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

Bill No. 7/1998

Read the first time on 14th January 1998.

An Act to amend the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 1996 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 Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 1998.

(2) Section 2(a) shall have effect for the year of assessment 1998 and subsequent years of assessment.

(3) Sections 2(b), (c), (d) and (e), 3 and 4 shall be deemed to have come into operation on 11th July 1997.

Amendment of section 66

2. Section 66 of the Economic Expansion Incentives (Relief from Income Tax) Act (referred to in this Act as the principal Act) is amended —

(a)

by deleting the words “or 43L” in the definition of “concessionary income” in subsection (1) and substituting the words “, 43L or 43M”;

(b)

by deleting the definition of “fixed capital expenditure” in subsection (1) and substituting the following definition:

“ “fixed capital expenditure” means capital expenditure to be incurred on an approved project by a company on the following items that are used for carrying out the project —

(a)	factory building (excluding land) in Singapore and, in relation to any project under section 67(1)(b), (c), (d), (f) or (g), includes a building or structure specially designed for carrying out the project;
(b)	the acquisition of any know-how or patent rights; and
(c)	any new productive equipment (and, subject to the approval of the Minister, any secondhand productive equipment) to be used in Singapore and, in relation to any project under section 67(1)(h), includes any productive equipment to be used outside Singapore as approved under section 67(2A);”;

(c)

by deleting the full-stop at the end of the definition of “research and development” in subsection (1) and substituting a semi-colon, and by inserting immediately thereafter the following definition:

“ “space satellite” means an apparatus placed in orbit relative to the earth for any economic, scientific or technological purpose.”;

(d)

by deleting the words “to be constructed or installed on site” in subsection (2)(b) and substituting the words ``to which paragraph (a) or (c) applies”; and

(e)

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

“(c)	in the case of any productive equipment to be used in relation to a project under section 67(1)(h), the company has received delivery of the equipment.”.

Amendment of section 67

3. Section 67 of the principal Act is amended —

(a)

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

“(h)	for the operation of any space satellite,”; and

(b)

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

“(2A) For the purposes of subsection (2), the Minister may approve any investment allowance in respect of the fixed capital expenditure to be incurred on any productive equipment to be used outside Singapore for any project under subsection (1)(h).”.

Amendment of section 97Q

4. Section 97Q of the principal Act is amended —

(a)

by deleting subsections (4) and (5) and substituting the following subsections:

“(4) Where an amount of dividends exempt from tax under subsection (3) has been received by a shareholder which is a holding company, the amount shall be credited to a designated account to be kept by the holding company for the purposes of this section.

(4A) Where the designated account is in credit at the date on which any dividends are paid by the holding company out of the income which has been credited to the designated account, an amount equal to the dividends or to the credit in that account, whichever is the less, shall be debited to the designated account.

(4B) So much of the amount of any dividends debited to the designated account as is received by a shareholder of the holding company shall, if the Comptroller is satisfied with the entries in the designated account, be exempt from tax in the hands of the shareholder.

(4C) Where an amount of dividends exempt from tax under subsection (4B) has been received on or after 11th July 1997 by a shareholder which is a relevant holding company, any dividends paid by the relevant holding company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of such amount, shall be exempt from tax in the hands of those shareholders.

(4D) Notwithstanding subsections (3), (4B) and (4C), no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder.

(5) The overseas enterprise or the holding company shall deliver to the Comptroller a statement of the account or designated account, as the case may be, made up to any date specified by him, if the Comptroller so requires by written notice.”;

(b)

by deleting the words “subsection (9) applies” in subsection (6)(b) and substituting the words “subsection (4B) applies or by a relevant holding company to which subsection (4C) applies”;

(c)

by deleting the words “to debit its account, kept in accordance with subsection (1),” in the first and second lines of subsection (6)(ii) and substituting the words “or any such shareholders to debit its account or designated account, as the case may be,”; and

(d)

by deleting subsections (8) and (9) and substituting the following subsections:

“(8) Section 44 of the Income Tax Act (Cap. 134) shall not apply to any dividends or part thereof which are exempt from tax under this section.

(9) For the purposes of this section, the Minister or such person as he may appoint may approve as a holding company any company which owns less than 50% beneficial interest in the issued share capital of the company paying the dividends at the time such dividends are received by the company.

(10) Subsections (4) to (8) shall apply, with the necessary modifications, to any dividends received by a relevant holding company where the Comptroller is satisfied that such dividends are paid out of any income exempt from tax under this section.

(11) In this section —

“holding company” means a company which owns not less than 50% beneficial interest in the issued share capital of the overseas enterprise paying the dividends at the time such dividends are received by the company, and includes a company approved under subsection (9);

“relevant holding company” means any holding company of another holding company.”.