreign tax” in subsection (10) and substituting the words “section 50A or any regulations made thereunder”;
(b)	by deleting the words “any regulations made under section 50A” in paragraph (c) of the definition of “tax credit” in subsection (10) and substituting the words “section 50A or any regulations made thereunder”; and
(c)	by deleting the words “or 43K” in subsection (11)(b) and substituting the words “, 43K or 43L”.

Amendment of section 13F

9. Section 13F (1) of the principal Act is amended by deleting the full-stop at the end of paragraph (b) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(c)	the carriage of passengers, mails, livestock or goods by any foreign ship to Singapore solely for the purpose of transhipment.”.

New sections 13G and 13H

10. The principal Act is amended by inserting, immediately after section 13F, the following sections:

“Exemption of income of foreign trust

13G.—(1) There shall be exempt from tax such income as the Minister may by regulations prescribe of such foreign trust as specified in those regulations and administered by a trustee company approved under section 43J.

(2) Where any income of a foreign trust is exempt from tax under regulations made under subsection (1) in any year of assessment, the share of such income to which any beneficiary under the trust is entitled to receive for that year of assessment shall also be exempt from tax.

Exemption of income of venture company

13H.—(1) There shall be exempt from tax such income as the Minister may by regulations prescribe of an approved venture company derived by it from making approved investments; and those regulations may provide for the determination of the amount of such income to be exempted and for the deduction of losses otherwise than in accordance with section 37.

(2) The exemption from tax of the income of an approved venture company under regulations made under subsection (1) shall be for such period or periods (referred to in this section as the tax exempt period) not exceeding 10 years in the aggregate as the Minister, or such other person as the Minister may appoint, may specify.

(3) The Comptroller shall determine the manner and extent to which allowances under section 19, 19A, 20, 21 or 22 and any expenses, losses and donations allowable under this Act which are attributable to the income referred to in subsection (1) are to be deducted.

(4) In determining the income of an approved venture company which is exempt from tax under regulations made under subsection (1) for any year of assessment, there shall be deducted therefrom —

(a)	expenses and donations allowable under this Act for that year of assessment which are attributable to that income;
(b)	any loss for that year of assessment arising from the disposal of any approved investments in Singapore or elsewhere;
(c)	any allowances for that year of assessment under section 19, 19A, 20, 21 or 22 attributable to that income notwithstanding that no claim for those allowances has been made; and
(d)	any balance of the expenses, losses and allowances referred to in paragraphs (a), (b) and (c) which have not been deducted in determining that income for any previous year of assessment.

(5) Any expenses, donations, allowances or losses referred to in subsection (4) shall only be deducted against the income of an approved venture company exempt from tax under regulations made under subsection (1) and shall not be available as a deduction against any other income of the company, except that any balance of the expenses, donations, allowances or losses remaining unabsorbed at the end of the tax exempt period of the company shall be available as a deduction against any other income of the company for the year of assessment which relates to the basis period in which the tax exemption ceases and for any subsequent year of assessment in accordance with section 23 or 37, as the case may be.

(6) The Comptroller shall for each year of assessment issue to an approved venture company a statement showing the amount of income exempt from tax under regulations made under subsection (1) and Parts XI and XII (relating to objections and appeals) and any rules made under this Act shall apply, mutatis mutandis, as if such statement were a notice of assessment.

(7) Subject to subsection (8), where any statement issued to an approved venture company under subsection (6) has become final and conclusive, the amount of income shown therein shall not form part of the statutory income of the company for the year of assessment to which the statement relates and shall be exempt from tax.

(8) The Comptroller may, before any such statement has become final and conclusive, treat a specified amount of the income of an approved venture company as exempt from tax pending such statement becoming final and conclusive.

(9) As soon as any amount of the income of an approved venture company has been exempt from tax under regulations made under subsection (1), that amount shall be credited to a special account (referred to in this section as the account) to be kept by the company for the purpose of this section.

(10) Where the account of an approved venture company is in credit at the date on which any dividends are paid by the company out of the amount credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.

(11) So much of the amount of any dividends debited to the account under subsection (10) as is received by a shareholder of an approved venture company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.

(12) Section 44 shall not apply to any dividends or part thereof which are exempt from tax under this section.

(13) Where an amount of dividends exempt from tax under this section has been received from an approved venture company by a shareholder, if that shareholder is a company, any dividends paid by that company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders; and section 44 shall not apply to any such dividend or part thereof.

(14) Notwithstanding subsections (11) and (13), no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder.

(15) An approved venture company shall deliver to the Comptroller a copy of the account made up to any date specified by him whenever called upon to do so by notice in writing.

(16) Notwithstanding anything in this section, where it appears to the Comptroller that —

(a)	any income of an approved venture company which has been exempted from tax; or
(b)	any dividend (including a dividend paid by a company to which subsection (13) applies) which has been exempted from tax in the hands of any shareholder,

ought not to have been so exempted, the Comptroller may at any time within 12 years from the date of the statement referred to in subsection (6) —

(i)	make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to make good any loss of tax; or
(ii)	direct the company to debit its account with such amount as the circumstances may require.

