Income Tax (Income from Syndicated Offshore Credit and Underwriting Facilities) Regulations

Income Tax Act

(Chapter 134, Section 43A)

Rg 4

G.N. No. S 35/1986

REVISED EDITION 2001

(31st May 2001)

[14th February 1986]

Citation

1. These Regulations may be cited as the Income Tax (Income from Syndicated Offshore Credit and Underwriting Facilities) Regulations and shall have effect for the year of assessment 1984 and subsequent years of assessment.

Definitions

2. In these Regulations —

“approved securities company” means a company approved under section 43A(1)(c) of the Act;

“financial institution” means a bank licensed under the Banking Act (Cap. 19) or a merchant bank approved by the Monetary Authority of Singapore;

“specified person”, in relation to any syndicated offshore credit facility —

(a)	means a non-resident person (excluding his 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
(b)	where the agreement for the credit facility is made on or after 1st April 1998, includes a person resident in Singapore (but excluding his permanent establishment outside Singapore) and a permanent establishment in Singapore;

“syndicated guarantee facility” means any syndicated facility whereby any guarantee or letter of credit is made available to any financial institution or any approved securities company where —

(a)	the facility is in currencies other than Singapore dollars;
(b)	the guarantee or letter of credit was issued in favour of an Asian Currency Unit of a financial institution or an approved securities company, as the case may be, for the purpose of providing or participating in a loan in currencies other than Singapore dollars made to a non-resident person (but excluding its permanent establishment in Singapore) and the loan is to be used outside Singapore; and
(c)	no interest in respect of the loan referred to in sub-paragraph (b) is borne, directly or indirectly, by any person resident in Singapore (except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore) or by any permanent establishment in Singapore;

“syndicated offshore credit facility” means —

(a)

any syndicated loan or advance or any facility whereby any fund, guarantee or letter of credit is made available where —

(i)	in the case of an agreement for a facility made before 14th August 1998, the facility is in currencies other than Singapore dollars;
(ii)	in the case of a loan, advance or a facility whereby funds are made available, such loan, advance or facility is to be used outside Singapore;
(iii)	in the case of a guarantee or letter of credit, such guarantee or letter of credit is made available to, and issued in favour of, a non-resident person (but excluding his permanent establishment in Singapore) or a person resident in Singapore in respect of any business carried on outside Singapore through a permanent establishment outside Singapore;
(iv)	in the case of a loan, advance or a facility whereby funds are made available and such loan, advance or facility is made available to a person referred to in paragraph (a) of the definition of “specified person”, no interest, commission, fee or any other payment in respect of the credit facility is borne, directly or indirectly, by any person resident in Singapore (except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore) or by any permanent establishment in Singapore;
(v)	in the case of a loan, advance or a facility whereby funds are made available and such loan, advance or facility is made available to a person referred to in paragraph (b) of the definition of “specified person”, no interest, commission, fee or any other payment in respect of the credit facility is deductible against any income of that person accruing in or derived from Singapore; and
(vi)	in the case of a guarantee or letter of credit, no interest, commission, fee or any other payment in respect of the credit facility is borne, directly or indirectly, by any person resident in Singapore (except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore) or by any permanent establishment in Singapore; or

(b)

any syndicated facility for the issue of any bonds, notes, certificates of deposit or other instruments of indebtedness provided to any specified person where the agreement for the facility is made on or after 11th July 1997, and where —

(i)	in the case of an agreement for a facility made before 14th August 1998, the bonds, notes, certificates of deposit or other instruments of indebtedness are in currencies other than Singapore dollars;
(ii)	the proceeds from the issue of such bonds, notes, certificates of deposit or other instruments of indebtedness are to be used outside Singapore;
(iii)	the person to whom such syndicated facility is provided is a person referred to in paragraph (a) of the definition of “specified person”, no interest, commission, fee or any other payment in respect of the syndicated facility is borne, directly or indirectly, by any person resident in Singapore (except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore) or by any permanent establishment in Singapore; and
(iv)	the person to whom such syndicated facility is provided is a person referred to in paragraph (b) of the definition of “specified person”, no interest, commission, fee or any other payment in respect of the syndicated facility is deductible against any income of that person accruing in or derived from Singapore;

“syndicated offshore underwriting facility” means any facility for the underwriting of bonds, notes, certificates of deposit or other instruments of indebtedness provided to a non-resident person (but excluding its permanent establishment in Singapore) or to a permanent establishment outside Singapore of a person resident in Singapore in respect of any business carried on outside Singapore through that permanent establishment where the agreement for the facility was made before 11th July 1997, and where —

(a)	the bonds, notes, certificates of deposit or other instruments of indebtedness are in currencies other than Singapore dollars;
(b)	the proceeds from the issue of such bonds, notes, certificates of deposit or other instruments of indebtedness are to be used outside Singapore; and
(c)	no interest, commission, fee payable or any other payment in respect of the underwriting facility is borne, directly or indirectly, by any person resident in Singapore (except in respect of any business carried on outside Singapore by a person resident in Singapore through a permanent establishment outside Singapore) or by any permanent establishment in Singapore.

Approval of syndicated offshore credit facility

3.—(1) The Minister, or such person as he may appoint, may approve any syndicated offshore credit facility, syndicated guarantee facility or any syndicated offshore underwriting facility for the purposes of these Regulations where the agreement for the credit, guarantee or underwriting facility is made at any time during the period from 1st April 1983 to 31st March 2003, and where he is satisfied that —

(a)	the syndicate providing the credit, guarantee or underwriting facility consists of not less than 3 parties;
(b)	the lead manager of the syndicate providing the credit, guarantee or underwriting facility is an approved securities company or a financial institution resident in Singapore or is a permanent establishment in Singapore of a non-resident financial institution, or where there are 2 or more lead managers, at least half of them are approved securities companies or financial institutions resident in Singapore or permanent establishments in Singapore of non-resident financial institutions; and
(c)	the syndication work in respect of the credit, guarantee or underwriting facility is carried out substantially in Singapore.

(2) Subject to these Regulations, there shall be exempt from tax the income of a financial institution or of an approved securities company from any such approved syndicated offshore credit or underwriting facility or syndicated guarantee facility.

(3) In the case of an underwriting facility or a syndicated facility referred to in paragraph (b) of the definition of “syndicated offshore credit facility” in regulation 2, where a financial institution or an approved securities company holds any of the notes, bonds or certificates of deposit or other instruments of indebtedness underwritten by the syndicate or issued under the syndicated facility, as the case may be, the income derived from the holding of those notes, bonds or certificates of deposit or other instruments of indebtedness or the profits arising from the sale thereof shall not be exempt from tax under these Regulations.

(4) The Minister may, in any particular case, waive the requirements specified in paragraph (1)(a), (b) and (c) subject to such conditions as he may impose.

(5) A financial institution or an approved securities company which is entitled to any exemption under paragraph (2) may, with the approval of the Comptroller, elect not to have such exemption.

Comptroller to determine amount of income to be exempted

4.—(1) The amount of the income to be exempted from tax under regulation 3(2) shall be determined by the Comptroller, having regard to such expenses, capital allowances and donations allowable under the Act as are, in his opinion, to be deducted in ascertaining the income to be exempted.

(2) In determining the amount of the income to be exempted, any loss incurred in respect of an approved syndicated offshore credit or underwriting facility, or syndicated guarantee facility or any capital allowances attributable to that income shall only be deducted against income to be exempted under regulation 3(2), and any balance of such lossor capital allowances shall not be available as a deduction against any other income.

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