Income Tax (Concessionary Rate of Tax for Equity Capital Market Intermediary) Regulations 2003

No. S 638

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Equity Capital Market Intermediary) 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 Equity Capital Market Intermediary) Regulations 2003 and shall have effect for the year of assessment 2003 and subsequent years of assessment.

Definitions

2. In these Regulations —

“Equity Capital Market Intermediary” means —

(a)	a financial institution with an Asian Currency Unit; or
(b)	a company holding a capital markets services licence under the Securities and Futures Act (Cap. 289) to deal in securities or that is exempted under that Act from holding such a licence,

that is approved or deemed to be approved for a period not exceeding 5 years under section 43A of the Act;

“foreign investor” —

(a)

in relation to an individual, means an individual who is neither a citizen of Singapore nor resident in Singapore and who is the beneficial owner of the funds —

(i)	managed before 3rd May 2002 by a fund manager approved under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; and
(ii)	managed on or after 3rd May 2002 by any fund manager in Singapore;

(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);

“initial public offering” means a public offering of securities of a company, whose stocks or shares have not previously been listed on the Singapore Exchange, in conjunction with the listing of those securities on the Singapore Exchange, and includes a listing of securities of such a company on the Singapore Exchange by way of an introduction;

“non-resident person” means a person who is not resident in Singapore.

Concessionary rate of 10% on income derived by Equity Capital Market Intermediary

3.—(1) Tax shall be payable at the rate of 10% on the income derived by an Equity Capital Market Intermediary approved for securities trading or securities lending activities from the following:

(a)

subject to paragraph (3), services (including services as a broker, nominee or custodian) on behalf of a person who is neither resident in Singapore nor a permanent establishment in Singapore in connection with transactions relating to —

(i)

stocks, shares, bonds and other securities which are —

(A)	denominated in any foreign currency, and issued by a company which is neither incorporated in Singapore nor resident in Singapore; or
(B)	listed on the Singapore Exchange in any foreign currency, and issued by a company which —
(BA)	is incorporated in Singapore;
(BB)	has at least 50% of its turnover derived from outside Singapore; and
(BC)	is approved for the purpose of this regulation by the Minister or such person as he may appoint;

(ii)

negotiable certificates of deposit denominated in any foreign currency;

(iii)

Asian Dollar Bonds; or

(iv)

bonds denominated in any foreign currency issued by any foreign government;

(b)

services as a broker on behalf of another Equity Capital Market Intermediary in connection with the sale of the securities specified in sub-paragraph (a) which are owned by that Equity Capital Market Intermediary to —

(i)

a person who is neither resident in Singapore nor a permanent establishment in Singapore;

(ii)

another Equity Capital Market Intermediary approved for securities trading or securities lending activities; or

(iii)

a foreign investor, in respect of any sale transacted —

(A)	before 3rd May 2002 through a fund manager approved under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; or
(B)	on or after 3rd May 2002 through a fund manager in Singapore;

(c)

services as a nominee or custodian on behalf of another Equity Capital Market Intermediary in connection with transactions relating to the securities specified in sub-paragraph (a) which are owned by that Equity Capital Market Intermediary;

(d)

the sale of stocks, shares, bonds and other securities referred to in sub-paragraph (a) to —

(i)

a person who is neither resident in Singapore nor a permanent establishment in Singapore;

(ii)

another Equity Capital Market Intermediary approved for securities trading or securities lending activities; or

(iii)

a foreign investor, in respect of any sale transacted —

(A)	before 3rd May 2002 through a fund manager approved under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; or
(B)	on or after 3rd May 2002 through a fund manager in Singapore;

(e)

the loan of securities specified in sub-paragraph (a)(i) or (iv) under a securities lending arrangement in writing to —

(i)

another Equity Capital Market Intermediary approved for securities trading or securities lending activities;

(ii)

a person who is neither resident in Singapore nor a permanent establishment in Singapore;

(iii)

a branch office outside Singapore of a bank resident in Singapore which has an Asian Currency Unit; or

(iv)

a foreign investor where such loans are transacted —

(A)	before 3rd May 2002 through a fund manager approved under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; or
(B)	on or after 3rd May 2002 through a fund manager in Singapore.

