11. The principal Act is amended by inserting, immediately after section 13T, the following sections:
—(1) There shall be exempt from tax any income of an approved not-for-profit organisation.
(2) The Minister or such person as he may appoint may, during the period from 15th February 2007 to 14th February 2017, approve any not-for-profit organisation for the purposes of subsection (1).
(3) The approval under subsection (2) shall be subject to such conditions as the Minister or such person as he may appoint may impose and shall be for such period not exceeding 10 years as he may specify.
(4) Notwithstanding subsection (2), the period specified under subsection (3) may be extended on expiry by the Minister or such person as he may appoint for such further period or periods, not exceeding 10 years at any one time, as he thinks fit.
(5) The Minister may make regulations to provide for the deduction of expenses, allowances, losses and donations of an approved not-for-profit organisation otherwise than in accordance with this Act.
(6) Notwithstanding subsection (1), where it appears to the Comptroller that any income of an approved not-for-profit organisation which has been exempted from tax under subsection (1) ought not to have been so exempted for any year of assessment, the Comptroller may at any time, subject to section 74, make such assessment or additional assessment on the approved not-for-profit organisation as may appear to be necessary in order to make good any loss of tax.
(7) In this section, “not-for-profit organisation” means any person, not being a person registered or exempt from registration under the Charities Act (Cap. 37) —
who is not established or operated for the object of deriving a profit;
whose income and property —
may only be applied for the furtherance of its objects; and
are not distributable to any shareholder, member, trustee or officer of the person except as reasonable compensation for services rendered; and
whose property may only be distributed to persons established for a similar object as that person’s upon that person’s dissolution.
—(1) Any law practice intending to provide legal services in connection with any international arbitration the hearing of which is to be held in Singapore may, from 1st July 2007 to 30th June 2012, apply to the Minister, or such person as he may appoint, for approval as an approved law practice.
(2) Where the Minister, or such person as he may appoint, considers it expedient in the public interest to do so, he may approve the application and issue a letter to the law practice subject to such conditions as he thinks fit.
(3) Every letter issued under subsection (2) shall specify a date as the commencement day from which the approved law practice shall be entitled to tax relief under this section.
(4) The tax relief period of an approved law practice shall commence on its commencement day and shall continue for such period, not exceeding 5 years, as is specified in the letter issued to it under subsection (2).
(5) The amount of the income of an approved law practice which will qualify for the relief for any year of assessment shall be the excess of the total amount of the qualifying income of the approved law practice for the basis period for that year of assessment over its base income.
(6) Where an approved law practice has satisfied the conditions specified in the letter issued to it under subsection (2), one-half of the amount of the income of the approved law practice for any year of assessment which qualifies for the relief as ascertained under subsection (5) shall not form part of the statutory income of the approved law practice for that year of assessment and shall be exempt from tax.
(7) Where an approved law practice is a law corporation, the exemption under section 43(6) or (6A), as the case may be, shall not apply to the balance of the qualifying income exceeding the base income of the approved law practice that is not exempt under subsection (6).
(8) The base income referred to in subsection (5) is —
where an approved law practice had in the period of 3 years immediately preceding the commencement day provided legal services in connection with any qualifying international arbitration the hearing of which had been held at least once in Singapore within the period ––
the amount ascertained by dividing the total income derived from providing those legal services in the period by the actual number of years in the period in which those legal services were provided; or
if the amount ascertained under sub-paragraph (i) is less than zero, deemed to be zero; or
such amount as the Minister may specify.
(9) The Comptroller shall determine the manner and extent to which allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses, losses and donations allowable under this Act which are attributable to the qualifying income of an approved law practice are to be deducted.
(10) In determining the qualifying income of an approved law practice for the basis period for any year of assessment, there shall be deducted from the income —
expenses and donations allowable under this Act for that year of assessment which are attributable to that income; and
any allowances for that year of assessment under section 19, 19A, 20, 21 or 22 attributable to that income notwithstanding that no claim for those allowances has been made.
(11) The Comptroller may require an auditor to certify the income derived by an approved law practice from legal services in connection with any qualifying international arbitration and any direct costs and expenses incurred therefor.
(12) Where an approved law practice has in any year of assessment during the tax relief period incurred any loss from providing legal services in connection with any qualifying international arbitration or any allowances or donations attributable to the qualifying income remaining unabsorbed, 50% of the loss, allowances or donations, in each case, shall be deducted as provided for in section 23 or 37, as the case may be, and the balance shall be disregarded.
(13) The following provisions shall apply during the period from 1st July 2007 to 31st December 2007 to an approved law practice which is a law corporation resident in Singapore:
as soon as any amount of income of the approved law practice is exempted under subsection (6), such amount shall be credited to an account to be kept by the approved law practice for the purpose of this section;
where such account is in credit at the date on which any dividends are paid by the approved law practice out of income which has been exempted, an amount equal to such dividends or to such credit, whichever is the less, shall be debited to such account;
so much of the amount of any dividends debited to such account as are received by a shareholder in the approved law practice shall, if the Comptroller is satisfied with the entries in such account, be exempt from tax in the hands of such shareholder;
any dividends debited to such account shall be treated as having been distributed to the shareholders of the approved law practice or any particular class of such shareholders in accordance with the proportion of their shareholdings in the approved law practice;
section 44 shall not apply to any dividends or part thereof which are exempt from tax under this section;
notwithstanding paragraph (c), no dividend paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.
(14) An approved law practice which is a law corporation shall deliver to the Comptroller a copy of the accounts referred to in subsection (13) made up to any date specified by him whenever called upon to do so by notice in writing.
(15) In this section —
“arbitral tribunal”, “award”, “international arbitration” and “party” have the same meanings as in the International Arbitration Act (Cap. 143A);
“client”, “foreign law firm”, “Formal Law Alliance”, “Joint Law Venture”, “law corporation”, “law firm” and “limited liability law partnership” have the same meanings as in the Legal Profession Act (Cap. 161);
“hearing” means a hearing by the arbitral tribunal on the substance of the dispute;
“law practice” means a law firm, law corporation, limited liability law partnership, foreign law firm, Formal Law Alliance or Joint Law Venture;
“legal services in connection with any qualifying international arbitration” means any professional work of a legal nature provided by lawyers of the approved law practice for a client who is a party to an international arbitration the hearing of which is held in Singapore during its tax relief period (or the period referred to in subsection (8)(a)) for the purposes of the international arbitration, beginning from —
where the client is the claimant serving the request for arbitration, the date of issue of the request for arbitration; or
where the client is the respondent being served the request for arbitration, the date of receipt of the request for arbitration by the client or approved law practice,
and ending on —
the date on which the final award is made by the arbitral tribunal; or
the date on which the arbitration proceeding has otherwise finally terminated,
whichever is the earlier;
“qualifying income” means the income derived by an approved law practice from the provision of legal services in connection with any qualifying international arbitration.”.