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No. S 414

Income Tax Act

(Chapter 134)

Income Tax (Exemption of Income of Approved Persons Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010

In exercise of the powers conferred by section 13X 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 (Exemption of Income of Approved Persons Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 and shall be deemed to have come into operation on 1st April 2009.

Definitions

2. In these Regulations —

“committed funds”, in relation to a company, limited partnership or trust fund which is a private equity fund, means the funds which, by a written contractual agreement between investors and the company, limited partnership or trust fund, the investors are obliged to contribute to the company, limited partnership or trust fund;

“designated investments” and “specified income” have the same respective meanings as in the Income Tax (Exemption of Income of Non-residents Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 (G.N. No. S 6/2010), with references to “prescribed person” therein modified to refer to “approved person”.

Exemption from tax under section 13X of Act

3.—(1) Subject to the conditions in paragraph (2) and regulations 4, 5 and 6, there shall be exempt from tax for any year of assessment —

(a)	any specified income derived by an approved person, other than a partner of an approved limited partnership, from funds managed in Singapore by a fund manager in respect of designated investments; and
(b)	in the case of a partner of an approved limited partnership, the share to which he is entitled in any specified income derived by the approved limited partnership from funds managed in Singapore by a fund manager in respect of designated investments.

(2) The conditions referred to in paragraph (1) are —

(a)

throughout the basis period for that year of assessment, the funds are managed in Singapore by a fund manager;

(b)

at the time of the application for approval of the company, limited partnership or trust fund as an approved company, approved limited partnership or approved trust fund for the purposes of section 13X of the Act —

(i)	the amount of its funds; or
(ii)	if the company, limited partnership or trust fund is a private equity fund, the amount of its committed funds,

managed in Singapore by a fund manager in Singapore is at least $50 million;

(c)

for that year of assessment, no part of the income of the approved company or approved limited partnership or of the trustee of the approved trust fund (other than any income derived before the approved company, approved limited partnership or approved trust fund was approved as such) —

(i)	is exempt from tax under section 13C, 13CA, 13G, 13H, 13O, 13P, 13Q, 13R or 13W of the Act;
(ii)	is subject to a concessionary rate of tax under section 43E, 43G or 43Q of the Act; or
(iii)	is entitled to any tax relief or concessionary rate of tax under Part III or IIIB of the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86);

(d)

the investment strategy remains unchanged from the date the company, limited partnership or trust fund is so approved as an approved company, approved limited partnership or approved trust fund, as the case may be; and

(e)

conditions specified in the letter of approval issued by the Monetary Authority of Singapore approving the company, limited partnership or trust fund, as the case may be, as an approved company, approved limited partnership or approved trust fund under section 13X of the Act.

No deduction in respect of loss arising from designated investments

4. Notwithstanding anything in these Regulations, no deduction shall be allowed under the Act to an approved person in respect of any loss arising from —

(a)	the sale or realisation of any designated investments if any gains or profits realised from the sale or realisation of such investments would have been exempt from tax under regulation 3; and
(b)	transactions referred to in paragraphs (c), (k), (l), (p), (q) and (r) of the definition of “designated investments” in the Income Tax (Exemption of Income of Non-residents Arising from Funds Managed by Fund Manager in Singapore) Regulations 2010 (G.N. No. S 6/2010) with references to “prescribed person” therein modified to refer to “approved person”.

Determination of income exempted from tax

5. In determining the income of an approved person to be exempt from tax under regulation 3 —

(a)

there shall be deducted from that income any expenses and donations allowable under the Act which are attributable to that income; and any balance of the expenses or, where the approved person is a partner of an approved limited partnership, any excess of his share of the expenses over his share of the specified income of the approved partnership, shall be disregarded; and

(b)

there shall be deducted from that income any allowances under section 19, 19A, 20, 21 or 22 of the Act attributable to that income notwithstanding that no claim for those allowances has been made; and any balance of the allowances or, where the approved person is a partner of an approved limited partnership, any excess of his share of the allowances over his share of the specified income of the approved partnership, shall be disregarded.

Recovery of tax from partner of approved limited partnership

6.—(1) Where in any period to which the account of an approved limited partnership is made up to, the approved limited partnership fails to comply with any condition imposed under these Regulations, there shall be deemed to be income of each partner or former partner of that limited partnership who had previously enjoyed the exemption from tax for the year of assessment in which the Comptroller discovers such non-compliance —

(a)

where the partner or former partner is a company, an amount equal to the aggregate of the relevant amounts for all the years of assessment between the year of assessment relating to the basis period during which the non-compliance occurs and the year of assessment in which the Comptroller discovers the non-compliance (both years inclusive); and

(b)

where the partner or former partner is an individual, an amount equal to the aggregate of the full amounts of the partner or former partner’s share of the specified income of the approved limited partnership that is exempt from tax under regulation 3 for all the years of assessment between the year of assessment relating to the basis period during which the non-compliance occurs and the year of assessment in which the Comptroller discovers the non-compliance (both years inclusive).

(2) The amount of tax to be recovered from a partner or former partner which is a company shall be computed by multiplying the amount as determined under paragraph (1)(a) by the rate of tax under section 43(1)(a) of the Act for the year of assessment in which the Comptroller discovers the non-compliance.

(3) In paragraph (1)(a), the relevant amount for any year of assessment is to be ascertained in accordance with the formula

where A

is the full amount of the partner or former partner’s share of the specified income of the approved limited partnership that is exempt from tax under regulation 3 for that year of assessment;

is the rate of tax under section 43(1)(a) of the Act applicable to the partner or former partner’s share of the specified income of the approved limited partnership for that year of assessment if that share were not exempt from tax under regulation 3;

is the rate of tax under section 43(1)(a) of the Act applicable to the partner or former partner’s share of the specified income of the approved limited partnership for the year of assessment in which the Comptroller discovers the non-compliance, if that share were not exempt from tax under regulation 3.

Annual declaration

7.—(1) An approved company or the trustee of an approved trust fund, shall, within 4 months after the end of the basis period of the approved company or the trustee of the approved trust fund (in relation to his income as such trustee) or within such time as the Comptroller or the Monetary Authority of Singapore may specify, submit a declaration to the Comptroller and the Monetary Authority of Singapore, in such form as the Comptroller or the Monetary Authority of Singapore may specify, that the following conditions have been met for the basis period:

(a)	the conditions subject to which the company or trust fund had been approved as an approved company or trust fund for the purposes of section 13X of the Act; and
(b)	the conditions specified in regulation 3(2)(a), (c), (d) and (e).

(2) The general partner or, if he is not personally present in Singapore, the attorney, agent, manager or factor of an approved limited partnership shall, within 4 months after the end of the last day of the period to which the account of the limited partnership is made up, or within such time as the Comptroller or the Monetary Authority of Singapore may specify, submit a declaration to the Comptroller and the Monetary Authority of Singapore, in such form as the Comptroller or the Monetary Authority of Singapore may specify, that the following conditions have been met for the basis period in question:

(a)	the conditions subject to which the limited partnership had been approved as an approved limited partnership for the purposes of section 13X of the Act; and
(b)	the conditions specified in regulation 3(2)(a), (c), (d) and (e).

Made this 27th day of July 2010.

PETER ONG

Permanent Secretary,
Ministry of Finance,
Singapore.

[MFR 032.19.4 Vol. 34; AG/LLRD/SL/134/2005/54 Vol. 1]