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No. S 480

Income Tax Act

Chapter 134

Income Tax (Concessionary Rate of Tax for Approved Fund Managers) (Amendment) Regulations 1999

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

Citation and commencement

1.—(1) These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Approved Fund Managers) (Amendment) Regulations 1999.

(2) Regulations 3(a), (b) and (e), 4 and 5 of these Regulations shall have effect for the year of assessment 1998 and subsequent years of assessment.

(3) Regulations 2 and 3(c) and (d) of these Regulations shall have effect for the year of assessment 1999 and subsequent years of assessment.

Deletion and substitution of regulations 3, 4 and 5

2. The Income Tax (Concessionary Rate of Tax for Approved Fund Managers) Regulations (Rg 7) (referred to in these Regulations as the principal Regulations) are amended by deleting regulations 3, 4 and 5 and substituting the following regulations:

“Computation of income of approved Fund Manager from managing funds of certain foreign investors

3. Where a foreign investor is —

(a)	a company referred to in paragraph (b) of the definition of “foreign investor” in regulation 6 in which any designated person is a shareholder and more than 20% of its issued capital is beneficially owned, directly or indirectly, by persons who are not foreign investors referred to in paragraph (a) or (b) of that definition and by designated persons; or
(b)	a trust fund referred to in paragraph (c) of the definition of “foreign investor” in regulation 6 in which any designated person is a beneficiary and more than 20% of the value of the fund is beneficially held, directly or indirectly, by persons who are not foreign investors referred to in paragraph (a) or (b) of that definition and by designated persons,

the amount of fees and commissions which is chargeable to tax at the concessionary rate of 10% under regulation 2 shall be computed in accordance with the formula —

where A

is the amount of issued capital of the company or the value of the trust fund, as the case may be, which is not beneficially owned or held, directly or indirectly, by persons who are not foreign investors referred to in paragraph (a) or (b) of the definition of “foreign investor” in regulation 6 or by designated persons;

is the amount of issued capital of the company or the value of the trust fund, as the case may be;

is the amount of fees and commissions derived from the provision of the services referred to in regulation 2(a), (b) and (c) to the foreign investor.

Tax exemption on income derived by approved Fund Manager

4.—(1) Notwithstanding regulation 2, the Minister (or such person as he may appoint) may, subject to such conditions as he may impose, exempt from tax the fees and commissions derived by a Fund Manager approved under section 43A of the Act from the activities described in regulation 2 if he is of the opinion that such exemption from tax will promote or enhance the economic development of Singapore.

(2) Where the activities described in regulation 2 are in respect of a foreign investor which is a company or a trust fund referred to in regulation 3, the amount of fees and commissions to be exempted from tax under paragraph (1) shall be computed in accordance with the formula specified in that regulation.

(3) The exemption from tax under paragraph (1) shall be for such period (referred to in these Regulations as the tax exempt period), not exceeding 10 years, as the Minister (or such person as he may appoint) may specify, and shall apply only to Fund Managers approved under section 43A from 28th February 1998 to 27th February 2003.

Tax exemption on income derived by approved Fund Manager (year of assessment 1998 only)

5.—(1) Notwithstanding regulation 2, the fees and commissions derived by a Fund Manager approved under section 43A of the Act from the activities described in regulation 2 shall be exempt from tax for the year of assessment 1998, if the following conditions are satisfied —

(a)	the average monthly value of the funds of foreign investors managed by the approved Fund Manager in the basis period for that year of assessment is not less than $10,000 million;
(b)	the Fund Manager has employed not less than 7 professional fund managers or analysts throughout the basis period for that year of assessment; and
(c)	the Fund Manager has been approved under section 43A of the Act for at least 3 years immediately preceding that year of assessment.

(2) Where the activities described in regulation 2 are in respect of a foreign investor which is a company or a trust fund referred to in regulation 3 or 4 in force for the year of assessment 1998, the amount of fees and commissions to be exempted from tax under paragraph (1) shall be computed in accordance with the formula specified in that regulation 3 or 4, as the case may be.