(17) Parts XI and XII (relating to objections and appeals) and any rules made under this Act shall apply, mutatis mutandis, as if an assessment or a direction under subsection (16) were a notice of assessment.

(18) For the purposes of this section —

“approved” means approved by the Minister or such other person as he may appoint;

“investments” means —

(a)	debentures, stocks, shares, bonds, notes or warrants issued by a government or company;
(b)	any right or option in respect of any such debentures, stocks, shares, bonds, notes or warrants; or
(c)	units in any unit trust within the meaning of section 10B;

“venture company” means any company whose business consists wholly or mainly in the making of approved investments and the principal part of whose income is derived therefrom.”.

Amendment of section 14

11. Section 14 of the principal Act is amended —

(a)

by inserting, immediately after the word “society” in the second line of subsection (1)(e), the words “or any pension or provident fund constituted outside Singapore”;

(b)

by inserting, immediately after the words “Provided that” in the proviso to subsection (1)(e), the following words:

“in the case of any contribution to the Central Provident Fund or any approved pension or provident fund designated by the Minister under section 39(6)(c)”;

(c)

by inserting, immediately after the words “1st July 1992” in sub-paragraph (i) (M) of the proviso to subsection (1)(e), the words “and before 1st July 1993”;

(d)

by deleting the comma at the end of sub-paragraph (i) (M) of the proviso to subsection (1)(e) and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraph:

“(N)	commencing on or after 1st July 1993 shall not exceed 18¹/₂%,”; and

(e)

by deleting subsection (2) and substituting the following subsection:

“(2) Notwithstanding subsection (1), payments made by way of compensation for injuries or death, salaries, wages or similar emoluments or death gratuities to an employee (or his legal representative) who is the husband, wife or child of —

(a)	any employer;
(b)	any partner of the firm in which that employee is employed;
(c)	any individual who by himself or with his spouse or child or all of them have the ability to control directly or indirectly the company in which that employee is employed; or
(d)	any individual whose spouse or child or all of them have the ability to control directly or indirectly the company in which that employee is employed,

shall be allowed as deductions only to the extent to which, in the opinion of the Comptroller, they are reasonable in amount having regard to the services performed by that employee.”; and

(f)

by inserting, immediately after subsection (4), the following subsections:

“(5) Notwithstanding subsection (1), medical expenses falling within that subsection incurred by any employer (other than an employer who derives any income from any trade, business, profession or vocation which is wholly or partly exempt from tax or subject to tax at a concessionary rate of tax under this Act (Cap. 86) or the Economic Expansion Incentives (Relief from Income Tax) Act) shall not be allowed as deductions to the extent specified in the following provisions:

(a)

in the case of an employer who incurred medical expenses in the basis period for the year of assessment 1992 amounting to 2% or less of the total remuneration of his employees for that basis period, or in the case of an employer who commences any trade, business, profession or vocation during or after the basis period for the year of assessment 1993, any amount of the medical expenses incurred by such employer in excess of 2% of the total remuneration of his employees in the basis period for the year of assessment 1994 and for any subsequent year of assessment shall not be allowed as deductions; and

(b)

in the case of an employer who incurred medical expenses in the basis period for the year of assessment 1992 exceeding 2% of the total remuneration of his employees for that basis period, any amount of medical expenses incurred by such employer in excess of the relevant amount for any year of assessment shall not be allowed as deductions for that year of assessment.

(6) Where, in the basis period for any year of assessment, any employer derives any income from any trade, business, profession or vocation which is wholly or partly exempt from tax or subject to tax at a concessionary rate of tax under this Act (Cap. 86) or the Economic Expansion Incentives (Relief from Income Tax) Act and incurs medical expenses in excess of —

(a)	2% of the total remuneration of his employees in that basis period, as if he were an employer referred to in subsection (5)(a); or
(b)	the relevant amount for that year of assessment, as if he were an employer referred to in subsection (5)(b),

an amount equal to the excess medical expenses shall be deemed to be income of the employer chargeable to tax at the rate of tax under section 42(1) or 43 (1), as the case may be, for that year of assessment.

(7) The references to medical expenses in subsections (5) and (6) shall be read as references to medical expenses which would but for subsection (5) be allowable as deductions under this Act.

