Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill

Bill No. 22/1991

Read the first time on 28th June 1991.

An Act to amend the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 1988 Revised Edition).

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

Short title

1. This Act may be cited as the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 1991.

Amendment of section 10

2. Section 10 of the Economic Expansion Incentives (Relief from Income Tax) Act (referred to in this Act as the principal Act) is amended —

(a)

by deleting subsection (3) and substituting the following subsections:

“(3) Notwithstanding subsection (1), where a pioneer enterprise has incurred or has given a written undertaking to the Minister to incur a fixed capital expenditure of not less than $150 million and —

(a)	more than 50% of the paid-up capital of the pioneer enterprise is held by persons permanently resident in Singapore; and
(b)	such capital expenditure has been approved by the Minister as promoting or enhancing the economic or technological development of Singapore,

the capital expenditure so incurred by the pioneer enterprise within its tax relief period in respect of any asset used for the purposes of its new trade or business shall, subject to such conditions as the Minister may impose, be deemed, for the purposes of sections 16, 17, 18, 19, 19A, 20, 21 and 22 of the Income Tax Act [Cap. 134], to have been incurred on the day immediately following the last day of its tax relief period:

Provided that where the carrying on of a separate trade or business has been permitted under section 8(1), and an industrial building, plant or machinery is used both for the purposes of that trade or business and the trade or business relating to the relevant pioneer product, this subsection shall apply to that building, plant or machinery.

(3A) Where a pioneer enterprise has, before the commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 1991, incurred a fixed capital expenditure of not less than $1,000 million, subsection (3) shall apply to that enterprise in respect of that expenditure notwithstanding that the enterprise has not complied with paragraphs (a) and (b) of that subsection.”;

(b)

by inserting, immediately after the words “subsection (3)” in subsection (4), the words “or (3A)”; and

(c)

by deleting subsection (5) and substituting the following subsection:

“(5) For the purposes of subsections (3) and (3A), “fixed capital expenditure” means capital expenditure in connection with a pioneer product, on factory building (excluding land) in Singapore and on any new plant or new machinery used in Singapore and, subject to the approval of the Minister, on any secondhand plant or secondhand machinery used in Singapore.”.

Amendment of section 19C

3. The principal Act is amended by renumbering section 19C as subsection (1) of that section, and by inserting immediately thereafter the following subsection:

“(2) The Minister may, subject to such terms and conditions as he may impose, extend the tax relief period of a post-pioneer company for such further period or periods as the Minister may determine except that the tax relief period of the company shall not in the aggregate exceed 10 years.”.

New sections 19G and 19H

4. The principal Act is amended by inserting, immediately after section 19F, the following sections:

“Power to give directions

19G. For the purposes of the Income Tax Act [Cap. 134] and this Act, the Comptroller may direct that —

(a)

any sums payable to a post-pioneer company in the tax relief period which might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated as not having been payable in that period but as having been payable on such date, after that period, as the Comptroller thinks fit; and

(b)

any expense incurred by a post-pioneer company within one year after the end of its tax relief period which might reasonably and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred within that year but as having been incurred for the purposes of its qualifying activities and on such date, during its tax relief period, as the Comptroller thinks fit.

Ascertainment of income in respect of qualifying activities

19H.—(1) The qualifying income of a post-pioneer company shall, subject to subsection (2), be ascertained in accordance with the provisions of the Income Tax Act [Cap. 134] after making such adjustments as may be necessary in consequence of any direction given under section 19G.

(2) In determining the qualifying income of the post-pioneer company for any year during its tax relief period —

(a)	the allowances provided for in sections 16, 17, 18, 19, 19A, 20, 21 and 22 of the Income Tax Act shall be taken into account notwithstanding that no claim for such allowances has been made and such allowances shall only be made against the qualifying income;
(b)	where full effect cannot, by reason of an insufficiency of its qualifying income for that year, be given to the allowances referred to in paragraph (a), such allowances shall be made in accordance with section 23 of the Income Tax Act but only against such qualifying income;
(c)	any loss incurred shall be deducted in accordance with section 37(2) of the Income Tax Act [Cap. 134] but only against its qualifying income; and
(d)	the balance of any allowances or loss referred to in paragraphs (a) and (c), respectively, which remains unabsorbed at the end of its tax relief period is available for deduction in accordance with the Income Tax Act against income derived subsequent to that period.

(3) In this section, “qualifying income” means the income of a post-pioneer company in respect of its qualifying activities.

(4) This section shall have effect for the year of assessment 1991 and subsequent years of assessment.”.

Amendment of section 25

5. Section 25 of the principal Act is amended by deleting the words “require at the time when the expansion certificate is issued to that expanding enterprise” in the seventh, eighth and ninth lines of subsection (9) and substituting the word “approve”.

Amendment of section 40

6. Section 40 of the principal Act is amended by deleting the words “require at the time when the export certificate is issued to that export enterprise” in the eighth and ninth lines of subsection (9) and substituting the word “approve”.

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