Income Tax (Concessionary Rate of Tax for Derivatives Activities) Regulations 2003

No. S 637

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Derivatives Activities) Regulations 2003

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. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Derivatives Activities) Regulations 2003 and shall have effect for the year of assessment 2003 and subsequent years of assessment.

Definitions

2. In these Regulations —

“Approved Derivatives Trader” means an Approved Securities Company approved during the period from 20th May 2002 to 31st December 2003 (both dates inclusive) as an Approved Derivatives Trader for a period not exceeding 5 years by the Minister or such person as he may appoint;

“Approved Securities Company” means a company approved for derivatives activities under section 43A(1)(c) of the Act for the purpose of these Regulations;

“financial derivatives” means derivatives the payoffs of which are linked, whether in whole or in part, to the payoffs or performance of any financial assets, securities, financial instruments or indices.

Concessionary rate of tax on income derived by Approved Securities Company

3. Tax shall be payable at the rate of 10% on the income derived by an Approved Securities Company from —

(a)

services as an intermediary in connection with transactions relating to financial derivatives in currencies other than Singapore dollars for —

(i)	an Asian Currency Unit of a financial institution;
(ii)	a person who is neither resident in Singapore nor a permanent establishment in Singapore;
(iii)	a branch office outside Singapore of a company resident in Singapore; or
(iv)	another Approved Securities Company; and

(b)

trading in financial derivatives in currencies other than Singapore dollars with —

(i)	an Asian Currency Unit of a financial institution;
(ii)	a person who is neither resident in Singapore nor a permanent establishment in Singapore;
(iii)	a branch office outside Singapore of a company resident in Singapore; or
(iv)	another Approved Securities Company.

Concessionary rate of tax on income derived by Approved Securities Company as Approved Derivatives Trader

4. Notwithstanding regulation 3, where an Approved Securities Company is an Approved Derivatives Trader, tax shall be payable at the rate of 5% on income derived by the Approved Derivatives Trader from —

(a)

services as an intermediary in connection with transactions relating to over-the-counter financial derivatives in currencies other than Singapore dollars for —

(i)	an Asian Currency Unit of a financial institution;
(ii)	a person who is neither resident in Singapore nor a permanent establishment in Singapore;
(iii)	a branch office outside Singapore of a company resident in Singapore; or
(iv)	another Approved Securities Company; and

(b)

trading in over-the-counter financial derivatives in currencies other than Singapore dollars with —

(i)	an Asian Currency Unit of a financial institution;
(ii)	a person who is neither resident in Singapore nor a permanent establishment in Singapore;
(iii)	a branch office outside Singapore of a company resident in Singapore; or
(iv)	another Approved Securities Company.

Determination of income chargeable to tax

5. For the purposes of regulations 3 and 4, the Comptroller shall determine —

(a)	the income chargeable to tax of an Approved Securities Company having regard to such expenses, capital allowances and donations allowable under the Act as are, in his opinion, to be deducted in ascertaining such income; and
(b)	the manner and extent to which any losses arising from the activities specified in regulations 3 and 4 may be deducted under section 37(2) of the Act in ascertaining the chargeable income of the Approved Securities Company.

Made this 29th day of December 2003.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[R32.19.2421 Vol. 2; AG/LEG/SL/134/2002/10 Vol. 2]

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