(8) For the purposes of subsections (5) to (7) —

“medical expenses” means expenses incurred in or in connection with the provision of medical treatment and includes —

(a)	expenses incurred in or in connection with the provision of maternity health care, natal care, and preventive and therapeutic treatment;
(b)	expenses incurred in or in connection with the provision of a medical clinic by the employer;
(c)	cash allowance in lieu of medical expenses; and
(d)	expenses incurred in or in connection with the provision of insurance against the cost of medical treatment;

“medical treatment” includes all forms of treatment for, and procedures for diagnosing, any physical or mental ailment, infirmity or defect;

“relevant amount” means —

(a)	in relation to the year of assessment 1994, 4% or the specified percentage of the total remuneration of the employees in the basis period for the year of assessment 1994, whichever is the less;
(b)	in relation to the year of assessment 1995, 3.5% or the specified percentage of the total remuneration of the employees in the basis period for the year of assessment 1995, whichever is the less;
(c)	in relation to the year of assessment 1996, 3% or the specified percentage of the total remuneration of the employees in the basis period for the year of assessment 1996, whichever is the less;
(d)	in relation to the year of assessment 1997, 2.5% or the specified percentage of the total remuneration of the employees in the basis period for the year of assessment 1997, whichever is the less;
(e)	in relation to the year of assessment 1998 and every subsequent year of assessment, 2% of the total remuneration of the employees in the basis period for the year of assessment 1998 or that subsequent year of assessment, as the case may be;

“remuneration” means any wage, salary, leave pay, fee, commission, bonus, gratuity, allowance, other emoluments paid in cash by or on behalf of an employer and contributions to any approved pension or provident fund by any employer which are allowable as deductions under this Act, but does not include any director’s fee, medical expense, cash allowance in lieu of medical expenses and benefit-in-kind;

“specified percentage” means the percentage arrived at by dividing the amount of medical expenses incurred in the basis period for the year of assessment 1992 by the total remuneration of the employees in that basis period.”.

Amendment of section 14B

12. Section 14B of the principal Act is amended —

(a)

by deleting the words “a manufacturer” in the first lines of subsection (1)(a) and (b) and substituting in each case the words “an approved manufacturer”;

(b)

by deleting the word “or” at the end of subsection (1)(b);

(c)

by deleting the words “a company” in the first line of subsection (1)(c) and substituting the words “an approved firm or company”;

(d)

by deleting the comma at the end of paragraph (c) of subsection (1) and substituting a semi-colon, and by inserting immediately thereafter the following paragraphs:

“(d)

on or after 1st April 1993 by an approved firm or company resident or having a permanent establishment in Singapore and carrying on in Singapore the business of providing services in establishing, maintaining or otherwise participating in an approved local or overseas trade fair or exhibition, trade mission or trade promotion activity for the primary purpose of promoting the provision of services overseas; or

(e)

on or after 1st April 1993 by an approved firm or company resident in Singapore and carrying on in Singapore the business of providing services in maintaining an approved overseas trade office established exclusively for the purpose of promoting the provision of services overseas,”;

(e)

by inserting, immediately after subsection (2), the following subsections:

“(2A) In respect of the deduction allowable to a company or a firm for expenses incurred in establishing, maintaining or otherwise participating in an approved local trade fair or exhibition under subsection (1)(d), if the gross revenue of the company or firm in the basis period for any year of assessment from the provision of services to persons not resident in Singapore and having no permanent establishment in Singapore or to permanent establishments outside Singapore of persons resident in Singapore or elsewhere does not exceed 50% of its total gross revenue in that basis period from the provision of services, the amount of deduction to be allowed to the company or firm shall be determined in accordance with the formula

where A

is the amount of expenses incurred;

is the gross revenue in the basis period for the year of assessment from the provision of services to persons not resident in Singapore and having no permanent establishment in Singapore or to permanent establishments outside Singapore of persons resident in Singapore or elsewhere; and

is the total gross revenue in the basis period for the year of assessment from the provision of services.

(2B) The Minister may specify the maximum amount of expenditure (or any item thereof) to be allowed under subsection (1).”; and

(f)

by deleting the word “company” in subsection (3)(d)(v) and substituting the words “firm or company”.

Amendment of section 14C

13. Section 14C of the principal Act is amended —

(a)

by deleting the words “a company” in the ninth line of subsection (1) and substituting the words “an approved firm or company”;

(b)

by deleting the comma immediately after the word “Singapore” in the eleventh line of subsection (1) and substituting the following words:

“; or on or after 1st April 1993 by an approved firm or company resident in Singapore and carrying on in Singapore the business of providing services principally for promoting the provision of services overseas,”;

(c)

by inserting, immediately after the word “information” at the end of paragraph (i) of the definition of “export market development expenditure” in subsection (4), the words “, including any feasibility study”;

(d)

by deleting the word “or” at the end of paragraph (ii) of the definition of “export market development expenditure” in subsection (4); and

(e)

by deleting the full-stop at the end of paragraph (iii) of the definition of “export market development expenditure” in subsection (4) and substituting the word “; or”, and by inserting immediately thereafter the following paragraph:

“(iv)

expenses incurred in the design of the packaging, or in the certification, of goods manufactured in Singapore for export or in the certification of services to be provided overseas where such certification is carried out by an approved person.”.

Amendment of section 14J

14. Section 14J (1) of the principal Act is amended —

(a)

by deleting the word “and” at the end of paragraph (b); and

(b)

by deleting the full-stop at the end of paragraph (c) and substituting the word “; and”, and by inserting immediately thereafter the following paragraph:

“(d)

fees and other benefits paid or granted under or arising out of a contract for financial consultancy services, whether in money or otherwise, to an approved consultant engaged in the research and development of any approved new financial activity, where —

(i)	the contract is for a period of not less than 6 months; and
(ii)	the approved consultant is not absent from Singapore for more than 30 days in the aggregate during the period of the contract.”.

