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Contents  

Long Title

Part I PRELIMINARY

Part II ADMINISTRATION

Part III IMPOSITION OF INCOME TAX

Part IV EXEMPTION FROM INCOME TAX

Part V DEDUCTIONS AGAINST INCOME

Part VI CAPITAL ALLOWANCES

Part VII ASCERTAINMENT OF CERTAIN INCOME

Part VIII ASCERTAINMENT OF STATUTORY INCOME

Part IX ASCERTAINMENT OF ASSESSABLE INCOME

Part X ASCERTAINMENT OF CHARGEABLE INCOME AND PERSONAL RELIEFS

Part XI RATES OF TAX

Part XII DEDUCTION OF TAX AT SOURCE

Part XIII ALLOWANCES FOR TAX CHARGED

Part XIV RELIEF AGAINST DOUBLE TAXATION

Part XV PERSONS CHARGEABLE

Husband and wife

Trustees, agents and curators

Part XVI RETURNS

Part XVII ASSESSMENTS AND OBJECTIONS

Part XVIII APPEALS

Part XIX COLLECTION, RECOVERY AND REPAYMENT OF TAX

Part XX OFFENCES AND PENALTIES

Part XXA EXCHANGE OF INFORMATION UNDER AVOIDANCE OF DOUBLE TAXATION ARRANGEMENTS AND EXCHANGE OF INFORMATION ARRANGEMENTS

Part XXB INTERNATIONAL AGREEMENTS TO IMPROVE TAX COMPLIANCE

Part XXI MISCELLANEOUS

FIRST SCHEDULE Institution, authority, person or fund exempted

SECOND SCHEDULE Rates of tax

THIRD SCHEDULE Repealed

FOURTH SCHEDULE Name of bond, securities, stock or fund

FIFTH SCHEDULE Child relief

SIXTH SCHEDULE Number of years of working life of asset

SEVENTH SCHEDULE Advance rulings

EIGHTH SCHEDULE Information to be included in a request for information under Part XXA

