Income Tax (Concessionary Rate of Tax for Approved Offshore Composite Insurance Companies) (Amendment) Regulations 1999

No. S 514

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Approved Offshore Composite Insurance Companies) (Amendment) Regulations 1999

In exercise of the powers conferred by section 43C 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 Offshore Composite Insurance Companies) (Amendment) Regulations 1999 and shall have effect for the year of assessment 1999 and subsequent years of assessment.

Amendment of regulation 2

2. Regulation 2 of the Income Tax (Concessionary Rate of Tax for Approved Offshore Composite Insurance Companies) Regulations (Rg 27) (referred to in these Regulations as the principal Regulations) is amended —

(a)

by inserting, immediately after the definition of “approved insurance company”, the following definition:

“ “approved marine hull and liability insurer” means any insurance company approved under regulation 3A;”; and

(b)

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

“ “offshore marine hull and liability business” means the business of insuring and reinsuring offshore risks involving marine hull and liability but excludes cargo, energy and aviation risks;”.

New regulation 3A

3. The principal Regulations are amended by inserting, immediately after regulation 3, the following regulation:

“Approval of marine hull and liability insurer

3A. The Minister or such person as he may appoint may, upon application by any approved insurance company and if he considers it expedient in the public interest to do so, approve the insurance company as an approved marine hull and liability insurer for such period not exceeding 10 years as he may specify.”.

Amendment of regulation 4

4. Regulation 4 (1) of the principal Regulations is amended by deleting the word “Tax”and substituting the words “Subject to regulation 5A, tax”.

New regulation 5A

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

“Exemption from income tax

5A. Notwithstanding regulation 4, there shall be exempt from tax the following income derived by an approved marine hull and liability insurer for the basis period for any year of assessment:

(a)

the underwriting income derived from accepting offshore marine hull and liability business;

(b)

such part of the income derived from the investment of its insurance fund established and maintained under the Insurance Act (Cap. 142) for the offshore general insurance business as is ascertained by the formula —

where P_m

is the amount of the gross premiums received or receivable during the basis period in respect of policies underwritten by the approved marine hull and liability insurer in the course of carrying on its business in Singapore from the offshore marine hull and liability business;

P_o

has the same meaning as in regulation 5(1); and

is the total amount of dividends and interest derived from outside Singapore, gains or profits realised from the sale of offshore investments, and interest from ACU deposits derived from the investment of its insurance fund established and maintained under the Insurance Act (Cap. 142) for the offshore general insurance business for the basis period ascertained in accordance with regulation 4(1)(c)(i); and

(c)

such part of the income referred to in regulation 4(1)(c)(ii) as is ascertained by the formula —

where P_m

Has the same meaning as in paragraph (b);

P_o and P_oL

Have the same meanings as in regulation 5(1); and

Is the total amount of the income referred to in regulation 4(1)(c)(ii) for the basis period.”.

Amendment of regulation 6

6. Regulation 6 of the principal Regulations is amended by renumbering the regulation as paragraph (1) of that regulation, and by inserting immediately thereafter the following paragraphs:

“(2) Any amount of expenditure, capital allowances and donations apportioned to the offshore general insurance business and offshore life business in accordance with paragraph (1) shall be apportioned between the offshore marine hull and liability business and the other offshore insurance business of an approved marine hull and liability insurer; and the portion attributable to the offshore marine hull and liability business shall be ascertained by using the fraction —

where P_m, P_o and P_oL have the same meanings as in regulation 5A.

(3) Any item of expenditure incurred in respect of both the offshore marine hull and liability business and the other offshore general insurance business, allowable to the approved marine hull and liability insurer under the Act, shall be apportioned between the offshore marine hull and liability business and the other offshore general insurance business; and the portion attributable to the offshore marine hull and liability business shall be ascertained by using the fraction —

where P_m and P_o have the same meanings as in regulation 5A.”.

New regulation 6A

7. The principal Regulations are amended by inserting, immediately after regulation 6, the following regulation:

“Determination of income exempted from tax

6A.—(1) In determining the income of an approved marine hull and liability insurer to be exempted from tax under regulation 5A —

(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 capital allowances attributable to that income notwithstanding that no claim for those allowances has been made;
(c)	any balance of the allowances mentioned in sub-paragraph (b) and any losses incurred in respect of the offshore marine hull and liability business (which, if they had been profits, would have been exempted from tax under regulation 5A) shall only be deducted against income to be exempted under regulation 5A, and any balance of such allowances and losses shall not be deducted against any other income; and
(d)	any balance of the allowances and losses referred to in sub-paragraph (c) remaining unabsorbed as at the end of the period for which the exemption from tax under regulation 5A is approved shall, subject to paragraph (2), be available as a deduction against any other income of the insurer 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.

(2) 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 paragraph (1)(d) as if they were unabsorbed allowances or losses in respect of the concessionary income under that section.”.

Made this 22nd day of November 1999.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[MF(R)R 32.7.06 V.8; AG/LEG/SL/134/97/9 Vol. 1]

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