New section 14K

15. The principal Act is amended by inserting, immediately after section 14J, the following section:

“Further or double deduction for overseas investment development expenditure

14K.—(1) Where the Comptroller is satisfied that —

(a)	any investment development expenditure for the carrying out of an approved investment project overseas; or
(b)	any expense for the maintenance of an approved overseas project development office,

has been incurred on or after 1st April 1993 by an approved firm or company resident in Singapore and carrying on business in Singapore, there shall be allowed —

(i)	where such expenditure or expense is allowable as a deduction under section 14, a further deduction of the amount of such expenditure or expense in addition to the deduction allowed under that section; and
(ii)	where such expenditure or expense is not allowable as a deduction under section 14, a deduction equal to twice the amount of such expenditure or expense.

(2) The Minister or such person as he may appoint may —

(a)	specify the maximum amount of investment development expenditure for the carrying out of an approved investment project overseas or expenses for the maintenance of an approved overseas project development office (or any item thereof) to be allowed under subsection (1); and
(b)	impose such conditions as he thinks fit when approving the investment project or the overseas project development office for which the deduction is to be allowed under this section.

(3) No deduction shall be allowed under this section in respect of —

(a)

travelling, accommodation and subsistence expenses or allowances for more than two employees taking part in an approved investment project overseas;

(b)

any expenses for the maintenance of an approved overseas project development office —

(i)	which are incurred for the establishment of that office;
(ii)	by way of remuneration, travelling, accommodation and subsistence expenses or allowances for more than 3 employees of that office;
(iii)	which are specifically excluded as a condition of approval for that office under this section;
(iv)	which are incurred after the end of the first 6 months of the establishment of that office; and
(v)	which are incurred by the approved firm or company having a permanent establishment which has, during the first 6 months of the establishment of that office, income chargeable to tax in the country in which that office is established.

(4) As soon as any amount of deduction is allowed to any company under subsection (1), a sum equal to the amount of the expenditure or expense incurred by the company which qualified for the deduction under subsection (1) shall be credited to an account (referred to in this section as the further deduction account) to be kept by the company for the purposes of this section.

(5) Section 14B(3B) to (3E) shall apply with the necessary modifications to any company to which a deduction is allowed under subsection (1) and, in relation to a deduction allowed to any company under subsection (1) (ii), the references to further deduction in those subsections shall be read as references to a deduction of a sum equal to the amount of the expenditure or expense incurred by the company which qualified for the deduction under subsection (1) (ii).

(6) For the purposes of this section —

“approved” means approved by the Minister or such person as he may appoint;

“investment development expenditure” means expenses directly attributable to the carrying out of —

(a)	any study to identify investment overseas; and
(b)	any feasibility or due diligence study on any approved investment overseas;

“overseas project development office” means any office established for the purpose of identifying, initiating and developing any approved investment overseas.”.

Amendment of section 15

16. Section 15 of the principal Act is amended by deleting the words “or 14I” in subsection (2) and substituting the words “, 14I or 14K”.

New section 19C

17. The principal Act is amended by inserting, immediately after section 19B, the following section:

“Writing-down allowances for approved cost-sharing agreement for research and development activities

19C.—(1) Subject to this section, where during or after the basis period for the year of assessment 1994, a person carrying on a trade or business has incurred expenditure under any approved cost-sharing agreement in respect of research and development activities for the purposes of that trade or business (referred to in this section as the relevant trade or business), writing-down allowances in respect of that expenditure shall be made to him during a writing-down period of 5 years, or such shorter period as may be approved, beginning with the year of assessment relating to the basis period in which that expenditure is incurred, subject to such conditions as may be imposed by the Minister or such person as he may appoint.

(2) The Minister may specify the maximum amount of expenditure in respect of which writing-down allowances are to be made under subsection (1).

(3) No writing-down allowance shall be made under subsection (1) to any person in respect of any payment or contribution paid by him for the right to become a party to any existing approved cost-sharing agreement.

(4) The writing-down allowance to be made to a person under this section for any year of assessment in respect of any expenditure incurred by him shall be the amount of that expenditure allowable under this section divided by 5 or the number of years approved under subsection (1), as the case may be.

(5) Any expenditure incurred by a person under any approved cost-sharing agreement before the commencement of his trade or business shall be treated for the purpose of this section as if it had been incurred by him on the first day he commences that trade or business.

(6) Where a person to whom writing-down allowances have been made under this section —

(a)	sells, assigns or otherwise disposes of any right under any approved cost-sharing agreement to which he is a party;
(b)	sells, assigns or otherwise disposes of the whole or part of any technology or know-how developed from the research and development activities carried out under any approved cost-sharing agreement to which he is a party;
(c)	receives any consideration from any other person for permitting that other person to become a party to any approved cost-sharing agreement to which he is a party; or
(d)	receives any consideration from the disposal of any machinery, plant or building acquired under any approved cost-sharing agreement to which he is a party,

the amount or value of any consideration therefor shall, so far as it is not chargeable to tax as a revenue or income receipt, be treated for all purposes as a trading receipt of the relevant trade or business for the year of assessment which relates to the basis period in which the event in paragraph (a), (b), (c) or (d) occurs.

