2. The Economic Expansion Incentives (Relief from Income Tax) Act is amended by renumbering section 46AA as section 46ZA, and by inserting immediately thereafter the following Part:“PART VID | INVESTMENTS IN NEW TECHNOLOGY COMPANIES |
46ZB. For the purposes of this Part, unless the context otherwise requires —“eligible holding company”, in relation to a technology company, means a company incorporated in Singapore —| (a) | which is resident in Singapore; | | (b) | which holds shares in the technology company; and | | (c) | in respect of which not less than 50% of the paid-up capital is beneficially owned by citizens or permanent residents of Singapore throughout the whole of the qualifying period of the technology company, unless the Minister otherwise decides; |
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| “qualifying period”, in relation to a technology company, means a period of 3 years from the day it commences, for the purposes of the Income Tax Act (Cap. 141), to carry on its relevant trade or business; |
| “relevant trade or business”, in relation to a technology company, means the trade or business to which the certificate, issued to the company under section 46ZC(2), relates; |
| “technology company” means a company approved as a technology company under section 46ZC(2). |
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| Application for and issue of certificate to technology company |
46ZC.—(1) Any company incorporated in Singapore which is desirous of using in Singapore a new technology in relation to a product, process or service may make an application in the prescribed form to the Minister to be approved as a technology company.| (2) Where the Minister is satisfied that the technology, if introduced in Singapore, would promote or enhance the economic or technological development of Singapore, he may approve the company as a technology company and issue a certificate to that company subject to such conditions as he thinks fit. |
| (3) Every certificate issued under this section shall specify a percentage, not exceeding 50%, of such amount of the paid-up capital of the technology company as is held by any eligible holding company for the purpose of determining the deduction under section 46ZD. |
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| Deductions allowable to eligible holding company |
46ZD.—(1) Where a technology company has incurred an overall loss in respect of its relevant trade or business at the end of its qualifying period it may, within 5 years from that date, by notice in writing to the Comptroller elect for the overall loss (less any amount which has been deducted up to the date of the notice) and the amount of any unabsorbed capital allowances (less any amount which has been deducted up to the date of the notice) to be made available to an eligible holding company as a deduction against the statutory income of the eligible holding company.(2) The deduction to be made available to an eligible holding company under subsection (1) shall be an amount to be ascertained by multiplying the overall loss (less any amount which has been deducted up to the date of the notice) or the unabsorbed capital allowances (less any amount which has been deducted up to the date of the notice), as the case may be, by the percentage of the paid-up capital of the technology company held by that eligible holding company throughout the whole of the qualifying period of the technology company:| Provided that the deduction shall not in the aggregate exceed such percentage as may be specified in the certificate issued to the technology company under section 46ZC of the paid-up capital of the technology company held by the eligible holding company (excluding any shares acquired from other shareholders of the technology company) as at the end of such qualifying period. |
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| (3) Notwithstanding subsection (2), where the percentage of the paid-up capital of the technology company held by an eligible holding company is increased at any time during the qualifying period of the technology company, the Minister may, upon the application by the eligible holding company, if he considers it just and reasonable to do so, increase the amount of the deduction available under subsection (2) up to 50% of the paid-up capital of the technology company held by the eligible holding company as at the end of such qualifying period. |
| (4) Where any deduction is made available to an eligible holding company in accordance with this section, any overall loss or unabsorbed capital allowances to the extent of the deduction so made available shall cease to be deductible by the technology company under section 23 or 37 of the Income Tax Act (Cap. 141), and those sections shall apply to the eligible holding company in respect of the deduction made available as if the eligible holding company was carrying on the trade or business in respect of which the overall loss or the unabsorbed capital allowances were made. |
| (5) The overall loss or unabsorbed capital allowances made available to an eligible holding company under this section shall first be deducted against the statutory income of the eligible holding company for the year of assessment immediately following the year in which the notice was given under subsection (1). |
(6) In this section —| “overall loss”, in relation to a technology company, means the amount by which the total of the losses exceed the total of the statutory income arising from its relevant trade or business for the whole of its qualifying period ascertained in accordance with the provisions of the Income Tax Act (Cap. 141) and subject to such regulations as may be prescribed under this Act; |
| “unabsorbed capital allowances”, in relation to a technology company, means the balance of any allowance provided for in sections 16, 17, 18, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act which remain unabsorbed at the end of the qualifying period of the company in respect of capital expenditure incurred for the purpose of its relevant trade or business before the end of the qualifying period. |
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(7) For the purposes of the Income Tax Act and this Part, the Comptroller may direct that —| (a) | any sums payable to a technology company before or after its qualifying period which, but for the provisions of this Part, might reasonably and properly have been expected to be payable to the technology company, in the normal course of business, during its qualifying period shall be treated as having been payable on such date within the qualifying period, as the Comptroller thinks fit; and | | (b) | any expense incurred by a technology company during its qualifying period which, but for the provisions of this Part, might reasonably and properly have been expected to be incurred, in the normal course of business, before or after the qualifying period shall be treated as not having been incurred within the qualifying period but as having been incurred on such date before or after that qualifying period, as the Comptroller thinks fit. |
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| Prohibition of other trade or business |
46ZE.—(1) During its qualifying period, a technology company shall not, without the written approval of the Minister, carry on any trade or business other than its relevant trade or business.| (2) Where the carrying on of a separate trade or business has been approved under subsection (1), separate accounts shall be maintained in respect of that trade or business. |
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| 46ZF. Notwithstanding anything in this Part, where it appears to the Comptroller that any deduction under section 46ZD ought not to have been given to an eligible holding company by reason of any direction under section 46ZD(7) or the revocation under section 48 of a certificate issued to a technology company, the Comptroller may, at any time within 12 years from the date of any such direction or revocation, make such assessment or additional assessment upon the eligible holding company or any of its shareholders as may be necessary in order to recover any tax which should have been payable by the eligible holding company.”. |
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