Legislative History

Comparative Table

Comparative Table

 
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PART VII
ASCERTAINMENT OF CERTAIN INCOME
Profits of insurers
26.
—(1)  Subject to section 34A, this section has effect notwithstanding anything to the contrary in this Act except that nothing in this section shall affect the chargeability to tax of any income of an insurer under section 10.
[28/92; 7/2007]
Separate accounts to be maintained for business of insuring and reinsuring offshore risks
(2)  An insurer shall maintain separate accounts for the income derived by it from carrying on offshore life business or the business (other than the business of life assurance) of insuring and reinsuring offshore risks.
[7/79; 9/80; 20/91; 7/2007]
Insurers other than life insurers
(3)  In the case of an insurer whether mutual or proprietary (other than a life insurer) where the gains or profits accrue in part outside Singapore, the gains or profits on which tax is payable shall be ascertained by —
(a)
taking the gross premiums and interest and other income received or receivable in Singapore (less any premiums returned to the insured and premiums paid on reinsurances);
(b)
deducting from the balance so arrived at a reserve for unexpired risks at the percentage adopted by the insurer in relation to its operations as a whole for such risks at the end of the period for which the gains or profits are being ascertained;
(c)
adding thereto a reserve similarly calculated for unexpired risks outstanding at the commencement of that period; and
(d)
from the net amount so arrived at, deducting the actual losses (less the amount recovered in respect thereof under reinsurance), the distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office.
[7/2007]
(4)  For the purposes of subsection (3), in ascertaining the gains or profits derived by an insurer from carrying on the business (other than the business of life assurance) of insuring and reinsuring offshore risks or any other risks for the purposes of any concessionary rate of tax or exemption from tax prescribed by regulations made under section 43C —
(a)
no income other than income from premiums or from such dividends, interest and gains or profits realised from the sale of investments as may be specified in those regulations shall be included;
(b)
income in respect of dividends, interest and gains or profits realised from the sale of investments shall be apportioned in such manner as may be prescribed by those regulations; and
(c)
any item of expenditure not directly attributable to that business shall be apportioned in such manner as may be prescribed by those regulations.
[7/79; 9/80; 20/91; 26/93; 21/2003; 7/2007]
(5)  [Deleted by Act 19 of 2013]
Life insurers
(6)  In the case of a life insurer, whether mutual or proprietary, the gains or profits on which tax is payable shall be ascertained by taking the aggregate of —
(a)
in the case of insurance funds established and maintained for Singapore policies, the amount computed in the following manner:
(i)
taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act (Cap. 142);
(ii)
adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;
(iii)
deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;
(iv)
adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; and
(v)
adding thereto the balance so arrived at the life insurance surplus in relation to the non-participating fund and the investment-linked fund;
(b)
in the case of shareholders’ fund established in Singapore, the income therein less any expenses (including management expenses) incurred in the production of such income; and
(c)
in the case of insurance funds established and maintained for offshore policies, the amount computed in the following manner:
(i)
taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act;
(ii)
adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;
(iii)
deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;
(iv)
adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act;
(v)
adding thereto the offshore life insurance surplus in relation to the non-participating fund and the investment-linked fund; and
(vi)
deducting from the balance so arrived at such income that is subject to tax at the concessionary rate of tax prescribed by regulations made under section 43C.
[7/2007]
(7)  Notwithstanding subsection (6), in the case of a life insurer which has income subject to tax at the concessionary rate of tax prescribed by regulations made under section 43C, in ascertaining the income for the purposes of those regulations —
(a)
only such part of the following income as may be specified in those regulations shall be included:
(i)
the amount in relation to insurance funds established and maintained for offshore policies, computed in the following manner:
(A)
taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act;
(B)
adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;
(C)
deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;
(D)
adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; and
(E)
adding thereto the offshore life insurance surplus in relation to the non-participating fund and the investment-linked fund; and
(ii)
the income of the shareholders’ fund established in Singapore as is attributable to the offshore life business; and
(b)
the income referred to in paragraph (a) and any item of expenditure not directly incurred in the production of such income shall be apportioned in such manner as may be prescribed by those regulations.
[28/92; 7/2007]
(8)  In ascertaining the gains or profits of a life insurer whether mutual or proprietary —
(a)
the Comptroller shall determine the manner and extent to which —
(i)
any allowances under section 19, 19A, 20, 21, 22 or 23 and expenses and donations allowable under this Act are to be deducted; and
(ii)
any losses incurred by the insurer may be deducted under section 37;
(b)
the allowances under section 19, 19A, 20, 21, 22 or 23 or the losses under section 37 in respect of such part of the income of the insurer as is apportioned to the policyholders of the insurer in accordance with regulations made under section 43(9) or 43C in any year of assessment —
(i)
shall only be available for deduction against such part of the income as is so apportioned in accordance with regulations made under section 43(9) or 43C for that year of assessment, as the case may be; and
(ii)
the balance of such allowances or losses shall be added to, and be deemed to form part of, the corresponding allowances or losses, if any, for the next succeeding year of assessment and any subsequent year of assessment in accordance with section 23 or 37, as the case may be;
(c)
section 37B shall apply, with the necessary modifications, in relation to the deduction of allowances under section 19, 19A, 20, 21, 22 or 23 or the losses under section 37 in respect of such part of the income of the insurer (being a company) as is subject to tax at the rate of tax under section 43(1)(a) and of such part of the income of the insurer (being a company) as is apportioned to the shareholders of the insurer in accordance with regulations made under section 43C; and for the purpose of such application any reference in section 37B to income of a company subject to tax at a lower rate of tax or income of the company subject to tax at a lower rate of tax, as the case may be, shall be read as a reference to such part of the income of the insurer as is apportioned to the shareholders of the insurer in accordance with regulations made under section 43C; and
(d)
in a case where, immediately before the life insurer ceases business permanently without transferring the business to any person in Singapore, there is an amount remaining in the participating fund which is not allocated by way of bonus to any participating policy, the Comptroller may make such adjustment to the tax liability of the life insurer as he thinks fit.
[28/92; 26/93; 24/2001; 37/2002; 7/2007]
Composite insurers
(9)  In the case of an insurer carrying on life insurance business in conjunction with any other insurance business, the assessment of the gains or profits on which tax is payable shall be made in one sum, but the gains or profits arising from the life insurance business shall be computed in accordance with subsections (6), (7) and (8) as if such life insurance business were a separate business from the other insurance business carried on by the insurer.
[28/92; 7/2007]
(10)  For the purposes of this section, the Minister may make regulations —
(a)
to provide for such transitional, supplementary and consequential matters as he may consider necessary or expedient; and
(b)
generally to give effect to or for carrying out the purposes of this section.
[7/2007]
(11)  Notwithstanding the amendment of this section by the Income Tax (Amendment) Act 2007 (Act 7 of 2007), section 26 in force immediately before the amendment shall apply to the income of an insurer derived before the year of assessment 2006.
[7/2007]
Definitions
(12)  In this section, and section 43C (except in relation to the definition of “insurer”) —
“accident and health policy” has the same meaning as in the Insurance Act (Cap. 142);
[Act 19 of 2013 wef Y/A 2015]
1“income of the shareholders’ fund” means —
(a)