(7) For the purpose of subsection (6), in relation to any consideration referred to in subsection (6)(d), the amount or value of the consideration to be treated as a trading receipt shall not exceed the amount of expenditure allowable under this section in respect of the machinery, plant or building.

(8) Where no writing-down allowances have been made to any person in respect of expenditure incurred by him by virtue of subsection (2) or in respect of any payment or contribution made by him by virtue of subsection (3), the Minister may for the purposes of subsection (6) exempt such part of the amount or value of the consideration as he thinks fit.

(9) Where a person to whom writing-down allowances have been made under this section in respect of any approved cost-sharing agreement ceases to carry on the relevant trade or business, an allowance equal to the amount of the expenditure incurred under that agreement remaining unallowed shall be made to him in computing his income for the year of assessment which relates to the basis period in which the cessation occurs.

(10) Any event referred to in subsection (6) which occurs after the date on which the relevant trade or business permanently ceases shall be deemed to have occurred immediately before the cessation.

(11) Where a person to whom writing-down allowances have been made under this section is entitled to royalty or other payments in one lump sum or otherwise for the use of or right to use any technology or know-how developed from the research and development activities carried out under any approved cost-sharing agreement, such royalty or payments shall be deemed to be income derived from Singapore for the year of assessment which relates to the basis period in which the person is entitled to the royalty or payments, as the case may be.

(12) In this section —

“approved” means approved by the Minister or such person as he may appoint;

“cost-sharing agreement” means any agreement or arrangement made by two or more persons to share the expenditure of research and development activities to be carried out under the agreement or arrangement.”.

Amendment of section 23

18. Section 23 (1) of the principal Act is amended by inserting, immediately after the word “19B”, the word “, 19C”.

Amendment of section 26

19. Section 26 of the principal Act is amended —

(a)

by deleting the words “and interest” in paragraphs (a) and (b) of the proviso to subsection (2) and substituting in each case the words “, interest and gains or profits realised from the sale of investments”; and

(b)

by deleting paragraphs (c) and (d) of subsection (3B) and substituting the following paragraph:

“(c)

section 37B shall apply with the necessary modifications in relation to the deduction of allowances under section 19, 19A, 20, 21, 22 or 23 or losses under section 37 in respect of such part of the income of the 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 company as is apportioned to the shareholders of the company in accordance with regulations made under section 43C; and for the purpose of such application any reference in section 37B to —

(i)	concessionary income shall be read as a reference to such part of the income of the company as is apportioned to the shareholders of the company in accordance with regulations made under section 43C; and
(ii)	normal income shall be read as a reference to such part of the income of the company as is subject to tax at the rate of tax under section 43(1)(a);”.

Amendment of section 35

20. Section 35 (2A) of the principal Act is amended by deleting the full-stop at the end of paragraph (d) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(e)	derived during the period from 1st January 1992 to 31st December 1992 shall be treated as his statutory income for the year of assessment 1993 and be charged to tax at the rate applicable to him for that year of assessment.”.

Amendment of section 37

21. Section 37 (2) of the principal Act is amended by deleting paragraph (b) and substituting the following paragraph:

“(b)	an amount not exceeding twice the value, both the amount and value to be determined by the Minister, of an approved gift made to an approved museum in the year preceding the year of assessment; and for this purpose “approved” means approved by the Minister or such person as he may appoint;”.

New section 37B

22. The principal Act is amended by inserting, immediately after section 37A, the following section:

“Adjustment of capital allowances and losses between income subject to tax at concessionary and normal rates of tax

37B.—(1) This section shall apply to any company whose income for any year of assessment is subject to tax as concessionary income and normal income.

(2) Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the concessionary income of a company to which this section applies, and there is any chargeable normal income of the company, those unabsorbed allowances or losses shall be deducted against the chargeable normal income in accordance with the following provisions:

(a)

in the case where those unabsorbed allowances or losses do not exceed that chargeable normal income multiplied by the adjustment factor, that chargeable normal income shall be reduced by an amount arrived at by dividing those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and

(b)

in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by multiplying that chargeable normal income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the concessionary income, for the next succeeding year of assessment and any subsequent year of assessment in accordance with section 23 or 37, as the case may be, and that chargeable normal income shall be nil.

(3) Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the normal income of a company to which this section applies, and there is any chargeable concessionary income of the company, those unabsorbed allowances or losses shall be deducted against that chargeable concessionary income in accordance with the following provisions:

(a)

in the case where those unabsorbed allowances or losses do not exceed that chargeable concessionary income divided by the adjustment factor, that chargeable concessionary income shall be reduced by an amount arrived at by multiplying those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and

(b)

in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by dividing that chargeable concessionary income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the normal income, for the next succeeding year of assessment and any subsequent year of assessment in accordance with section 23 or 37, as the case may be, and that chargeable concessionary income shall be nil.

