Income Tax (Amendment) Bill

Bill No. 8/1977

Read the first time on 27th May 1977.

An Act to amend the Income Tax Act (Chapter 141 of the Revised Edition).

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

Short title

1.—(1) This Act may be cited as the Income Tax (Amendment) Act, 1977.

(2) Sections 3, 6, 7 and 11 of this Act shall have effect for the year of assessment 1977 and subsequent years of assessment.

Amendment of section 2

2. Section 2 of the Income Tax Act (hereinafter in this Act referred to as “the principal Act”) is hereby amended by inserting immediately after the definition of “local forces” appearing therein the following definition: —

“ “permanent establishment” means a fixed place where a business is wholly or partly carried on including —

(a)	a place of management;
(b)	a branch;
(c)	an office;
(d)	a factory;
(e)	a warehouse;
(f)	a workshop;
(g)	a farm or plantation;
(h)	a mine, oil well, quarry or other place of extraction of natural resources;
(i)	a building or work site or a construction, installation or assembly project, and,

without prejudice to the generality of the foregoing, a person shall be deemed to have a permanent establishment in Singapore if that person —

(j)

carries on supervisory activities in connection with a building or work site or a construction, installation or assembly project; or

(k)

has another person acting on that person’s behalf in Singapore who —

(i)	has and habitually exercises an authority to conclude contracts;
(ii)	maintains a stock of goods or merchandise for the purpose of delivery on behalf of that person; or
(iii)	habitually secures orders wholly or almost wholly for that person or for such other enterprises as are controlled by that person;”.

Amendment of section 10

3. Section 10 of the principal Act is hereby amended by inserting immediately after subsection (6) thereof the following subsection: —

“(6A) For the purposes of paragraph (e) of subsection (1) of this section, the income derived by a person resident in Singapore from any pension granted under any written law relating to pensions in Singapore or under such other pensions scheme as the Minister may, by notification in the Gazette, approve shall be deemed to be an amount equal to fifty per cent of the pension.”.

Amendment of section 12

4. Section 12 of the principal Act is hereby amended by deleting subsection (6) thereof and substituting therefor the following subsections: —

“(6) There shall be deemed to be derived from Singapore —

(a)

any interest, commission, fees or any other payments in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which are —

(i)	borne directly or indirectly by a person resident in Singapore or a permanent establishment in Singapore except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore; or
(ii)	deductible against any income accruing in or derived from Singapore; or

(b)

any income derived from loans where the funds provided by such loans are brought into or used in Singapore.

(7) There shall be deemed to be derived from Singapore —

(a)	royalty or other payments in one lump sum or otherwise for the use of or the right to use any movable property;
(b)	any payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information;
(c)	any payment for the management or assistance in the management of any trade, business or profession; or
(d)	rent or other payments under any agreement or arrangement for the use of any movable property,

which are borne directly or indirectly by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore) or which are deductible against any income accruing in or derived from Singapore.”.

Amendment of section 13

5. Section 13 of the principal Act is hereby amended —

(a)

by deleting the words “issued in Singapore” appearing in the second line of paragraph (v) of subsection (1) thereof;

(b)

by deleting subsection (2) thereof and substituting therefor the following: —

“(2) Where the Minister is of the opinion that any payment in the nature of any income referred to in subsection (6) or (7) of section 12 of this Act is made for any purpose which will promote or enhance the economic or technological development of Singapore, he may, by notification in the Gazette, provide that the income shall, subject to such conditions as he may impose, be exempt from tax wholly or in part and either generally or in respect of certain classes of persons; and such income shall as from the date and to the extent specified by the notification be exempt from tax.”; and

(c)

by deleting the definition of “permanent establishment” appearing in subsection (6) thereof.

Amendment of section 39

6. Section 39 of the principal Act is hereby amended by inserting immediately after the word “household” appearing in the second line of paragraph (f) of subsection (2) thereof the words “in Singapore”.

Amendment of section 43A

7. Section 43A of the principal Act is hereby amended by deleting subsection (2) thereof and substituting therefor the following subsections: —

“(2) In subsection (1) of this section,

“off-shore income” means —

(a)	income derived from loans made to persons outside Singapore to be used outside Singapore where the interest on such loans is not borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore; and
(b)	fees, commission or interest received from advising or confirming off-shore letters of credit from transactions in bills drawn on such letters of credit.

(3) For the purpose of paragraph (b) of subsection (2) of this section, an off-shore letter of credit is a letter of credit subject to the following conditions: —

(a)	the letter of credit is opened in currencies other than Singapore dollars;
(b)	neither the buyer nor the seller who is a party to the letter of credit is a resident of Singapore or a permanent establishment in Singapore; and
(c)	the goods covered in the letter of credit are not exported from or imported into Singapore.”.

