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No. S 748

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Approved Offshore Life Insurers) (Amendment) Regulations 2010

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 Life Insurers) (Amendment) Regulations 2010 and shall be deemed to have come into operation on 1st April 2008.

Amendment of regulation 2

2. Regulation 2 of the Income Tax (Concessionary Rate of Tax for Approved Offshore Life Insurers) Regulations (Rg 28) (referred to in these Regulations as the principal Regulations) is amended —

(a)

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

“ “approved takaful insurer” means any insurer approved under regulation 3B;”; and

(b)

by deleting the full-stop at the end of the definition of “participating policy” and substituting a semi-colon, and by inserting immediately thereafter the following definition:

“ “qualifying return in lieu of interest” means any return in lieu of interest from investing in products endorsed by any Shari’ah council or body, or by any committee formed for the purpose of providing guidance on compliance with Shari’ah law.”.

New regulation 3B

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

“Approval of takaful insurer

3B.—(1) The Minister or such person as he may appoint may, upon application by any insurer registered under the Insurance Act (Cap. 142) to carry on life takaful business and if he considers it expedient in the public interest to do so, during the period from 1st April 2008 to 31st March 2013, approve the insurer as an approved takaful insurer for the purposes of these Regulations.

(2) Any approval under paragraph (1) shall be for such period not exceeding 5 years as is specified by the Minister or the person appointed under paragraph (1).”.

Amendment of regulation 4

4. Regulation 4 of the principal Regulations is amended —

(a)

by deleting the word “Tax” in paragraph (1) and substituting the words “Subject to regulations 4A and 5A, tax”; and

(b)

by deleting the regulation heading and substituting the following regulation heading:

“Concessionary rate of tax for approved insurer”.

New regulation 4A

5. The principal Regulations are amended by inserting, immediately after regulation 4, the following regulation:

“Concessionary rate of tax for income of approved takaful insurer

4A.—(1) Notwithstanding regulation 4 and subject to regulation 5A, tax shall be payable at the rate of 5% on the following income derived by an approved takaful insurer:

(a)

the amount referred to in section 26(7)(a)(i) of the Act in respect of offshore life takaful (but excluding the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of any life insurance fund established under the Insurance Act relating to offshore life takaful contracts); and

(b)

the dividends and qualifying return in lieu of interest derived from outside Singapore, the gains or profits realised from the sale of offshore investments, and qualifying return in lieu of interest from ACU deposits derived from —

(i)	subject to paragraph (2), the investment of its insurance fund established and maintained under the Insurance Act (Cap. 142) for the offshore life takaful business; and
(ii)	the investment of its shareholders’ funds established in Singapore which are used to support the offshore life takaful business as ascertained under regulation 5C.

(2) Where the Comptroller is satisfied that any part of the insurance fund referred to in sub-paragraph (b)(i) of paragraph (1) is not required to support the offshore life takaful business of an approved takaful insurer, he may adopt such reduced amount of the dividends, qualifying return in lieu of interest and gains or profits under that sub-paragraph as appears to him to be reasonable in the circumstances.”.

Amendment of regulation 5

6. Regulation 5 of the principal Regulations is amended —

(a)

by deleting the word “The” in paragraph (1) and substituting the words “Subject to regulation 5C, the”; and

(b)

by deleting the regulation heading and substituting the following regulation heading:

“Calculation of dividends, interest and gains from sale of offshore investments for approved insurer”.

New regulation 5C

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

“Calculation of dividends, qualifying return in lieu of interest and gains from sale of offshore investments for approved takaful insurer

5C.—(1) The dividends and qualifying return in lieu of interest under regulation 4A(1)(b)(ii) derived by an approved takaful insurer for the basis period for any year of assessment shall be ascertained by the formula —

where

C_o

is the amount of the gross contributions received or receivable during the basis period in respect of insurance contracts underwritten by the approved takaful insurer in the course of carrying on its business in Singapore from the offshore life takaful business; and

P_o, P_i, I and X

have the same meanings as in regulation 5(1).

(2) The gains or profits from the sale of offshore investments under regulation 4A(1)(b)(ii) derived by an approved takaful insurer for the basis period for any year of assessment shall be ascertained by the formula —

where

P_o and P_i

have the same meanings as in paragraph (1); and

has the same meaning as in regulation 5(2).

(3) For the purposes of paragraphs (1) and (2), where the Comptroller is satisfied that any part of the shareholders’ funds of the approved takaful insurer is not required to support its offshore life takaful business, he may adopt such reduced amount of income of I or K as appears to him to be reasonable in the circumstances..”.

Amendment of regulation 6

9. Regulation 6 of the principal Regulations is amended —

(a)

by inserting, immediately after the words “an approved captive insurer under regulation 3A” in paragraph (2), the words “or an approved takaful insurer under regulation 3B”;

(b)

by deleting the words “offshore captive insurance business or” in paragraph (2) and substituting the words “offshore captive insurance business, the offshore life tafakul business or”;

(c)

by deleting the word “and” at the end of paragraph (2)(a);

(d)

by deleting sub-paragraph (b) of paragraph (2) and substituting the following sub-paragraphs:

“(b)

the portion attributable to offshore life takaful business shall be ascertained by using the fraction —

(c)

the portion attributable to offshore life business, other than offshore captive insurance business, and offshore life takaful business, shall be ascertained by using the fraction —

”.

(e)

by deleting the last 4 lines of paragraph (2) and substituting the following:

“

where

P_c

has the same meaning as in regulation 5A;

P_o and P_i

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

C_o

has the same meaning as in regulation 5C(1).

”.

Amendment of regulation 7

10. Regulation 7(1) of the principal Regulations is amended by inserting, immediately after the words “regulation 4(1)(a) and (b)(i)”, the words “or by an approved takaful insurer for any year of assessment taxable at the rate of 5% in accordance with regulation 4A(1)(a) and (b)(i)”.

[G.N. No. S 81/2009]

Made this 3rd day of December 2010.

PETER ONG

Permanent Secretary,
Ministry of Finance,
Singapore.

[R32.18.2925.V8; AG/LLRD/SL/134/2010/9 Vol. 1]