Income Tax (Concessionary Rate of Tax for Cyber Trading) Regulations

Income Tax Act

(Chapter 134, Section 43O)

Rg 33

G.N. No. S 512/1999

REVISED EDITION 2001

(31st January 2001)

Citation and commencement

1. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Cyber Trading) Regulations and shall have effect for the year of assessment 1999 and subsequent years of assessment.

Definitions

2. In these Regulations —

“approved company” means a company which is approved under section 43O of the Act;

“commerce service” means the provision of any service used or to be used outside Singapore specified in Part I of the Schedule through the Internet by an approved company to —

(a)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(b)	a branch office outside Singapore of a company resident in Singapore,

but excludes such service which is connected to —

(i)	any immovable property located in Singapore; or
(ii)	any online mall;

“income from qualifying electronic commerce transaction” means any of the following income derived by an approved company and specified by the Minister (or such other person as he may appoint) in writing where the transaction from which the income is derived is carried out through the Internet by the approved company in currencies other than Singapore dollars:

(a)

gains, profits, fees or commissions from any physical trading or commerce service;

(b)

fees or commissions from acting as a broker in —

(i)	the provision of any service specified in Part I of the Schedule (excluding any service which is connected to any immovable property located in Singapore or any online mall); or
(ii)	trading of any goods specified in Part II of the Schedule or any immovable property located outside Singapore,

between any of the following persons:

(A)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(B)	a branch office outside Singapore of a company resident in Singapore; or

(c)

royalties or licence fees from granting of licence to a person who is neither a resident of nor a permanent establishment in Singapore for the use or the right to use any computer software,

but excludes any income attributable to any activity carried out in Singapore which adds value to any service or goods specified in the Schedule by any alteration, addition or improvement (including storage, blending, processing and bulk-breaking);

“pay-per-view service” means the viewing of any video, film or broadcast or playing of any music or game through the Internet upon payment of a fee;

“physical trading” means trading in any goods specified in Part II of the Schedule or any immovable property located outside Singapore where the goods or immovable property are purchased by an approved company from and sold to —

(a)	another approved company;
(b)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(c)	a branch office outside Singapore of a company resident in Singapore,

but excludes any transaction in which the goods are purchased for the purposes of consumption or use in Singapore.

Period of concession

3. The Minister (or such other person as he may appoint) may approve any company for the purposes of section 43O of the Act for such period not exceeding 5 years and from such date as he may specify.

Concessionary rate of tax

4.—(1) Subject to this regulation, tax shall be payable at the rate of 10% on the incremental income from qualifying electronic commerce transactions derived by an approved company.

(2) The incremental income shall be the amount of income from qualifying electronic commerce transactions derived by the approved company that exceeds the average corresponding income.

(3) The average corresponding income referred to in paragraph (2) shall be determined by taking one-third of the total of the corresponding income from qualifying electronic commerce transactions for the 3 years immediately preceding the date referred to in regulation 3.

(4) Notwithstanding paragraph (3), the Minister (or such other person as he may appoint) may, if he thinks fit, specify any amount to be the average corresponding income in substitution of the amount determined under that paragraph.

(5) Paragraph (1) shall not apply where any fees, commissions or royalties are borne, directly or indirectly, by a person resident in Singapore or by a permanent establishment in Singapore except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore.

Determination of income chargeable to tax at concessionary rate

5. For the purposes of these Regulations, the Comptroller shall determine —

(a)	the income chargeable to tax of an approved company 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;
(b)	the manner and extent to which any losses arising from the qualifying electronic commerce transactions specified in the regulations may be deducted under section 37(2) of the Act in ascertaining the chargeable income of an approved company; and
(c)	the manner and extent to which income attributable to activities carried out in Singapore which add value to services or goods by any alteration, addition or improvement (including storage, blending, processing and bulk-breaking) should be excluded from the income referred to in regulation 4.

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