New section 45A

8. The principal Act is hereby amended by inserting immediately after section 45 thereof the following section: —

“Application of section 45 to royalties, management fees, etc.

45A. The provisions of section 45 of this Act shall apply in relation to the payment of any income referred to in subsection (7) of section 12 of this Act by any person to another person not known to him to be resident in Singapore as those provisions apply to any interest paid by a person to another person not known to him to be resident in Singapore and, for the purpose of such application, any reference in those provisions to interest shall be construed as a reference to the income referred to in subsection (7) of section 12 of this Act.”.

Repeal and re-enactment of section 46

9. Section 46 of the principal Act is hereby repealed and the following substituted therefor: —

“Tax deducted from dividends, interests, etc.

46. Any tax —

(a)	which a person has deducted or is entitled to deduct from any dividend under the provisions of section 44 of this Act or has deducted from any interest or other payment under the provisions of section 45 or 45A of this Act;
(b)	applicable to the share to which any person is entitled in the income of a body of persons or trust,

shall, when such interest or other payment or share is included in the chargeable income of any person, be set off for the purpose of collection against the tax charged on that chargeable income.”.

Amendment of section 49

10. Section 49 of the principal Act is hereby amended —

(a)

by deleting paragraph (b) of subsection (2) thereof and substituting therefor the following: —

“(b)	may provide for exemption, wholly or partly and with or without conditions, from tax in either or both countries and for any income so exempted to be taken into account in determining the effective rate of tax to be applicable to other income;”; and

(b)

by inserting immediately after subsection (2) thereof the following subsection: —

“(2A) In paragraph (b) of subsection (2) of this section, “effective rate of tax” means the rate of tax as ascertained in accordance with the formula

where A

is the tax payable before allowance of credit under any arrangements having effect under this section on B + C computed in accordance with the provisions of this Act;

is the exempt income; and

is the other income.

”.

Amendment of section 50

11. Section 50 of the principal Act is hereby amended by inserting immediately after subsection (10) thereof the following subsection: —

“(11) Nothing in this section shall authorise the reduction of any tax payable on income accruing in or derived from Singapore by virtue of the allowance of any credit under this section.”.

New section 63A

12. The principal Act is hereby amended by inserting immediately after section 63 thereof the following section: —

“Furnishing of estimate where accounting year ends on or before 30th September

63A.—(1) Where the accounting period in respect of any trade, business, profession or vocation ends on or before the 30th day of September in any year, the person carrying on such trade, business, profession or vocation shall, within three months after the end of the accounting period, furnish to the Comptroller an estimate of his chargeable income.

(2) Any person who fails or neglects without reasonable excuse to furnish the estimate of his chargeable income as required under subsection (1) of this section shall be guilty of an offence against this Act.”.

Amendment of section 72A

13. Section 72A of the principal Act is hereby amended by inserting immediately after subsection (3) thereof the following subsection: —

“(3A) In making an assessment under subsection (3) of this section the Comptroller may have regard to the estimate of chargeable income furnished under section 63A of this Act or he may make an assessment according to the best of his judgment where such estimate of chargeable income has not been furnished or has been rejected by him.”.

Amendment of section 80

14. Section 80 of the principal Act is hereby amended by deleting subsection (4) thereof.

Repeal and re-enactment of section 83

15. Section 83 of the principal Act is hereby repealed and the following substituted therefor: —

“Proceedings before Board of Review and High Court

83.—(1) Subject to subsections (2) and (3) of this section, all proceedings before the Board of Review and in appeals to, or in cases stated for the opinion of, the High Court under the provisions of this Part, and in appeals from decisions of the High Court under subsection (5) of section 81 of this Act shall be heard in camera.

(2) Where the Comptroller or the taxpayer applies to the Board or the Court, as the case may be, that the proceedings be heard by way of a hearing open to the public, the Board or the Court may direct that the proceedings be so heard, notwithstanding any objection from the other party to the proceedings.

(3) Where in the opinion of the Board or the Court any proceedings heard in camera ought to be reported, the Board or the Court may publish or authorise the publication of the facts of the case, the arguments and the decision relating to these proceedings without disclosing the name of the taxpayer concerned.”.

Amendment of section 91

16. Section 91 of the principal Act is hereby amended —

(a)

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

“(2A) Any amount deducted pursuant to any direction given by the Comptroller under this section shall be paid by the employer to the Comptroller within ten days after the date of the deduction, and if any such amount is not paid —

(a)	within the said period of ten days, a penalty equal to five per cent of that amount shall be payable by the employer to the Comptroller;
(b)	within one month after the date of the deduction, an additional penalty equal to one per cent of that amount shall be payable by the employer to the Comptroller for each completed month that the amount remains unpaid, but the total additional penalty shall not exceed twelve per cent of the amount outstanding.

(2B) The Comptroller may for any good cause shown remit the whole or any part of the penalty due under subsection (2A) of this section.”.

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