(4) Where a company to which this section applies ceases to derive concessionary income in the basis period for any year of assessment but derives normal income in that basis period, subsection (2) shall apply, mutatis mutandis, to any unabsorbed allowances or losses in respect of the concessionary income of the company for any year of assessment subsequent to that year of assessment.

(5) Where a company to which this section applies ceases to derive normal income in the basis period for any year of assessment but derives concessionary income in that basis period, subsection (3) shall apply, mutatis mutandis, to any unabsorbed allowances or losses in respect of the normal income of the company for any year of assessment subsequent to that year of assessment.

(6) Nothing in this section shall be construed as affecting the application of section 23 or 37 unless otherwise provided in this section.

(7) For the purposes of this section —

“adjustment factor”, in relation to any year of assessment, means the factor ascertained in accordance with the formula

where A

is the rate of tax under section 43(1) (a) for that year of assessment; and

is the concessionary rate of tax for that year of assessment at which the concessionary income is subject to tax;

“allowances” means allowances under section 16, 17, 19, 19A, 19B, 19C, 20, 21, 22 or 23 including unabsorbed allowances which arose in any year of assessment prior to the year of assessment 1994;

“chargeable concessionary income” means concessionary income after deducting expenses, donations, allowances or losses allowable under this Act against the concessionary income;

“chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under this Act against the normal income;

“concessionary income” means income subject to tax at the concessionary rate of tax in accordance with regulations made under section 43A, 43C (in respect of those relating to offshore general insurance business only), 43D, 43E, 43F, 43G, 43H, 43J, 43K or 43L, as the case may be;

“losses” means losses which are deductible under section 37 including unabsorbed losses incurred in respect of any year of assessment prior to the year of assessment 1994;

“normal income” means income subject to tax at the rate of tax under section 43(1)(a);

“unabsorbed allowances or losses in respect of the concessionary income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under this Act against the concessionary income;

“unabsorbed allowances or losses in respect of the normal income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under this Act against the normal income.”.

Amendment of section 39

23. Section 39 of the principal Act is amended —

(a)

by deleting “$2,000” in subsection (1)(a) and substituting “$3,000”;

(b)

by inserting, immediately after the word “income” in subsection (2)(ca)(ii), the following words:

“(other than payment of maintenance or alimony received from that individual under an order of court or deed of separation)”;

(c)

by deleting proviso (i) to subsection (2)(d) and substituting the following proviso:

“(i)	a deduction is allowable under paragraph 1 or 3 of the Fifth Schedule, the deduction shall be increased to $3,500;”;

(d)

by deleting “17¹/₂%” in subsection (2)(ea) and substituting “18%” ;

(e)

by deleting “$12,600” wherever it appears in subsection (2)(ea) and substituting in each case “$12,960”;

(f)

by deleting the words “with him in the same household in Singapore or living in a hospital or nursing home in Singapore if a registered medical practitioner certifies that the hospitalisation or nursing care is necessary,” in subsection (2)(f) and substituting the words “in Singapore”;

(g)

by deleting the word “and” at the end of subsection (2)(f)(iii);

(h)

by deleting sub-paragraph (iv) of subsection (2)(f) and substituting the following sub-paragraphs:

“(iv)	in respect of whom no deduction has been claimed by another person under paragraph (a), (b), (c) or (ca); and
(v)	who was living with him in the same household or in respect of whom a sum of not less than $1,500, or such lower sum as the Comptroller may determine, was incurred in that year by the individual in maintaining the dependant,”;

(i)

by inserting, immediately after the word “dependants” at the end of the proviso to subsection (2)(f), the following words:

“, and where more than one individual claims a deduction in respect of the same dependant, the deduction shall be allowed to such claimant as the individuals may agree or, failing such agreement, to such claimant as determined by the Comptroller whose decision shall be final”;

(j)

by deleting the words “with him in the same household in Singapore or living in a hospital or nursing home in Singapore if a registered medical practitioner certifies that the hospitalisation or nursing care is necessary” in subsection (2)(g) and substituting the words “in Singapore”;

(k)

by deleting the word “and” at the end of subsection (2)(g)(iii); and

(l)

by deleting sub-paragraph (iv) of subsection (2)(g) and substituting the following sub-paragraphs:

“(iv)	in respect of whom no deduction has been claimed by another person under paragraph (a), (b), (c), (ca) or (d); and
(v)	who was living with him in the same household or in respect of whom a sum of not less than $1,500, or such lower sum as the Comptroller may determine, was incurred in that year by the individual in maintaining the dependant,”.

Amendment of section 42

24. Section 42 of the principal Act is amended —

(a)

by deleting “33%” wherever it appears in subsection (2) and substituting in each case “30%”;

(b)

by deleting the words “year of assessment 1987 and subsequent years of assessment” in subsection (3)(b) and substituting the words “years of assessment 1987 to 1993”;

(c)

by deleting “30%” wherever it appears in subsection (5) and substituting in each case “27%”; and

(d)

by deleting the full-stop at the end of paragraph (c) of the proviso to subsection (5) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(d)	for the year of assessment 1993, be read as a reference to 30%.”.