gains or profits on the sale of investments of the shareholders’ fund, whether derived from Singapore or elsewhere; and
(b)
investment income and other income of the shareholders’ fund derived from Singapore or received in Singapore from outside Singapore;
1  The definition of “accident and health policy” has been inserted immediately before the definition of “income of the shareholders’ fund” from the year of assessment 2015 pursuant to section 21(1)(b) and (2) of the Income Tax (Amendment) Act 2013 (Act 19 of 2013).
“insurer” means —
(a)
a company licensed under the Insurance Act to carry on insurance business in Singapore; or
(b)
a person (including a partnership) permitted under the Insurance Act to carry on insurance business in Singapore under a foreign insurer scheme;
“investment-linked fund” means an insurance fund for investment-linked policies established and maintained under section 17(1A) of the Insurance Act;
“investment-linked policies”, “non-participating policies” and “participating policies” have the same meanings as in the First Schedule to the Insurance Act;
“life insurance surplus”, in relation to the non-participating fund and the investment-linked fund of an insurer, means the amount ascertained —
(a)
by taking the aggregate of —
(i)
the gross premiums (including consideration paid or payable for the purchase of annuities) from Singapore non-participating and Singapore investment-linked policies of any life insurance fund established and maintained under the Insurance Act (less any premiums returned to the insured and premiums paid or payable on reinsurance);
(ii)
the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to Singapore non‑participating and Singapore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act; and
(iii)
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 and maintained under the Insurance Act relating to Singapore non-participating and Singapore investment-linked policies; and
(b)
by deducting from that aggregate —
(i)
distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office;
(ii)
policy moneys paid or payable in respect of Singapore non-participating and Singapore investment-linked policies (less any amount recovered or recoverable in respect thereof under reinsurance);
(iii)
moneys paid or payable on the surrender of Singapore non-participating and Singapore investment-linked policies; and
(iv)
the net increase between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to Singapore non-participating and Singapore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act;
“life policy” has the same meaning as in the Insurance Act;
“non-participating fund” means an insurance fund established and maintained under section 17(2) of the Insurance Act which comprises wholly of non-participating policies;
2“offshore life business” means the business of insuring or reinsuring the liability of a life policy, or accident and health policy, of any life insurance fund established and maintained under the Insurance Act, not being a Singapore policy within the meaning of that Act;
[Act 19 of 2013 wef Y/A 2015]
2  The definition of “offshore life business” has been deleted and substituted from the year of assessment 2015 pursuant to section 21(1)(c) and (2) of the Income Tax (Amendment) Act 2013 (Act 19 of 2013).
“offshore life insurance surplus”, in relation to the non-participating fund and the investment-linked fund of an insurer, means the amount ascertained —
(a)
by taking the aggregate of —
(i)
the gross premiums (including consideration paid or payable for the purchase of annuities) from offshore non-participating and offshore investment-linked policies of any life insurance fund established and maintained under the Insurance Act (less any premiums returned to the insured and premiums paid or payable on reinsurance);
(ii)
the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to offshore non‑participating and offshore investment‑linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act; and
(iii)
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 and maintained under the Insurance Act relating to offshore non‑participating and offshore investment‑linked policies; and
(b)
by deducting from that aggregate —
(i)
distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office;
(ii)
policy moneys paid or payable in respect of offshore non‑participating and offshore investment‑linked policies (less any amount recovered or recoverable in respect thereof under reinsurance);
(iii)
moneys paid or payable on the surrender of offshore non‑participating and offshore investment‑linked policies; and
(iv)
the net increase between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to offshore non‑participating and offshore investment‑linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act;
3“offshore risk” means a risk or liability that is insured by a policy of any general insurance fund established and maintained under the Insurance Act, not being a Singapore policy within the meaning of that Act;
[Act 19 of 2013 wef Y/A 2015]
3  The definition of “offshore risk” has been deleted and substituted from the year of assessment 2015 pursuant to section 21(1)(e) and (2) of the Income Tax (Amendment) Act 2013 (Act 19 of 2013).
“participating fund” means an insurance fund established and maintained under section 17(2) of the Insurance Act which comprises wholly or partly of participating policies;
“policy liabilities”, in relation to the non-participating fund and the investment-linked fund of an insurer, means liabilities in respect of policies for which the non-participating fund and investment-linked fund are established and maintained under section 17 of the Insurance Act;
“policy moneys” has the same meaning as in the Insurance Act;
[Deleted by Act 19 of 2013 wef Y/A 2015]
“surplus account”, in relation to a participating fund of a life insurer, means the surplus account established and maintained under section 17(6)(a) of the Insurance Act as part of that fund.
[28/92; 7/2007; 27/2009; 11/2013; 19/2013]
Ascertainment of income of member of Lloyd’s syndicate
26A.
—(1)  Where a business of insuring and reinsuring risks is carried on by any member of Lloyd’s through a syndicate formed to carry on the business in Singapore —
(a)
the income of the member of Lloyd’s from the syndicate in the basis period for any year of assessment shall be deemed to be the share to which he was entitled during that period in the income of the syndicate; and
(b)
the statutory income of the member of Lloyd’s from the syndicate shall be computed in accordance with section 35 by treating his share of the income of the syndicate as if it were income of a trade, business, profession or vocation carried on or exercised by him.
[7/2007]
(2)  Sections 36 (as it applies by the operation of section 36C(1)) and 36C shall not apply to any Lloyd’s Scottish limited partnership carrying on a business of insuring and reinsuring risks in Singapore, and sections 35 and 43(1)(c) shall apply, with the necessary modifications, to such partnership as if it were a person (other than a company or an individual) not resident in Singapore.
[7/2007; 53/2007; 29/2012]
(2A)  Sections 36 (as it applies by the operation of section 36A(2)) and 36A shall not apply to any Lloyd’s limited liability partnership carrying on a business of insuring and reinsuring risks in Singapore, and sections 35 and 43(1)(c) shall apply, with the necessary modifications, to such partnership as if it were —
(a)
for the purposes of the years of assessment 2008 to 2012, a person (other than a company, an individual or a Hindu joint family) not resident in Singapore; or
(b)
for the purposes of every subsequent year of assessment, a person (other than a company or an individual) not resident in Singapore.
[29/2012]
(2B)  For the year of assessment 2015 and every subsequent year of assessment, section 37B shall apply, with the necessary modifications, to —
(a)
any Lloyd’s limited liability partnership; or
(b)
any Lloyd’s Scottish limited partnership,
carrying on a business of insuring and reinsuring risks in Singapore whose income for that year of assessment is subject to tax at different rates, as that section applies to a company whose income for any year of assessment is subject to tax at different rates.
[Act 37 of 2014 wef 27/11/2014]
(2C)  To avoid doubt, subsection (2B) applies to any amount of allowance, loss or donation of the Lloyd’s limited liability partnership or the Lloyd’s Scottish limited partnership carried forward to the year of assessment from an earlier year of assessment.
[Act 37 of 2014 wef 27/11/2014]
(3)  Section 53 shall apply, with the necessary modifications, to any non-resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on that business in Singapore as that section applies to a person not resident in Singapore.
[7/2007]
(4)  The tax chargeable for any year of assessment on the income of any non-resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through all syndicates formed to carry on the business in Singapore of which he is a member shall be aggregated with that of all other non-resident members of Lloyd’s of those syndicates, and assessable in the name of the agent.
[7/2007]
(5)  The agent shall —
(a)
