Income Tax (Exemption of Income of Foreign Trusts) Regulations

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Income Tax Act

(Chapter 134, Section 13G)

Income Tax (Exemption of Income of Foreign Trusts) Regulations

Rg 24

G.N. No. S 92/1994

REVISED EDITION 1995

(1st April 1995)

[18th March 1994]

Citation

1. These Regulations may be cited as the Income Tax (Exemption of Income of Foreign Trusts) Regulations and shall have effect for the year of assessment 1994 and subsequent years of assessment.

Definitions

2. In these Regulations —

“designated investments” has the same meaning as in the Income Tax (Income from Funds Managed for Foreign Investors) Regulations 2003 (G.N. No. S 640/2003);

[S 590/2005 wef 03/05/2002]

“foreign trust” means —

(a)

a trust by deed where very settlor and beneficiary of the trust are —

(i)

In the case of an individual, neither a citizen of Singapore nor resident in Singapore; and

(ii)

In the case of a company, neither incorporated nor resident in Singapore and where such a company has not more than 50 shareholders, the whole of its issued capital is beneficially owned, directly or indirectly, by persons who are neither citizens of Singapore nor resident in Singapore; and where such a company has more than 50 shareholders, not less that 95% of its issued capital is beneficially owned, directly or indirectly, by persons who are neither citizens of Singapore nor resident in Singapore or

(b)

a unit trust where the whole value of its fund is beneficially held, directly or indirectly, by individuals or companies referred to in paragraph (a);

“specified income” means —

(a)

interest and dividends derived from outside Singapore and received in Singapore in respect of any designated investments;

(b)

interest derived from deposits with and certificates of deposit issued by banks approved under section 13(6) of the Act and from Asian dollar bonds approved under section 13(1)(v) of the Act;

(c)

gains or profits realised from the sale of any designated investments;

(d)

gains from transactions in currencies other than Singapore dollars carried out on or after 1st April 1993 in interest rate or currency contracts on a forward basis, interest rate or currency options and interest rate or currency swaps with —

(i)	an Asian Currency unit of a financial institution;
(ii)	a person who is neither a resident of nor a permanent establishment in Singapore; or
(iii)	a branch office outside Singapore of a company resident in Singapore;
	“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.

Exemption

3. Subject to regulations 4 and 5, there shall be exempt from tax the specified income derived from designated investments by a foreign trust administered by a trustee company approved under section 43J of the Act.

Deduction of certain losses not allowed

4. No deduction shall be allowed under the Act to any foreign trust in respect of any loss arising from —

(a)

the sale of any designated investments if any gains or profits realised from the sale of such investments would have been exempt from tax under regulation 3;

(b)

any foreign exchange transaction in currencies other than Singapore dollars; and

(c)

any transaction in currencies other than Singapore dollars carried out on or after 1st April 1993 in interest rate or currency contracts on a forward basis, interest rate or currency options and interest rate or currency swaps with —

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

Regulations not applicable to certain foreign trusts

5. These Regulations shall not apply to a foreign trust where any settlor or beneficiary or unit holder (as the case may be) of the foreign trust is a company which —

(a)	has a permanent establishment in Singapore other than a trustee company approved under section 43J of the Act;
(b)	carries on a business in Singapore;
(c)	beneficially owns more than 20% of the issued capital of any company incorporated in Singapore; or
(d)	has 20% or more of its issued capital beneficially owned, directly or indirectly, by a company which falls within paragraph (a), (b) or (c),

unless approval is granted by the Minister or such other person as he may appoint.

Keeping of records

6. Every approved trustee company shall keep and maintain in respect of a foreign trust such records of the particulars of every settlor and beneficiary or unit holder (as the case may be) of the foreign trust as may be required by the Minister or such person as he may appoint for the purposes of these Regulations.

[G. N. No. S 92/94]

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