Amendment of section 43

25. Section 43 of the principal Act is amended —

(a)

by deleting “30%” in subsection (1)(a) and (b) and substituting in each case “27%”;

(b)

by deleting “30%” in the first line of subsection (2) and substituting “27%”; and

(c)

by deleting the full-stop at the end of paragraph (c) of subsection (2) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(d)	for the year of assessment 1993, be read as a reference to 30%.”.

Amendment of section 43D

26. Section 43D (1) of the principal Act is amended by inserting, immediately after the word “with” in the third line of paragraph (a), the words “, or derived from any foreign exchange transaction in any currency other than the Singapore dollar with”.

New section 43L

27. The principal Act is amended by inserting, immediately after section 43K, the following section:

“Concessionary rate of tax for art and antique dealers

43L.—(1) Notwithstanding section 43, the Minister may by regulations provide that tax at the rate of 10% or such other concessionary rate shall be levied and paid for each year of assessment upon such income as the Minister may specify of an approved company dealing in works of art, precious objects or antiquities on behalf of any person who is neither a resident of nor a permanent establishment in Singapore through any approved auctioneer in Singapore.

(2) In this section, “approved” means approved by the Minister or such person as he may appoint.”.

Amendment of section 44

28. Section 44 of the principal Act is amended —

(a)

by deleting “30%” in subsection (1) and substituting “27%”;

(b)

by inserting, immediately after subsection (11B), the following subsection:

“(11C) Notwithstanding anything in this Act, where tax on any dividend paid in 1993 has been deducted at the rate of 30% —

(a)	the amount of such dividend received by a shareholder shall be deemed to have been paid without deduction of tax and to be a dividend of such a gross amount as after deduction of tax at the rate of 27% would be equal to the net amount paid; and a sum equal to the difference between such gross amount and the net amount paid shall be deemed to have been deducted from the dividend as tax; and
(b)	the difference between the amount of the tax deducted at 30% from such dividend and the amount deemed to have been so deducted under paragraph (a) shall be added to the balance on the 1st day of the year of assessment 1994 and deemed to be a part thereof.”; and

(c)

by deleting the words “or 43K” in the fifth line of subsection (12)(f)(ii) and substituting the words “, 43K or 43L”.

Amendment of section 45

29. Section 45 of the principal Act is amended —

(a)

by deleting “30%” wherever it appears in subsection (1) and substituting in each case “27%”;

(b)

by deleting the words “7 days” in subsections (3) and (4) and substituting in each case the words “10 days”; and

(c)

by deleting the full-stop at the end of paragraph (d) of subsection (7) and substituting a semi-colon, and by inserting immediately thereafter the following paragraph:

“(e)	at the rate of 30% on every payment made on or after 1st January 1993 which would be assessable on the person receiving the payment for the year of assessment 1993.”.

Amendment of section 46

30. Section 46 of the principal Act is amended by inserting, immediately after subsection (2B), the following subsection:

“(2C) Notwithstanding subsection (1), where the tax on any dividend paid in 1993 has been deducted at the rate of 30%, the tax to be set off under subsection (1) shall be the sum deemed to be the tax deducted from such dividend under section 44(11C).”.

Amendment of section 48

31. Section 48 of the principal Act is amended by inserting, immediately after subsection (5), the following subsection:

“(6) Any person granted relief from tax in Singapore under this section on any income shall not be given any tax credit under section 50A or any regulations made thereunder in respect of that income.”.

Amendment of section 50

32. Section 50 of the principal Act is amended by deleting “33%” wherever it appears in subsection (3) and substituting in each case “30%”.

Repeal and re-enactment of section 50A

33. Section 50A of the principal Act is repealed and the following section substituted therefor:

“Unilateral tax credits

50A.—(1) Notwithstanding that there are no arrangements for the time being in force under section 49 with the government of any territory outside Singapore, tax credit under section 50 shall, subject to this section, be given to any person resident in Singapore for tax payable under the law of that territory in respect of —

(a)	any income derived from such professional, consultancy and other services as the Minister may by regulations prescribe;
(b)	any dividend derived therefrom;
(c)	any income from employment therein; or
(d)	any profit derived from outside Singapore by a branch in that territory of a company resident in Singapore.

(2) The Minister may, in regulations made under subsection (1)(a), specify the territories to which those regulations shall have effect.

(3) Where any dividend in respect of which tax credit is given under subsection (1)(b) is paid by a company which is resident outside Singapore to a person resident in Singapore who owns not less than 25% of the shares of the company paying the dividend, the tax credit shall take into account any tax paid by that company in the country in which it is resident in respect of its income out of which the dividend is paid.

(4) Where under arrangements for the time being in force under section 49 with the government of any territory outside Singapore no provision is made for tax credit in respect of income out of which any dividend is paid by a company resident in that territory, tax credit under section 50 in respect of such income shall be given to any person resident in Singapore who owns not less than 25% of the shares of the company paying the dividend.