when required by the Comptroller by notice published in the Gazette under section 62(1) or by notice in writing under section 62(3), make a return of income for the year of assessment specified in the notice and furnish such particulars as may be required for the purpose of ascertaining the income, if any, for which any member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on the business in Singapore, is chargeable to tax; and
(b)
if a return is not made under paragraph (a) for any year of assessment, furnish to the Comptroller an estimate of the aggregate amount of chargeable income of every non‑resident member of Lloyd’s carrying on a business of insuring and reinsuring risks through any syndicate formed to carry on the business in Singapore, within 3 months after the end of the accounting period relating to that year of assessment of that member.
[7/2007]
(6)  In this section —
“agent” means Lloyd’s of London (Asia) Pte Ltd or such other person as the Comptroller may determine;
“Council of Lloyd’s” means the Council of Lloyd’s established by the Lloyd’s Act 1982 of the United Kingdom;
“Lloyd’s” means the society of underwriters known in the United Kingdom as Lloyd’s and incorporated by the Lloyd’s Act 1871 of the United Kingdom;
“Lloyd’s limited liability partnership” means any limited liability partnership formed under the law of any part of the United Kingdom which is a member of Lloyd’s;
“Lloyd’s Scottish limited partnership” means a limited partnership formed under the laws of the Scotland which is a member of Lloyd’s;
“member of Lloyd’s” means a person admitted to membership of Lloyd’s as an underwriting member and includes, where the context so requires, any person who has ceased to be a member of Lloyd’s and any administrator, administrative receiver, committee, curator bonis, executor, liquidator, manager, personal representative, supervisor or trustee in bankruptcy, or any other person by law entitled or bound to administer the affairs of the member or former member concerned;
“syndicate” means a member of Lloyd’s or a group of members of Lloyd’s underwriting insurance business at Lloyd’s through the agency of a Lloyd’s underwriting agent to which member or group a particular syndicate number is assigned by or under the authority of the Council of Lloyd’s.
[7/2007; 29/2012]
Profits of non-resident shipowner or charterer
27.
—(1)  Where a non-resident person carries on the business of shipowner or charterer, the income on which tax is payable shall be ascertained as provided in this section.
(2)  Where, for any period, the non-resident person produces a certificate complying with subsection (3) —
(a)
the profits accruing in Singapore from the business for that period shall be deemed to be a sum bearing the same ratio to the sums receivable in respect of the carriage of passengers, mail, livestock and goods shipped in Singapore as the total profits for that period bear to the total sum receivable by him in respect of the carriage of passengers, mail, livestock and goods, as shown by the certificate; and
(b)
the depreciation allowable against such profits shall similarly be deemed to be a sum bearing the same ratio to the sums receivable in respect of the carriage of passengers, mail, livestock and goods shipped in Singapore as the total depreciation for that period bears to the total sum receivable by him in respect of the carriage of passengers, mail, livestock and goods, as shown by the certificate.
(3)  The certificate referred to in subsection (2) shall —
(a)
be one issued by or on behalf of the income tax authority of the place of residence of the non-resident person;
(b)
be acceptable for the purposes of this section only where the Comptroller is satisfied that the relevant income tax authority —
(i)
computes and assesses the full profits of the non‑resident person from his shipping business on a basis not materially different from the basis of assessment provided by this Act for the assessment of a resident of Singapore carrying on a similar business; and
(ii)
accepts any certificate issued by the Comptroller for the purpose of computing the profits derived by a resident of Singapore from carrying on the business of a shipowner or charterer and assesses the income of that resident on the basis of and without making any adjustment to the profits or loss or the allowance for depreciation as stated in the certificate issued by the Comptroller and in the same manner as the income of the non-resident person is assessed under subsection (2); and
(c)
contain, in respect of the relevant accounting period, the following information:
(i)
the ratio of the profits or, where there are no profits, of the loss, as computed for the purposes of income tax by that authority, without making any allowance by way of depreciation, to the total sum receivable in respect of the carriage of passengers, mail, livestock and goods;
(ii)
the ratio of the allowance for depreciation as computed by that authority to that total sum receivable in respect of the carriage of passengers, mail, livestock and goods.
[5/83]
(4)  Where, for any period, a non-resident person does not, for any reason, produce a certificate complying with subsection (3), the profits accruing in Singapore shall be deemed to be a sum equal to 5% of the full sum receivable on account of the carriage of passengers, mail, livestock and goods shipped in Singapore.
(5)  Where a non-resident person has been assessed under subsection (4) because a certificate had not been issued at the time of assessment, he shall be entitled, on the subsequent production of such a certificate to claim at any time within 2 years after the end of such year of assessment, or such further time as the Comptroller may consider reasonable in the circumstances, that his liability to tax for the year be determined on the basis provided by subsection (2).
(6)  Where the Comptroller decides that the call of a ship (within the meaning of section 2(1) of the Merchant Shipping Act) belonging to a particular non-resident shipowner or charterer at a port in Singapore is casual and that further calls by that ship or others in the same ownership are improbable, this section shall not apply to the profits of that ship and no tax shall be chargeable on them.
[Act 2 of 2016 wef 11/04/2016]
(7)  Notwithstanding anything in subsections (1) to (6), if in computing the profits derived by a resident in Singapore from carrying on the business of a shipowner or charterer, the tax authority of a foreign country determines such profits to be an amount which exceeds 5% of the full sum receivable on account of the carriage of passengers, mail, livestock and goods shipped in that foreign country, the Minister may if he thinks fit direct that, in computing the profits derived in Singapore by a non-resident shipowner or charterer who is resident in that foreign country, the Comptroller shall determine the amount of such profits in such manner as may be substantially similar to that adopted by the tax authority of that foreign country.
[37/75]
Profits of non-resident air transport and cable undertakings
28.  Where a non-resident person carries on the business of air transport or of transmission of messages by cable or by any form of wireless apparatus, he shall be assessable to tax as if he were a non‑resident shipowner and section 27 shall apply, with the necessary modifications, to the computation of the gains or profits of the business.
29.  [Repealed by Act 19 of 2013]
30.  [Repealed by Act 19 of 2013]
Income arising from settlements
31.
—(1)  Where under the terms of any settlement and during the life of the settlor any income, or assets representing it, will or may become payable or applicable to or for the benefit of any relative of the settlor and at the commencement of the year of assessment such relative is unmarried and has not attained the age of 21 years, such income or assets shall be deemed to be income of the settlor and not income of any other person.
(2)  If and so long as the terms of any settlement are such that —
(a)
any person has or may have power, whether immediately or in the future, and whether with or without the consent of any other person, to revoke or otherwise determine the settlement or any provision thereof; and
(b)
in the event of the exercise of the power, the settlor or the wife or husband of the settlor will or may become beneficially entitled to the whole or any part of the property then comprised in the settlement, or of the income arising from the whole or any part of the property so comprised,
all income arising under the settlement from the property comprised in the settlement shall be deemed to be income of the settlor and not income of any other person.
[49/2004]
(3)  Subsection (2) shall not apply by reason only that the settlor or the wife or husband of the settlor will or may become beneficially entitled to any income or property relating to the interest of any beneficiary under the settlement in the event that the beneficiary should die before him.
(4)  Where in any year of assessment the settlor or any relative of the settlor or any person under the direct or indirect control of the settlor or of any of his relatives, whether by borrowing or otherwise, makes use of any income arising or of any accumulated income which has arisen under a settlement to which he is not entitled thereunder, then the amount of such income or accumulated income so made use of shall be deemed to be income of the settlor for that year of assessment and not income of any other person.
