Income Tax (Income from Funds Managed for Foreign Investors) Regulations

Income Tax Act

(CHAPTER 134, Section 13C)

Rg 8

G.N. No. S 234/1988

REVISED EDITION 1993

(1st April 1993)

[2nd September 1988]

Citation

1. These Regulations may be cited as the Income Tax (Income from Funds Managed for Foreign Investors) 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;

“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 fund manager;

(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;
(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;

“specified income” means —

(a)	interest and dividends derived from outside Singapore and received in Singapore in respect of any designated investments;
(b)	interest derived from deposits with and certificates of deposit issued by banks approved under section 13(6) of the Act and from Asian dollar bonds approved under section 13 (1) (v) of the Act;
(c)	gains or profits realised from the sale of any designated investments; and
(d)	gains from foreign exchange transactions in currencies other than Singapore dollars carried out in or after the basis period for the year of assessment 1992.

Exemption

3. Subject to regulations 4 and 5, there shall be exempt from tax the specified income derived by a foreign investor —

(a)	after 1st May 1983 from funds managed by an Asian Currency Unit specially approved by the Minister or such other person as he may appoint in respect of any designated investments specified in paragraphs (a) to (h) of the definition of “designated investments”; and
(b)	after 7th March 1986 from funds managed by an Asian Currency Unit or other fund manager specially approved by the Minister or such person as he may appoint in respect of any designated investments.

Exemption of income of headquarters company and Finance and Treasury Centre

4.—(1) Subject to regulations 4 and 5, there shall be exempt from tax the specified income derived —

(a)	in or after the basis period for the year of assessment 1991, from funds managed by a headquarters company approved under section 43E of the Act, by any of its associated companies outside Singapore approved under that section which satisfies the conditions in paragraph (2) in respect of any designated investments; and
(b)	in or after the basis period for the year of assessment 1991, from funds managed by a Finance and Treasury Centre approved under section 43G of the Act, by any of its associated companies approved under that section which satisfies the conditions in paragraph (2) in respect of any designated investments.

(2) The conditions mentioned in paragraph (1) are as follows:

(a)	if the associated company has 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
(b)	if the associated company has more than 50 shareholders, not less 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.

(3) The Minister or such other person as he may appoint may waive all or any of the conditions mentioned in paragraph (2).

No deduction in respect of loss arising from designated investments

5. Notwithstanding anything in these Regulations, no deduction shall be allowed under the Act to any associated company referred to in regulation 4 or any foreign investor in respect of any loss arising —

(a)	from the sale of any designated investments if any gains or profits realised from the sale of such investments would have been exempt from tax under regulation 3 or 4; and
(b)	from any foreign exchange transaction in currencies other than Singapore dollars carried out in or after the basis period for the year of assessment 1992.

Application

6. These Regulations shall not apply where the foreign investor (other than an individual) or the associated company referred to in regulation 4, as the case may be, —

(a)	has a permanent establishment in Singapore (other than an Asian Currency Unit, fund manager, headquarters company or Finance and Treasury Centre approved under section 43A (1), 43E or 43G of the Act);
(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 paragraph (a), (b) or (c),

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

[G.N. Nos. S 234/88; S 14/89; S 495/92]

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