(5) Section 50 shall, with the necessary modifications and subject to any regulations made under subsection (1)(a), apply for the purposes of this section as if any territory to which this section and the regulations have effect were a territory with which arrangements have been made under section 49.

(6) Any person granted any tax credit under subsection (1) or any regulations made thereunder on any income shall not be given any tax relief under section 48 or tax credit under section 50 in respect of that income.”.

Amendment of section 51

34. Section 51 of the principal Act is amended by deleting subsections (4) and (5) and substituting the following subsection:

“(4) A married woman living with her husband may elect to be chargeable in her own name on her income, including any profits arising from any property owned by her which is deemed to be owned by her husband under the proviso to section 10(1A); and where she so elects all her income shall be so chargeable.”.

New section 99A

35. The principal Act is amended by inserting, immediately after section 99, the following section:

“Service of summons

99A.—(1) Every summons issued by a court against any person in connection with any offence under this Act or any rules or regulations made thereunder may be served on the person —

(a)

by delivering the summons to the person or to some adult member of his family at his last known place of residence;

(b)

by leaving the summons at his usual or last known place of residence or business in an envelope addressed to the person;

(c)

by sending the summons by registered post addressed to the person at his usual or last known place of residence or business; or

(d)

where the person is a body of persons or a company —

(i)	by delivering the summons to the secretary or other like officer of the body of persons or company at its registered office or principal place of business; or
(ii)	by sending the summons by registered post addressed to the body of persons or company at its registered office or principal place of business.

(2) Any summons sent by registered post to any person in accordance with subsection (1) shall be deemed to be duly served on the person to whom the letter is addressed at the time when the letter would in the ordinary course of post be delivered and in proving service of the summons, it shall be sufficient to prove that the envelope containing the summons was properly addressed, stamped and posted by registered post.”.

Amendment of Second Schedule

36. The Second Schedule to the principal Act is amended by deleting Part A and substituting the following Part:

“Part A

Rates of Income Tax on Chargeable Income of An Individual or A Hindu Joint Family

Chargeable Income

Rate of Tax

For every dollar of the first

5,000

2.5%

For every dollar of the next

2,500

5.0%

For every dollar of the next

2,500

6.0%

For every dollar of the next

5,000

7.0%

For every dollar of the next

5,000

8.0%

For every dollar of the next

5,000

11.0%

For every dollar of the next

10,000

13.0%

For every dollar of the next

15,000

15.0%

For every dollar of the next

25,000

19.0%

For every dollar of the next

25,000

22.0%

For every dollar of the next

50,000

24.0%

For every dollar of the next

50,000

25.0%

For every dollar of the next

200,000

28,0%

For every dollar exceeding

400,000

30.0%

”.

Amendment of Fifth Schedule

37. The Fifth Schedule to the principal Act is amended —

(a)

by inserting, immediately after the word “under” in the last line of paragraph 4(a), the words “paragraph 1 of”;

(b)

by inserting, immediately after the word “child” in paragraph 5, the words “under this Schedule or the proviso to section 39(2)(d)”;

(c)

by inserting, immediately after the word “shall” in the fifth line of paragraph 7 the words “, without prejudice to any deduction allowable under paragraph 1 or 3 or proviso (i) to section 39(2)(d),”;

(d)

by deleting the words “, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $15,000” in the second column of paragraph 7(a), (b), (c) and (e);

(e)

by deleting the words “, in addition to the appropriate deduction allowable under paragraph 1, subject to a maximum of $10,000” in the third column of paragraph 7(a), (b), (c) and (e);

(f)

by deleting the words “, subject to a maximum of $15,000” in the second column of paragraph 7(d);

(g)

by deleting the words “, subject to a maximum of $10,000” in the third column of paragraph 7(d);

(h)

by inserting, immediately after paragraph 7, the following paragraph:

“7A.—(1) The total deductions allowable to all individuals under paragraph 1 or 3, proviso (i) to section 39(2) (d) and paragraph 7 in respect of the same child shall be subject to a maximum of $15,000 if the child is under the age of 12 years on the first day of the year preceding the year of assessment or a maximum of $10,000 if the child is of the age of 12 years or above on the first day of the year preceding the year of assessment.

(2) For the purpose of sub-paragraph (1), any deduction allowable under paragraph 1 or 3 or proviso (i) to section 39(2) (d) shall first be allowed before a deduction, to the extent allowable under sub-paragraph (1), is allowed under paragraph 7.”; and

(i)

by deleting the word “The” in the first line of paragraph 8 and substituting the words “Subject to paragraph 7A, the”.

Remission of tax

38.—(1) There shall be remitted 5% of the tax payable for the year of assessment 1993 by an individual or Hindu joint family resident in Singapore and the amount of such remission shall be determined by the Comptroller.

(2) There shall be remitted the tax payable for the year of assessment 1994 by an individual or Hindu joint family resident in Singapore of an amount not exceeding $700 and the amount of such remission shall be determined by the Comptroller.

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