(5)  Where under the terms of any settlement to which this section applies any tax is charged on and paid by the person by whom the settlement is made, that person shall be entitled to recover from any trustee or other person to whom income is paid under the settlement the amount of the tax so paid, and for that purpose to require the Comptroller to furnish a certificate specifying the amount of tax so paid; and any certificate so furnished shall be conclusive evidence of the facts appearing therein.
(6)  If any question arises as to the amount of any payment of income or as to any apportionment of income under this section that question shall be decided by the Comptroller whose decision shall be final.
(7)  This section shall apply to every settlement wheresoever it was made or entered into and whether it was made or entered into before or after 1st January 1960 and shall (where there is more than one settlor or more than one person who made the settlement) have effect in relation to each settlor as if he were the only settlor.
(8)  In this section —
“child” shall include a step-child, a child who has been de facto adopted by the settlor or by the husband or by the wife of the settlor, whether or not such adoption has been registered in accordance with the provisions of any written law, and a child of whom the settlor has the custody or whom he maintains wholly or partly at his own expense;
“relative” means any person who is a wife, grandchild, child, brother, sister, uncle, aunt, nephew, niece or cousin of the settlor;
“settlement” includes any disposition, trust, covenant, agreement, whether reciprocal or collateral, arrangement or transfer of assets or income, but does not include —
(a)
a settlement which in the opinion of the Comptroller is made for valuable and adequate consideration;
(b)
a settlement resulting from an order of a court; or
(c)
any agreement made by an employer to pay to an employee or to the widow or any relative or dependant of such employee after his death such remuneration or pension or lump sum as in the opinion of the Comptroller is fair and reasonable;
“settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into, directly or indirectly, and any person who has provided or undertaken to provide funds or credit, directly or indirectly, for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.
Valuation of trading stock on discontinuance or transfer of trade or business
32.
—(1)  In computing for any purpose of this Act the gains or profits of a trade or business which has been discontinued or transferred, any trading stock belonging to the trade or business at the discontinuance or transfer thereof shall be valued as follows:
(a)
in the case of any such trading stock —
(i)
which is sold or transferred for valuable consideration to a person who carries on or intends to carry on a trade or business in Singapore; and
(ii)
the cost whereof may be deducted by the purchaser as an expense in computing for any such purpose the gains or profits of that trade or business,
the value thereof shall be taken to be the amount realised on the sale or the value of the consideration given for the transfer; and
(b)
in the case of any other such trading stock, the value thereof shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance or transfer of the trade or business.
(2)  In computing for any purpose of this Act the gains or profits of the purchaser of the trading stock of any trade or business which has been discontinued or transferred, such trading stock shall be valued as provided in subsection (1).
(3)  Any question arising under subsection (1) regarding the value attributable to the trading stock belonging to any trade or business which has been discontinued or transferred shall be determined by the Comptroller.
(4)  In this section, “trading stock”, in relation to any trade or business, means property of any description, whether movable or immovable, being either —
(a)
property such as is sold in the ordinary course of trade or business or would be so sold if it were mature or if its manufacture, preparation or construction were complete; or
(b)
materials such as are used in the manufacture, preparation or construction of any such property as is referred to in paragraph (a).
Comptroller may disregard certain transactions and dispositions
33.
—(1)  Where the Comptroller is satisfied that the purpose or effect of any arrangement is directly or indirectly —
(a)
to alter the incidence of any tax which is payable by or which would otherwise have been payable by any person;
(b)
to relieve any person from any liability to pay tax or to make a return under this Act; or
(c)
to reduce or avoid any liability imposed or which would otherwise have been imposed on any person by this Act,
the Comptroller may, without prejudice to such validity as it may have in any other respect or for any other purpose, disregard or vary the arrangement and make such adjustments as he considers appropriate, including the computation or recomputation of gains or profits, or the imposition of liability to tax, so as to counteract any tax advantage obtained or obtainable by that person from or under that arrangement.
(2)  In this section, “arrangement” means any scheme, trust, grant, covenant, agreement, disposition, transaction and includes all steps by which it is carried into effect.
[1/88]
(3)  This section shall not apply to —
(a)
any arrangement made or entered into before 29th January 1988; or
(b)
any arrangement carried out for bona fide commercial reasons and had not as one of its main purposes the avoidance or reduction of tax.
[1/88]
Decision of Comptroller no bar to appeal
34.  Nothing in section 32 or 33 shall prevent the decision of the Comptroller in the exercise of any discretion given to him by any such section from being questioned in an appeal against an assessment in accordance with Part XVIII.
[19/2013]
Adjustment on change of basis of computing profits of financial instruments
34A.
—(1)  Notwithstanding the provisions of this Act, the amount of any profit or loss (as the case may be) or expense to be brought into account for the basis period for any year of assessment in respect of any financial instrument of a qualifying person for the purposes of sections 10, 14, 14I and 37 is that which, in accordance with FRS 39 or SFRS for Small Entities (as the case may be), is recognised in determining any profit or loss (as the case may be) or expense in respect of that financial instrument for that year of assessment.
[7/2007; 29/2012]
(2)  Notwithstanding subsection (1), the profit or loss or expense in respect of the financial instrument referred to in the following paragraphs shall, for the purposes of sections 10, 14, 14I and 37, be computed as follows:
(a)
where a qualifying person to whom section 10(12)(b) applies derives interest from a negotiable certificate of deposit or derives a gain or profit from the sale thereof, his income therefrom shall be treated in the manner set out in section 10(12);
(b)
where a qualifying person derives interest from debt securities and the interest is chargeable to tax under section 10(1)(d), such interest shall be computed based on the contractual interest rate and not the effective interest rate;
(c)
any amount of profit or expense in respect of a loan for which no interest is payable shall be disregarded;
(d)
where the creditor and debtor of a loan agreement are not dealing with each other at arm’s length, only the interest income or the interest expense based on the contractual interest rate shall be chargeable to tax or allowed as a deduction, as the case may be;
(e)
in a case where section 14(1)(a) applies, only the interest expense incurred based on the contractual interest rate shall be allowed as a deduction under section 14(1)(a);
(f)
any amount of profit or loss in respect of a hedging instrument where the underlying asset or liability is employed or intended to be employed as capital shall be disregarded;
(g)
where a bank or qualifying finance company within the meaning of section 14I is unable to make provision for the amount of impairment losses in respect of a group of financial assets in accordance with FRS 39, but is required to make such provision by the Monetary Authority of Singapore, section 14I shall apply for a period of 5 years, or such further period as the Minister may allow, beginning from the year of assessment relating to the basis period in which the bank or qualifying finance company is first required to prepare financial accounts in respect of its trade or business in accordance with FRS 39;
(h)
a gain from discounts or premiums on debt securities, being a gain chargeable to tax under section 10(1)(d), shall be deemed —
(i)
to accrue only on the maturity or redemption of the debt securities; and
(ii)
to be equal to the difference between the amount received on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued;
(i)
in a case where a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium, and section 14(1)(a) applies in respect of the outgoing represented by such discount or premium, such outgoing shall be deemed to be incurred and deductible only when it is paid on the maturity or redemption of the debt securities and —
