Income Tax (Concessionary Rate of Tax for Income from Transactions in Approved Derivative Products) Regulations 2003

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No. S 639

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Income from Transactions in Approved Derivative Products) Regulations 2003

In exercise of the powers conferred by section 43D of the Income Tax Act, the Minister for Finance hereby makes the following Regulations:

Citation

1. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Income from Transactions in Approved Derivative Products) Regulations 2003.

Definitions

2. In these Regulations —

“approved derivative product” means a derivative product, including an Exchange Traded Fund, which —

(a)

is denominated —

(i)	in the case of a transaction in the derivative product carried out during the period from 1st January 2002 to 26th February 2004 (both dates inclusive), in any foreign currency; and
(ii)	in the case of a transaction in the derivative product carried out on or after 27th February 2004, in any currency; [S 254/2005 wef 27/02/2004]

(b)

commenced trading on the futures or securities markets maintained by the Singapore Exchange Limited or any of its subsidiaries for the first time during the period 1st January 2002 to 31st December 2006 (both dates inclusive); and

(c)

is approved for the purpose of these Regulations by the Minister or such other person as he may appoint;

“Exchange Traded Fund” means an investment fund that tracks a specific index or fixed basket of stocks, and is traded on the Singapore Exchange;

“member” means —

(a)

where the qualifying year of assessment is the year of assessment 2003 or 2004 —

(i)	a futures member of the Singapore Exchange whose membership is of the class or description known as “corporate membership”; and
(ii)	any member of any securities market maintained by the Singapore Exchange Securities Trading Limited; and

(b)

where the qualifying year of assessment is the year of assessment 2005 or any subsequent year of assessment —

(i)	a futures member of the Singapore Exchange as defined in section 43D(4) of the Act; and
(ii)	any member of any securities market maintained by the Singapore Exchange Securities Trading Limited; [S 300/2004 wef 30/12/2003]

“qualifying year of assessment”, in relation to an approved derivative product, means any year of assessment which is within the period of 3 years of assessment immediately following the year of commencement of trading of that approved derivative product on the futures or securities markets maintained by the Singapore Exchange Limited or any of its subsidiaries.

Concessionary rate of 5% on income from transaction in approved new derivative product

3. Tax shall be payable at the rate of 5% for any qualifying year of assessment on dealing profits, fees and commissions from and on interest derived by a member in connection with any transaction in an approved derivative product carried out on the futures or securities markets maintained by the Singapore Exchange Limited or any of its subsidiaries with —

(a)

an Asian Currency Unit of a financial institution;

(b)

another member;

(c)

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

(d)

a branch office outside Singapore of a company resident in Singapore; or

(e)

a foreign investor, in respect of any transaction —

(i)	carried out before 3rd May 2002 through an Asian Currency Unit of a financial institution or a fund manager approved in either case under section 13C(a) of the Act in force immediately before 3rd May 2002 or section 43A(1)(b) of the Act; or [S 254/2005 wef 30/12/2003]
(ii)	carried out on or after 3rd May 2002 through an Asian Currency Unit of a financial institution or a fund manager approved under section 43A(1)(b) of the Act,

where the member is among the top 20 members as determined by the Singapore Exchange Limited or any of its subsidiaries in respect of the total volume of transactions (excluding trades cleared for other members) in that product in the year immediately preceding that qualifying year of assessment.

Determination of income chargeable to tax

4. The Comptroller shall determine —

(a)	the income chargeable to tax at the concessionary rate of tax under regulation 3 having regard to such expenses, donations and allowances under section 19, 19A, 20, 21, 22 or 23 of the Act as are, in his opinion, to be deducted in ascertaining such income; and
(b)	the manner and extent to which any losses incurred by the member and arising from any transaction in an approved derivative product may be deducted under section 37 of the Act.

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]

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