Income Tax (Concessionary Rate of Tax for Asian Currency Unit Income) Regulations

Income Tax Act

(CHAPTER 134, Section 43A)

Rg 10

G.N. No. S 254/1988

REVISED EDITION 1993

(1st April 1993)

[16th September 1988]

Citation

1. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Asian Currency Unit Income) Regulations.

Definitions

2. In these Regulations —

“designated investments” means —

(a)	stocks and shares denominated in any foreign currency of companies not incorporated and not resident in Singapore, excluding stocks and shares of companies incorporated in Malaysia which are listed on the Stock Exchange of Singapore or on the Kuala Lumpur Stock Exchange;
(b)	securities, other than stocks and shares, denominated in any foreign currency (including bonds, notes, certificates of deposit, treasury bills) issued by foreign governments, foreign banks outside Singapore and companies not incorporated and not resident in Singapore;
(c)	futures contracts denominated in any foreign currency held in any futures exchange;
(d)	any immovable property situated outside Singapore;
(e)	certificates of deposit, notes and bonds issued by Asian Currency Units in Singapore;
(f)	Asian dollar bonds approved under section 13(1)(v) of the Act;
(g)	deposits in Singapore with banks approved under section 13(6) of the Act;
(h)	foreign currency deposits with financial institutions outside Singapore;
(i)	stocks, shares, bonds and other securities listed on the Stock Exchange of Singapore or on the Kuala Lumpur Stock Exchange and other stocks, shares, bonds and securities issued by companies incorporated and resident in Singapore;
(j)	Singapore Government securities; and
(k)	foreign exchange transactions in currencies other than Singapore dollars carried out in or after the basis period for the year of assessment 1992;

“foreign investor” —

(a)

in relation to an individual, means an individual who is not resident in Singapore and not a citizen of Singapore and who is the beneficial owner of the funds managed by the approved Asian Currency Unit;

(b)

in relation to a company, means a company not resident in Singapore and in the case of —

(i)	a company with not more than 50 shareholders, the whole of its issued capital is beneficially owned, directly or indirectly, by persons who are not citizens of Singapore and not resident in Singapore; and
(ii)	a company with more than 50 shareholders, not more than 95% of its issued capital is beneficially owned, directly or indirectly, by persons who are not citizens of Singapore and not resident in Singapore; and

(c)

in relation to a trust fund, means a trust fund where at least 95% of the value of the fund is beneficially held, directly or indirectly, by foreign investors referred to in paragraph (a) or (b) and, unless waived by the Minister or such other person as he may appoint, where —

(i)	the fund is created outside Singapore; and
(ii)	the trustees of the fund are neither citizens of Singapore nor resident in Singapore;

“offshore trade transactions” means trade transactions where —

(a)	neither the buyer nor the seller is a resident of Singapore or a permanent establishment in Singapore;
(b)	the goods are not exported from or imported into Singapore except for transhipment; and
(c)	the transactions are in foreign currencies.

10% tax payable on income of Asian Currency Unit

3. Tax shall be payable at the rate of 10% on the income of the Asian Currency Unit of a financial institution derived by it from the following activities:

(a)

loans in foreign currencies, other than bonds and debentures specified in paragraph (e), 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 except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore;

(b)

opening, advising or confirming of letters of credit relating to offshore trade transactions;

(c)

financing or re-financing of offshore trade transactions with or without letters of credit;

(d)

transactions with banks or branch offices outside Singapore or with other Asian Currency Units in Singapore with regard to any of the following:

(i)	loans;
(ii)	placement of funds;
(iii)	bankers’ acceptances on bills relating to offshore trade transactions;
(iv)	bills relating to offshore trade transactions; and
(v)	negotiable certificates of deposit:

Provided that the transactions are in foreign currencies;

(e)

managing, underwriting or selling (as a member of a selling group) the following types of securities denominated in any foreign currency:

(i)	Asian dollar bonds approved by the Minister under section 13(1)(v) of the Act;
(ii)	Asian dollar bonds and other bonds and debentures where the interest on such bonds and debentures is not 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; and
(iii)	fixed or floating rate notes and fixed or floating rate negotiable certificates of deposit issued by banks;

(f)

transacting, broking and investing in securities specified in paragraph (e);

(g)

providing advisory services relating to financial matters to persons outside Singapore;

(h)

foreign exchange transactions in currencies, other than Singapore dollars, with banks or branch offices or other persons outside Singapore or with other Asian Currency Units in Singapore;

(i)

transactions in gold bullion, gold futures or financial futures, in foreign currencies with —

(i)	an Asian Currency Unit of another financial institution;
(ii)	a member of the Singapore International Monetary Exchange;
(iii)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(iv)	a branch office outside Singapore of a company resident in Singapore;

(j)

providing guarantees, performance bonds, standby letters of credit and services relating to remittances where —

(i)

in the case of a guarantee, performance bond or standby letter of credit, the party on whose behalf as well as the party in whose favour the facility is issued is an Asian Currency Unit of a financial institution, or a person who is neither a resident of nor a permanent establishment in Singapore, or a permanent establishment outside Singapore of a person resident in Singapore in respect of any business carried on outside Singapore through that permanent establishment; and

(ii)

in the case of services relating to remittances, the person for whom as well as the person to whom the remittances are made is an Asian Currency Unit of a financial institution or is a person who is neither a resident of nor a permanent establishment in Singapore;

(k)

services (including services as a broker, as a nominee or as a custodian) on behalf of a person who is neither a resident of nor a permanent establishment in Singapore in connection with transactions relating to —