(i)
in the case of debt securities issued in the basis period relating to the year of assessment 2008 or subsequent years of assessment, to be equal to the difference between the amount paid on the maturity or redemption of the debt securities and the amount for which the debt securities were first issued; or
(ii)
in the case of debt securities issued before the basis period relating to the year of assessment 2008, to be equal to such part of the difference referred to in sub‑paragraph (i) that would be attributable to the year of assessment 2008 and subsequent years of assessment;
(j)
in a case where —
(i)
a qualifying person issues debt securities at a discount or redeems issued debt securities at a premium;
(ii)
the debt securities were issued with an embedded derivative to acquire shares or units in the qualifying person; and
(iii)
the outgoing represented by such discount or premium is deductible under section 14(1),
such part of the outgoing that is attributable to the embedded derivative shall not be deductible.
[7/2007; 53/2007]
(3)  A person who is required to prepare or maintain financial accounts in accordance with FRS 39 may, subject to such conditions as the Comptroller may specify, elect in accordance with subsection (4) not to be subject to this section; and if the person so elects, he shall not be treated as a qualifying person from the year of assessment relating to the basis period during which he is first required to prepare financial accounts in accordance with FRS 39.
[7/2007]
(3A)  A person who prepares or maintains financial accounts in accordance with SFRS for Small Entities may, subject to such conditions as the Comptroller may specify, elect in accordance with subsection (4A) not to be subject to this section; and if the person so elects, he shall not be treated as a qualifying person from the year of assessment relating to the basis period during which he first prepares financial accounts in accordance with SFRS for Small Entities.
[29/2012]
(3B)  A person is not entitled to make an election under subsection (3) if he is already subject to this section because he did not make an election in accordance with subsection (4A), or he had revoked under subsection (5) his election made in accordance with subsection (4A).
[29/2012]
(3C)  A person is not entitled to make an election under subsection (3A) if he is already subject to this section because he did not make an election in accordance with subsection (4), or he had revoked under subsection (5) his election made in accordance with subsection (4).
[29/2012]
(4)  The election referred to in subsection (3) shall be made by the person by notice in writing to the Comptroller —
(a)
at the time of lodgment of the return of income for the year of assessment referred to in subsection (3); or
(b)
within such further time as the Comptroller may allow.
[7/2007]
(4A)  The election referred to in subsection (3A) shall be made by the person by notice in writing to the Comptroller —
(a)
at the time of lodgment of the return of income for the year of assessment referred to in that subsection; or
(b)
within such further time as the Comptroller may allow.
[29/2012]
(5)  A person who has made an election under subsection (3) or (3A) may at any time revoke the election by notice in writing to the Comptroller; and if the person so revokes, he shall be treated as a qualifying person from the year of assessment relating to the basis period during which the revocation is made or such year of assessment as the Comptroller may approve.
[7/2007; 29/2012]
(6)  The revocation under subsection (5) shall be irrevocable.
[7/2007]
(7)  A person who is not required to prepare or maintain financial accounts in accordance with FRS 39 or SFRS for Small Entities may apply to the Comptroller in writing for approval to be subject to this section and, if the Comptroller approves the application, that person shall be treated as a qualifying person from the year of assessment relating to the basis period during which the approval is granted or such later year of assessment as the Comptroller may approve.
[7/2007; 29/2012]
(8)  The provisions of this section pertaining to FRS 39 shall have effect for any basis period beginning on or after 1st January 2005; and the provisions of this section pertaining to SFRS for Small Entities shall have effect for any basis period beginning on or after 1st January 2011.
[29/2012]
(9)  For the purposes of this section, the Minister may make regulations —
(a)
to provide for such transitional, supplementary and consequential matters as he may consider necessary or expedient; and
(b)
generally to give effect to or for carrying out the purposes of this section.
[7/2007]
(10)  In this section —
“contractual interest rate”, in relation to any financial instrument, means the interest rate specified in the financial instrument;
“debt securities” has the same meaning as in section 43N(4);
“FRS 39” means the financial reporting standard known as Financial Reporting Standard 39 (Financial Instruments: Recognition and Measurement) that is treated as made by the Accounting Standards Council under Part III of the Accounting Standards Act (Cap. 2B), as amended from time to time;
“Monetary Authority of Singapore” means the Monetary Authority of Singapore established under section 3 of the Monetary Authority of Singapore Act (Cap. 186);
“qualifying person”, in relation to any year of assessment, means —
(a)
a person who is required to prepare or maintain financial accounts in accordance with FRS 39 and who has not made an election under subsection (3) for that year of assessment;
(b)
a person who prepares or maintains financial accounts in accordance with SFRS for Small Entities and who has not made an election under subsection (3A) for that year of assessment; or
(c)
a person who is treated as a qualifying person under subsection (5) or (7) for that year of assessment,
as the case may be;
“SFRS for Small Entities” means the financial reporting standard known as Singapore Financial Reporting Standard for Small Entities made by the Accounting Standards Council under Part III of the Accounting Standards Act, as amended from time to time.
[7/2007; 29/2012]
(11)  Any term used in this section and not defined in this section but defined in FRS 39 or SFRS for Small Entities (as the case may be) shall have the same meaning as in FRS 39 or SFRS for Small Entities (as the case may be).
[7/2007; 29/2012]
Islamic financing arrangements
34B.
—(1)  This section shall apply to any prescribed Islamic financing arrangement entered into on or after 17th February 2006 between any person and a financial institution.
[7/2007]
(2)  Subject to such exceptions, adaptations and modifications as may be prescribed, sections 10, 12, 13, 14, 15 and 45 and regulations made under section 43Q shall apply in relation to any prescribed Islamic financing arrangement as if a reference in any of those provisions to interest accrued, derived, received or incurred in relation to any loan, deposit or mortgage were a reference to the effective return of the arrangement.
[7/2007]
(3)  Where under a prescribed Islamic financing arrangement, an asset is sold by one party to the arrangement to the other party, the effective return of the arrangement shall be excluded in determining for the purposes of this Act the consideration for the sale and purchase of the asset.
[7/2007]
(4)  Subsection (3) does not affect the operation of any provision of this Act which provides that the consideration for a sale or purchase is to be taken for any purpose to be an amount other than the actual consideration.
[7/2007]
(5)  For the purposes of this section, the Minister may make regulations —
(a)
to prescribe anything that is required or authorised to be prescribed under this section;
(b)
to provide for such transitional, supplementary and consequential matters as he may consider necessary or expedient; and
(c)
generally to give effect to or for carrying out the purposes of this section.
[7/2007]
(6)  In this section —
“effective return”, in relation to a prescribed Islamic financing arrangement, means the prescribed return in lieu of interest that has or is accrued, derived, received or incurred under the arrangement;
“financial institution” means —
(a)
any institution in Singapore that is licensed or approved by the Monetary Authority of Singapore, or exempted from such licensing or approval, under any written law administered by the Monetary Authority of Singapore; or
(b)
any institution outside Singapore that is licensed or approved, or exempted from such licensing or approval, under any written law administered by its financial supervisory authority for the carrying on of financial activities;
“Islamic financing arrangement” means a financing arrangement which is —
(a)
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; and
(b)
permitted under any written law in Singapore or elsewhere.
[7/2007]
Amalgamation of companies
34C.
—(1)  This section shall only apply to a qualifying amalgamation.
[27/2009]
Interpretation
(2)  In this section —