(3) For the purpose of this regulation, “average monthly value”, in relation to funds of foreign investors managed by an approved Fund Manager in the basis period for any year of assessment, means the aggregate of the values of such funds as at the last day of each month in that basis period for that year of assessment divided by the number of months in that basis period.”.

Amendment of regulation 6

3. Regulation 6 of the principal Regulations is amended —

(a)

by deleting the word “and” at the end of paragraph (k) of the definition of “designated investments”;

(b)

by inserting at the end of paragraph (l) of the definition of “designated investments” the word “and” and, by inserting immediately thereafter the following paragraph:

“(m)	units in any unit trust which invests wholly in designated investments;”;

(c)

by inserting, immediately after the definition of “designated investments”, the following definition:

“ “designated person” means the Government of Singapore Investment Corporation Pte Ltd, any statutory board or any company which is wholly owned, directly or indirectly, by the Minister (in his capacity as a corporation established under the Minister for Finance (Incorporation) Act (Cap. 183)) which is approved by the Minister or such person as he may appoint;”;

(d)

by deleting paragraphs (b) and (c) of the definition of “foreign investor” and substituting the following paragraphs:

“(b)	in relation to a company, means a company not resident in Singapore where not more than 20% (excluding the total percentage owned directly by designated persons) of its issued share capital is beneficially owned, directly or indirectly, by persons who are citizens of Singapore or resident in Singapore; and
(c)	in relation to a trust fund, means a trust fund where not more than 20% (excluding the total percentage held directly by designated persons) of the value of the fund is beneficially held, directly or indirectly, by persons who are not foreign investors referred to in paragraph (a) or (b).”; and

(e)

by inserting, immediately after the definition of “foreign investor”, the following definitions:

“ “unit” means a right or interest (whether described as a unit, a sub-unit or otherwise) which may be acquired under a unit trust;

“unit trust” means any trust established for the purpose, or having the effect, of providing facilities for the participation by persons as beneficiaries under a trust, in profits or income arising from the acquisition, holding, management or disposal of securities or any other property.”.

Amendment of regulation 9

4. Regulation 9 of the principal Regulations is amended by deleting the words “, 3, 4 and 5” in the 1st line and substituting the words “and 3”.

New regulation 10

5. The principal Regulations are amended by inserting, immediately after regulation 9, the following regulation:

“Determination of income exempted from tax

10.—(1) In determining the income of an approved Fund Manager to be exempted from tax under regulations 4 and 5 derived by it from the activities described in regulation 2 —

(a)	the Comptroller shall have 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)	there shall be deducted from that income any allowances under section 19, 19A, 20, 21 or 22 attributable to that income notwithstanding that no claim for those allowances has been made; and
(c)	any balance of the allowances mentioned in sub-paragraph (b) and any losses incurred in respect of such activities shall only be deducted against income to be exempted under regulation 4 or 5, and any balance of such allowances and losses shall not be deducted against any other income.

(2) Where any balance of the allowances and losses mentioned in paragraph (1)(c) is in respect of activities the income of which would be exempted from tax under regulation 5, any amount of such allowances and losses remaining unabsorbed as at the end of the year of assessment 1998 shall, subject to paragraph (4), be available as a deduction against any other income for the year of assessment 1999 and any subsequent year of assessment in accordance with section 23 or 37 of the Act, as the case may be, if the approved Fund Manager is not approved for the exemption under regulation 4 from the year of assessment 1999.

(3) Where any balance of the allowances and losses mentioned in paragraph (1)(c) is in respect of activities the income of which would be exempted from tax under regulation 4, any amount of such allowances and losses remaining unabsorbed as at the end of the tax exempt period shall, subject to paragraph (4), be available as a deduction against any other income for the year of assessment which relates to the basis period in which the tax exemption ceases and any subsequent year of assessment in accordance with section 23 or 37 of the Act, as the case may be.

(4) Section 37B of the Act shall apply to any amount of the allowances and losses available as a deduction against any other income as provided under paragraphs (2) and (3) as if they were unabsorbed allowances or losses in respect of the concessionary income under that section.”.

Made this 19th day of October 1999.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[R 32.19.04 Pt B; AG/LEG/SL/134/97/9 Vol. 1]