(i)	stocks, shares, bonds and other securities, denominated in any foreign currency, issued by a company which is not incorporated in Singapore and which is not resident in Singapore;
(ii)	negotiable certificates of deposit denominated in any foreign currency;
(iii)	Asian dollar bonds; or
(iv)	bonds denominated in any foreign currency issued by any foreign government;

(l)

services relating to transactions involving interest rate or currency swaps, in currencies other than Singapore dollars, for or with —

(i)	an Asian Currency Unit of another financial institution;
(ii)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(iii)	a branch office outside Singapore of a company resident in Singapore;

(m)

the sale of stocks, shares, bonds and other securities (other than those specified in paragraph (e)) denominated in foreign currencies, issued by a company which is not incorporated in Singapore and which is not resident in Singapore and bonds denominated in any foreign currency issued by any foreign government —

(i)	a person who is neither a resident of nor a permanent establishment in Singapore;
(ii)	another Asian Currency Unit of financial institution; or
(iii)	an approved securities company;

(n)

subject to regulation 5, managing the funds of a foreign investor —

(i)	after 1st May 1983, for the purpose of any designated investments specified in paragraphs (a) to (h) of the definition of “designated investments”;
(ii)	after 7th March 1986, for the purpose of any designated investments specified in paragraphs (i) and (j) of that definition; and
(iii)	in or after the basis period for the year of assessment 1992, for the purpose of any designated investments specified in paragraph (k) of that definition;

(o)

providing investment advisory services to a foreign investor, in or after the basis period for the year of assessment 1993, in relation to any designated investments;

(p)

services on behalf of a company which is neither incorporated nor resident in Singapore (excluding a permanent establishment in Singapore of such a company) in respect of the arrangement, underwriting, management and placement of securities issued in Singapore by such a company where —

(i)	such securities are denominated in any foreign currency;
(ii)	the placement of such securities is with persons who are neither residents nor permanent establishments in Singapore; and
(iii)	the payment for such services and other expenses in connection with the issue of such securities are not borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore;

(q)

providing trustee or custodian services referred to in regulation 3 of the Income Tax (Concessionary Rate of Tax for Approved Trustee Companies) Regulations 1992 where the payments for such services to the Asian Currency Unit are not borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore;

(r)

providing to any holder of a credit or charge card services in connection with the use of the card where —

(i)	the holder of the card is not resident in Singapore;
(ii)	the billing for the transactions for which the card was used is denominated in any foreign currency;
(iii)	the card is used outside Singapore for the purpose of making payments to a person outside Singapore who is neither resident in Singapore nor a permanent establishment in Singapore; and
(iv)	the payments for such services to the Asian Currency Unit are not 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.

Application

4.—(1) Regulation 3(g), (j) and (l) shall not apply where the payments for the services are borne, directly or indirectly —

(a)	by a person resident in Singapore (excluding for the purposes of regulation 3(j) and (l) an Asian Currency Unit of a financial institution), except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore; or
(b)	by a permanent establishment in Singapore (excluding for the purposes of regulation 3(j) and (l) an Asian Currency Unit of a financial institution).

(2) Regulation 3(k), (n) or (o) shall not apply where the payments for the services are borne, directly or indirectly, by a person resident in Singapore or by a permanent establishment in Singapore.

[S 513/1992 wef 18/12/1992]

Application of fees and commissions derived by Asian Currency Unit

5.—(1) Regulation 3(n) or (o) shall apply to the fees and commissions derived by an Asian Currency Unit specially approved by the Minister or such person as he may appoint for that purpose; and it shall not apply where a foreign investor, other than an individual, whose funds are managed by an Asian Currency Unit —

(a)	has a permanent establishment in Singapore (other than an approved Asian Currency Unit);
(b)	carries on a business in Singapore;
(c)	beneficially owns more than 20% of the issued capital of any company incorporated in Singapore; or
(d)	has 20% or more of its issued capital beneficially owned, directly or indirectly, by a company which falls within sub-paragraph (a), (b) or (c),

unless approval is granted by the Minister or such person as he may appoint.

(2) An approved Asian Currency Unit shall keep and maintain such records of the particulars of foreign investors as may be required by the Minister for the purposes of regulation 3(n).

Determination of income chargeable to tax

6. For the purposes of regulation 3, the Comptroller shall determine —

(a)	the income chargeable to tax of the Asian Currency Unit of a financial institution having regard to such expenses, capital allowances and donations allowable under the Act as are, in his opinion, to be deducted in ascertaining such income; and
(b)	the manner and extent to which any losses arising from the activities specified in regulation 3 may be deducted under section 37(2) of the Act in ascertaining the chargeable income of a financial institution for the year of assessment 1986 or any subsequent years of assessment.

Operative dates

7.—(1) Regulation 3(a) to (h) shall have effect for the year of assessment 1978 and subsequent years of assessment.

(2) Regulation 3(i) shall have effect for the year of assessment 1985 and subsequent years of assessment.

(3) Regulation 3(j), (k)(i) and (l) shall have effect for the year of assessment 1986 and subsequent years of assessment.

(4) Regulation 3(k)(ii) and (iii) and (m) shall have effect for the year of assessment 1988 and subsequent years of assessment.

(5) Regulations 2(c), 3(k)(iv) and 5(1)(d) shall have effect for the year of assessment 1988 and subsequent years of assessment.

(6) Regulation 3(p), (q) and (r) shall have effect for the year of assessment 1992 and subsequent years of assessment.

[G.N. Nos. S 254/88; S 13/89; S 513/92]

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