“first 2 years of assessment”, in relation to an amalgamating company, means the year of assessment relating to the basis period during which the company is incorporated and the year of assessment immediately following that year of assessment;
“FRS 38” and “FRS 103” mean the financial reporting standards known as Financial Reporting Standard 38 (Intangible Assets) and Financial Reporting Standard 103 (Business Combinations), respectively, issued by the Accounting Standards Council under the Accounting Standards Act (Cap. 2B);
“qualifying amalgamation” means —
(a)
any amalgamation of companies where the notice of amalgamation under section 215F of the Companies Act (Cap. 50) or a certificate of approval under section 14A of the Banking Act (Cap. 19) is issued on or after 22nd January 2009; and
(b)
such other amalgamation of companies as the Minister, or such person as he may appoint, may approve.
[27/2009; 29/2012]
(3)  For the purpose of this section, the date of amalgamation of companies is —
(a)
the date shown on the notice of amalgamation under section 215F of the Companies Act;
(b)
the date of lodgment mentioned in section 14A(4) of the Banking Act; or
(c)
such date as specified in the letter of approval issued under paragraph (b) of the definition of “qualifying amalgamation” in subsection (2),
as the case may be.
[27/2009]
Election for section to apply
(4)  An amalgamated company in a qualifying amalgamation shall, within 90 days from the date of amalgamation or such further period as the Comptroller may allow, elect for this section to apply to it and all the amalgamating companies in the qualifying amalgamation.
[27/2009]
(5)  An election under subsection (4) shall be made by an amalgamated company by notice in writing to the Comptroller and shall be irrevocable.
[27/2009]
(6)  Upon such election, the trades and businesses carried on in Singapore of all the amalgamating companies shall be treated as carried on in Singapore by the amalgamated company beginning from the date of amalgamation and —
(a)
any property on revenue account of each amalgamating company shall, subject to subsection (14), be treated as property on revenue account of the amalgamated company; and
(b)
any property on capital account of each amalgamating company shall, subject to subsection (16), be treated as property on capital account of the amalgamated company,
and the amalgamated company shall be treated as having acquired the property on the date on which the amalgamating company acquired it for an amount that was incurred by the amalgamating company in respect of that property.
[27/2009]
Effect of cancellation of shares
(7)  Where an amalgamating company (referred to as the first‑mentioned company) holds shares in another amalgamating company (referred to as the second-mentioned company), and the shares of the second-mentioned company are cancelled on the amalgamation, the following provisions shall apply:
(a)
the first-mentioned company is treated as having disposed of the shares in the second-mentioned company immediately before the amalgamation for an amount equal to the cost of the shares to the first-mentioned company;
(b)
if —
(i)
the first-mentioned company has borrowed money to acquire shares in the second-mentioned company; and
(ii)
the liability arising from the money borrowed referred to in sub-paragraph (i) is transferred to and becomes the liability of the amalgamated company,
no deduction shall be given for any interest or other borrowing costs incurred by the amalgamated company on or after the date of amalgamation on such liability.
[27/2009]
Transfer of property
(8)  Where there is a transfer of property from any amalgamating company to the amalgamated company on the date of amalgamation in respect of which allowances or writing-down allowances have been made to the amalgamating company under sections 16 to 21, the amalgamating company and the amalgamated company shall, subject to section 24(4), be deemed to have made an election under section 24(3), and section 24(3)(a) to (e) shall apply, with the necessary modifications, whether or not the amalgamated company is a company over which the amalgamating company has control, or the amalgamating company is a company over which the amalgamated company has control, or both the amalgamating company and amalgamated company are companies under the control of a common person.
[27/2009]
(8A)  Where there is a transfer of a building or structure from any amalgamating company to the amalgamated company on the date of amalgamation for which an allowance has been made to the amalgamating company under section 18C, the annual allowances provided under that section shall continue to be available to the amalgamated company as if it had incurred the qualifying capital expenditure that was incurred in carrying out the approved construction or approved renovation, as the case may be, referred to in that section.
[29/2010]
(8B)  Subsection (8A) shall not apply unless the building or structure is used before the transfer by the amalgamating company and after the transfer by the amalgamated company, in the production of income chargeable under the provisions of this Act.
[29/2010]
(9)  In the application of section 24(3)(a) to (e) under subsection (8) —
(a)
a reference in that provision to a buyer is a reference to the amalgamated company; and
(b)
a reference in that provision to a seller is a reference to the amalgamating company.
[27/2009]
(10)  Where —
(a)
there is a transfer of property, being intellectual property rights in respect of which writing-down allowances have been made to an amalgamating company under section 19B, from that amalgamating company to the amalgamated company on the date of amalgamation; and
(b)
before the transfer in the case of that amalgamating company and from any time on or after the transfer in the case of that amalgamated company, the property is used in the production of income chargeable under the provisions of this Act,
the following provisions shall, subject to subsection (18), apply:
(i)
section 19B(4) and (5) shall not apply to the amalgamating company;
(ii)
the writing-down allowances under section 19B shall continue to be available to the amalgamated company as if no transfer had taken place;
(iii)
the charge under section 19B(4) and (5) shall be made on the amalgamated company on any event occurring on or after the date of amalgamation as would have fallen to be made on the amalgamating company if the amalgamating company had continued to own the intellectual property rights and had done all such things and been allowed all such allowances as were done by or allowed to the amalgamated company.
[27/2009]
(11)  Notwithstanding section 32 but subject to subsection (18), where there is a transfer of property, being trading stock to both an amalgamating company and the amalgamated company, from that amalgamating company to the amalgamated company on the date of amalgamation —
(a)
the net book value of the trading stock of the amalgamating company shall be deemed to be the value of the consideration given by the amalgamated company to the amalgamating company for such transfer on the date of amalgamation for the purpose of deducting the cost of trading stock to the amalgamated company as an expense in computing the gains or profits of the trade or business of the amalgamated company; and
(b)
only the amount of provision of diminution in value computed by reference to the net book value referred to in paragraph (a) of the trading stock, if any, may be allowed as a deduction to the amalgamated company.
[27/2009]
(12)  Notwithstanding subsection (11), the value as reflected in the financial accounts of the amalgamated company on the date of amalgamation shall be taken as the value of the consideration given by the amalgamated company to the amalgamating company for the transfer of the trading stock on the date of amalgamation for the purpose of —
(a)
computing the gains or profits of the trade or business of that amalgamating company; and
(b)
deducting the cost of trading stock to the amalgamated company as an expense in computing the gains or profits of the trade or business of the amalgamated company,
if the amalgamated company has made an irrevocable election to that effect.
[27/2009]
(13)  Any gains or profits of the trade or business of the amalgamating company referred to in subsection (12) shall be chargeable to tax for the year of assessment which relates to the basis period in which the date of amalgamation falls.
[27/2009]
(14)  Where there is a transfer of property from an amalgamating company to the amalgamated company, being property on revenue account of the amalgamating company but not on revenue account of the amalgamated company, the consideration for the transfer by the amalgamating company is taken as the amount which it would have realised if the property had been sold in the open market on the date of amalgamation.
[27/2009]
(15)  The amount of consideration referred to in subsection (14) shall be used to compute the gains or profits of the trade or business of the amalgamating company and such gains or profits shall be chargeable to tax for the year of assessment which relates to the basis period in which the date of amalgamation falls.
[27/2009]