(2) Tax shall be payable at the rate of 10% on the income derived by an Equity Capital Market Intermediary approved for corporate finance activities from the following:

(a)

(i)	such securities are denominated in any foreign currency;
(ii)	the placement of such securities is with persons who are neither resident in Singapore nor permanent establishments in Singapore; and
(iii)	the payment for such services and other expenses in connection with the issue of such securities are not borne, directly or indirectly, by a person who is resident in Singapore or a permanent establishment in Singapore;

(b)

services on behalf of a company which —

(i)	is incorporated in Singapore;
(ii)	has at least 50% of its turnover derived from outside Singapore; and
(iii)	is approved for the purpose of this regulation by the Minister or such person as he may appoint,

in respect of the arrangement, underwriting, management and placement of —

(A)	securities by the company which are listed on the Singapore Exchange in any foreign currency; or
(B)	an initial public offering by the company of securities for the purpose of a listing on the Singapore Exchange in any foreign currency; and

(c)

the provision of corporate advisory services to persons outside Singapore, except where the payments for such services are borne, directly or indirectly, by a person who is resident in Singapore or by a permanent establishment in Singapore of a non-resident person.

(3) The concessionary rate of tax of 10% shall not apply where the payments for the services referred to in paragraph (1)(a) and other expenses in connection with the transactions referred to in that paragraph are borne, directly or indirectly, by a person who is resident in Singapore or by a permanent establishment in Singapore of a non-resident person.

Concessionary rate of 5% on income derived by Equity Capital Market Intermediary

4.—(1) Notwithstanding regulation 3, tax shall be payable at the rate of 5% on income derived by an Equity Capital Market Intermediary approved for securities trading or securities lending activities from the following:

(a)

services (including services as a broker, nominee or custodian) on behalf of a person who is neither resident in Singapore nor a permanent establishment in Singapore in connection with transactions relating to —

(i)

stocks, shares, bonds and other securities listed on the Singapore Exchange, denominated in any currency, issued by a company which is neither incorporated in Singapore nor resident in Singapore; and

(ii)

stocks, shares, bonds and other securities listed on the Singapore Exchange, denominated in any currency, issued by a company which —

(A)	is incorporated in Singapore;
(B)	has at least 50% of its turnover derived from outside Singapore; and
(C)	is approved for the purpose of this regulation by the Minister or such person as he may appoint,

except where the payments for these services and other expenses in connection with the transactions are borne, directly or indirectly, by a person who is resident in Singapore or by a permanent establishment in Singapore of a non-resident person; and

(b)

the sale of stocks, shares, bonds and other securities referred to in sub-paragraph (a) to —

(i)

a person who is neither resident in Singapore nor a permanent establishment in Singapore;

(ii)

another Equity Capital Market Intermediary approved for securities trading or securities lending activities; or

(iii)

a foreign investor, in respect of any sale transacted —

(A)	before 3rd May 2002 through a fund manager approved under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; or
(B)	on or after 3rd May 2002 through a fund manager in Singapore.

(2) Notwithstanding regulation 3, tax shall be payable at the rate of 5% on the income derived by an Equity Capital Market Intermediary approved for corporate finance activities from —

(a)

services on behalf of a company which is neither incorporated in Singapore nor resident in Singapore (excluding a permanent establishment in Singapore of such a company) in respect of the arrangement, underwriting, management and placement of an initial public offering by the company of securities for the purpose of a listing on the Singapore Exchange in any currency, where the payment for such services and other expenses in connection with the issue of such securities are not borne, directly or indirectly, by a person who is resident in Singapore or a permanent establishment in Singapore; and

(b)

services on behalf of a company which

(i)	is incorporated in Singapore;
(ii)	has at least 50% of its turnover derived from outside Singapore; and
(iii)	is approved for the purpose of this regulation by the Minister or such person as he may appoint,

in respect of the arrangement, underwriting, management and placement of an initial public offering by the company of securities for the purpose of a listing on the Singapore Exchange in any currency.

Determination of income chargeable to tax

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

(a)	the income chargeable to tax of an Equity Capital Market Intermediary 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 Equity Capital Market Intermediary.

(2) For the purposes of paragraph (1), any payment made by an Equity Capital Market Intermediary to another Equity Capital Market Intermediary for services rendered under regulation 3(1)(c) shall be deductible only against income chargeable to tax at the rate of 10%.

Revocation and deeming of approvals

6.—(1) The Income Tax (Concessionary Rate of Tax for Approved Securities Companies) Regulations (Rg 9) are revoked.

(2) A financial institution with an Asian Currency Unit before 2nd July 2002 shall be deemed to be approved from the year of assessment 2003 to the year of assessment 2007 as an Equity Capital Market Intermediary for the purposes of these Regulations.

(3) A company approved under section 43A(1)(c) of the Act for the purposes of the revoked Income Tax (Concessionary Rate of Tax for Approved Securities Companies) Regulations shall, for the period of its approval under that section, be deemed to be approved as an Equity Capital Market Intermediary for the purposes of these Regulations, except for the services referred to in regulation 3(2)(c).

Made this 29th day of December 2003.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[R32.19.2420 Vol. 2; AG/LEG/SL/134/2002/14 Vol. 1]

Search within Legislation