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No. S 204

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Approved Global Trading Companies) Regulations 2003

In exercise of the powers conferred by section 43P of the Income Tax Act, the Minister for Finance hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Approved Global Trading Companies) Regulations 2003 and shall be deemed to have come into operation on 1st June 2001.

Definitions

2. In these Regulations, unless the context otherwise requires —

“approved commodity exchange” means any commodity exchange which is approved for the purposes of these Regulations by the Minister or such person as he may appoint;

“approved global trading company” means a global trading company which is approved for the purposes of section 43P of the Act by the Minister or such person as he may appoint;

“approved international commodity trading company” means an international commodity trading company which is approved for the purposes of section 43H of the Act by the Minister or such person as he may appoint;

“approved oil trading company” means an oil trading company which is approved for the purposes of section 43F of the Act by the Minister or such person as he may appoint;

“commodity” means any of the commodities specified in the First Schedule;

“commodity futures trading” means trading in commodity futures contracts or options in any commodity on any exchange specified in the Second Schedule or on any approved commodity exchange, carried out by an approved global trading company in accordance with the rules and regulations or customs and practices of that exchange with —

(a)	a person who is neither a resident of nor a permanent establishment in Singapore;
(b)	a branch office outside Singapore of a company resident in Singapore;
(c)	an Asian Currency Unit of a financial institution;
(d)	a futures member of the Singapore Exchange;
(e)	a member of the Singapore Commodity Exchange;
(f)	an approved oil trading company;
(g)	an approved international commodity trading company; or
(h)	another approved global trading company;

“over the counter hedging transaction” has the meaning given to it in regulation 4;

“physical trading” means trading in any commodity on a spot or forward basis where the intention of the parties at the time of the transaction is that actual delivery of the commodity is required, whether or not it is actually made, and where the commodity is purchased by an approved global trading company from and sold to —

(a)	a person who is neither a resident of nor a permanent establishment in Singapore;
(b)	a branch office outside Singapore of a company resident in Singapore;
(c)	an approved oil trading company;
(d)	an approved international commodity trading company;
(e)	another approved global trading company;
(f)	a person who carries on the business of refining petroleum in Singapore; or
(g)	a petrochemical manufacturing company in Singapore which is approved on or after 1st November 1996 by the Minister or such person as he may appoint,

but does not include —

(i)	any transaction in which the commodity is purchased for the purposes of consumption in Singapore or for the supply of fuel to aircraft or vessels within Singapore; and
(ii)	any transaction in which the petroleum or petroleum product is both purchased from and sold to any petrochemical manufacturing company in Singapore which is approved on or after 1st November 1996 by the Minister or such person as he may appoint;

“qualifying transaction” means any of the following transactions carried out by an approved global trading company in a currency other than Singapore dollar:

(a)	physical trading;
(b)	commodity futures trading;
(c)	over the counter hedging transaction.

Approved global trading company

3.—(1) The Minister or such person as he may appoint may approve any global trading company for the purposes of section 43P of the Act for such period not exceeding 5 years from such date and for such commodities as he or that person may specify in writing.

(2) The Minister or such person as he may appoint may, in any particular case, extend the period so specified for such further periods, not exceeding 5 years at any one time, as he or that person thinks fit.

Over the counter hedging transaction

4.—(1) In these Regulations, “over the counter hedging transaction” means any transaction, other than a transaction carried out on any exchange specified in the Second Schedule or on any approved commodity exchange, in commodity swaps or options including caps, collars, floors and swap options, where —

(a)

the consideration or other payment in the transaction is calculated on the basis of the price of any commodity;

(b)

the transaction is in connection with and incidental to any physical trading, or the Minister or such person as he may appoint has waived this requirement under paragraph (2) in respect of that transaction; and

(c)

the transaction is carried out by an approved global trading company with —

(i)	a person who is neither a resident of nor a permanent establishment in Singapore;
(ii)	a branch office outside Singapore of a company resident in Singapore;
(iii)	an Asian Currency Unit of a financial institution;
(iv)	an approved oil trading company;
(v)	an approved international commodity trading company;
(vi)	another approved global trading company; or
(vii)	a person who carries on the business of refining petroleum in Singapore .

(2) The Minister or such person as he may appoint may, in any case in which he thinks fit, waive the requirement under paragraph (1)(b) for the transaction to be in connection with and incidental to any physical trading.

Concessionary rate of tax

5.—(1) Subject to paragraph (2), tax shall be payable at the rate of 10% on any income of an approved global trading company from —

(a)

profits from qualifying transactions in the commodities specified by the Minister, or such person as he may appoint, under regulation 3(1); and

(b)

commission and fees from acting as a broker in physical trading in the commodities specified by the Minister, or such person as he may appoint, under regulation 3(1) between any of the following persons:

(i)	a person who is neither a resident of nor a permanent establishment in Singapore;
(ii)	a branch office outside Singapore of a company resident in Singapore;
(iii)	an approved oil trading company;
(iv)	an approved international commodity trading company;
(v)	another approved global trading company; or
(vi)	a person who carries on the business of refining petroleum in Singapore .

(2) Paragraph (1) shall not apply to —

(a)	any income derived from any transaction in any commodity specified in the first column of the First Schedule carried out before the date specified opposite thereto in the second column thereof; and
(b)	any income attributable to activities carried out in Singapore which add value to the commodities specified by the Minister, or such person as he may appoint, under regulation 3(1) by any physical alteration, addition or improvement including storage, refining, blending, processing or bulk-breaking.

Determination of income chargeable to tax

6.—(1) For the purposes of regulation 5, the Comptroller shall determine —

(a)	the income chargeable to tax of an approved global trading company having regard to such expenses, donations and allowances under section 19, 19A, 20, 21, 22 or 23 of 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 transactions and physical trading specified in that regulation may be deducted under section 37 ofthe Act in ascertaining the chargeable income of an approved global trading company; and
(c)	the manner and extent to which income attributable to activities carried out in Singapore which add value to the commodities specified by the Minister, or such person as he may appoint, under regulation 3(1) by any physical alteration, addition or improvement (including storage, refining, blending, processing or bulk-breaking) should be excluded from the income referred to in regulation 5(1).

(2) For the purposes of paragraph (1) —

(a)

where the income determined is in relation to any period before 3rd May 2002, the reference to section 19A of the Act shall be read as a reference to section 19A of the Act in force immediately before 3rd May 2002; and

(b)

where the income determined is in relation to any period before the basis period for the year of assessment 2003 —

(i)	the reference to section 23 of the Act shall be read as a reference to section 23 of the Act in force immediately before the basis period for the year of assessment 2003; and
(ii)	the reference to section 37 of the Act shall be read as a reference to section 37 of the Act in force immediately before the basis period for the year of assessment 2003.

Made this 12th day of April 2003.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[R032.18.035.Pt. 5; AG/LEG/SL/134/2002/10 Vol. 1]