(16)  Where there is a transfer of property from an amalgamating company to the amalgamated company, being property not on revenue account of the amalgamating company but on revenue account of the amalgamated company, the consideration for the acquisition by the amalgamated company is taken as the amount which it would have incurred if the property had been purchased in the open market on the date of amalgamation or the actual amount paid, whichever is the lower.
[27/2009]
(17)  The amount of consideration referred to in subsection (16) shall be deducted as an expense in computing the gains or profits of the trade or business of the amalgamated company.
[27/2009]
(18)  Where the amalgamated company ceases to carry on the trade and business in Singapore after the date of amalgamation but instead carries on that trade and business outside Singapore —
(a)
in the case of trading stock which has been transferred at net book value under subsection (11)(a), section 32(1)(b) shall apply as if that trade and business has been discontinued or transferred on the date of cessation of the trade and business in Singapore, and any gain shall be chargeable to tax for the year of assessment relating to the basis period in which the amalgamated company ceases to carry on that trade and business in Singapore;
(b)
in the case of property, being intellectual property rights in respect of which subsection (10) applies, the charge under section 19B(4) or (5), as the case may be, shall be made on the amalgamated company as if the property has been sold on the date of cessation of the trade and business in Singapore; and for the purpose of computing the charge under section 19B(5), the value thereof shall be the amount which it would have realised if the property had been sold in the open market on the date of cessation of such trade and business in Singapore.
[27/2009]
(19)  Any question arising under subsections (14), (16) and (18) regarding the open market value attributable to property or trading stock, as the case may be, shall be determined by the Comptroller.
[27/2009]
Deductions for intellectual property rights
(20)  No deduction under section 19B shall be allowed to the amalgamated company for any intellectual property rights recognised in accordance with FRS 38 and FRS 103 as a result of the amalgamation but which were not in existence prior to the amalgamation.
[27/2009]
Deductions for bad debts, expenditure, losses, etc.
(21)  Where —
(a)
an amalgamating company ceases to exist on the date of amalgamation; and
(b)
the amalgamated company continues to carry on the trade and business of the amalgamating company and at any time —
(i)
writes off as bad the amount of a debt, or provides impairment loss in respect of a debt, that it acquires from the amalgamating company on the date of amalgamation;
(ii)
incurs an expenditure, other than the expenditure to which prescribed sections of this Act apply; or
(iii)
incurs a loss,
the amalgamated company —
(A)
shall be allowed a deduction for the amount of the debt, expenditure or loss, as the case may be, if —
(AA)
the amalgamating company would have been allowed the deduction but for the amalgamation; and
(AB)
the amalgamated company is not otherwise allowed the deduction; and
(B)
shall be chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if —
(BA)
the amalgamating company would have been chargeable to tax on such amount but for the amalgamation; and
(BB)
the amalgamated company is not otherwise chargeable to tax on such amount.
[27/2009]
(22)  Where —
(a)
an amalgamating company has been allowed a deduction in respect of any debt written off as bad or impairment loss, and it ceases to exist on the date of amalgamation; and
(b)
the amalgamated company continues to carry on the trade and business of the amalgamating company,
the amalgamated company shall be chargeable to tax on the amount of the debt recovered or impairment loss that is reversed if —
(i)
the amalgamating company would have been chargeable to tax on such amount but for the amalgamation; and
(ii)
the amalgamated company is not otherwise chargeable to tax on such amount.
[27/2009]
(23)  Where —
(a)
an amalgamating company ceases to exist on the date of amalgamation; and
(b)
the amalgamating company has any capital allowance, donation or loss remaining unabsorbed on the date of amalgamation,
sections 23 and 37 shall apply, with the necessary modifications, as if the amalgamated company is the amalgamating company for the purposes of deducting the unabsorbed capital allowance, donation or loss against the income or the statutory income, as the case may be, of the amalgamated company, subject to conditions specified in subsection (24).
[27/2009]
(24)  The conditions referred to in subsection (23) are —
(a)
the amalgamating company was carrying on a trade or business until the amalgamation; and
(b)
the amalgamated company continues to carry on the same trade or business on the date of amalgamation as that of the amalgamating company from which the unabsorbed capital allowance, donation or loss was transferred.
[27/2009]
(25)  Any deduction referred to in subsection (23) shall only be made against the income of the amalgamated company from the same trade or business as that of the amalgamating company immediately before the amalgamation.
[27/2009]
Amalgamating company as qualifying person under section 34A
(26)  Where any of the amalgamating companies is a qualifying person to which section 34A applies —
(a)
the amalgamated company shall be deemed to be a qualifying person for the purpose of section 34A, and section 34A shall have effect on the amalgamated company; and
(b)
the rules on the adjustment on change of basis of computing profits of financial instruments set out in regulations made under section 34A shall have effect on any amalgamating company which before the amalgamation is not a qualifying person to which section 34A applies, and any positive or negative adjustment which is not of a capital nature as a result of the application of such rules shall be assessed on or allowed to the amalgamated company.
[27/2009]
Amalgamated company as qualifying company under section 43(6A)
(27)  Where all the amalgamating companies cease to exist on the date of amalgamation, and the amalgamated company is a qualifying company for the purpose of section 43(6A) in any year of assessment, then, for that year of assessment —
(a)
in a case where the date of amalgamation does not fall within either of the basis periods of the first 2 years of assessment of any of the amalgamating companies, section 43(6) rather than section 43(6A) shall apply to the amalgamated company; and
(b)
in a case where the date of amalgamation falls within either of the basis periods of the first 2 years of assessment of any of the amalgamating companies, section 43(6A) shall apply to the amalgamated company if, and only if, the first‑mentioned year of assessment falls within such period as may be prescribed by the Minister, and if it does not, then section 43(6) shall apply to the amalgamated company.
[27/2009]
(28)  The Minister may, for different descriptions of amalgamations or companies, prescribe different periods for the purposes of subsection (27)(b).
[27/2009]
Rights and obligations of amalgamated company
(29)  Where any amalgamating company ceases to exist on the date of amalgamation, the amalgamated company shall comply with all obligations, meet all liabilities, and be entitled to all rights, powers and privileges, of the amalgamating company under this Act with respect to the year of assessment relating to the basis period in which the amalgamation occurs and all preceding years of assessment as if the amalgamated company is the amalgamating company.
[27/2009]
Regulations
(30)  The Minister may by regulations provide —
(a)
for the deduction of expenses, allowances, losses, donations and any other deductions otherwise than in accordance with this Act;
(b)
the manner and extent to which expenses, allowances, losses, donations and any other deductions may be allowed under this Act;
(c)
the manner and extent to which any qualifying deduction may be allowed under section 37C or 37E;
(d)
the rate of exchange to be used for the purpose of section 62B;
(e)
for the modification and exception to any prescribed section of this Act or the Economic Expansion Incentives (Relief from Income Tax) Act (Cap. 86) as it applies to an amalgamated company and an amalgamating company; and
(f)
generally for giving full effect to or for carrying out the purposes of this section.
[27/2009; 19/2013]
Transactions not at arm’s length
34D.
—(1)  Where 2 persons are related parties and conditions are made or imposed between the 2 persons in their commercial or financial relations which differ from those which would be made if they were not related parties, then any profits which would, but for those conditions, have accrued to one of the persons, and, by reason of those conditions, have not so accrued, may be included in the profits of that person and taxed in accordance with the provisions of this Act.
[27/2009]
(2)  Where a person carries on business through a permanent establishment, this section shall apply as if the person and the permanent establishment are 2 separate and distinct persons.
[27/2009]
(3)  In this section, “related party” has the same meaning as in section 13(16).
[27/2009]