On 21/05/2013,
you requested for the version in force on 21/05/2013
incorporating all amendments published on or before 21/05/2013.
The closest version currently available is that of 31/03/2005.
PART IIIB
1
DEVELOPMENT AND EXPANSION INCENTIVE
1 From year of assessment 1997.
19I. In this Part, unless the context otherwise requires —
“commencement day”, in relation to a development and expansion company, means the date specified under section 19J(3) in the certificate issued to the company under that section;
“development and expansion company” means a company which has been issued with a certificate under section 19J(2);
“qualifying activity” means any of the following:
(a)
the manufacturing or increased manufacturing of any product from any industry that would be of economic benefit to Singapore;
(b)
any qualifying activity as defined in section 16; and
(c)
such other services or activities as may be prescribed.
[36/96]
19J.
—(1) Any company engaged in any qualifying activity may apply in the prescribed form to the Minister for approval as a development and expansion company.
[36/96]
(2) The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he may impose.
[36/96]
(3) Every certificate issued to a development and expansion company under this section shall specify —
(a)
a date as the commencement day from which the company shall be entitled to tax relief under this Part;
(b)
its qualifying activities; and
(c)
the concessionary rate of tax to be levied for the purposes of this Part.
[36/96]
(4) The Minister may, in his discretion, upon an application of a development and expansion company, amend its certificate by substituting for the commencement day specified therein such other date as he thinks fit and thereupon the provisions of this Part shall have effect as if that date were the commencement day in relation to that certificate.
[36/96]
(5) Notwithstanding section 43 of the Income Tax Act (Cap. 134), tax at such concessionary rate, not being less than 5% as the Minister may specify, shall be levied and paid for each year of assessment upon the expansion income derived by a development and expansion company during its tax relief period from its qualifying activities.
[36/96; 44/2002]
(6) The expansion income shall be the income from such qualifying activities (referred to in this section and section 19M as qualifying income) to which the certificate issued under this section relates that exceeds the average corresponding income.
[36/96; 11/2004]
(7) The average corresponding income referred to in subsection (6) shall be determined by taking one-third of the total of the corresponding qualifying income for the 3 years immediately preceding the commencement day specified in the certificate issued under this section.
[36/96; 11/2004]
(8) Where a development and expansion company which has been granted a tax relief period of at least 10 years is granted an extension or a further extension of its tax relief period under section 19K(1) (b) or (2), the Minister shall compute the average corresponding income for each such extension or further extension in accordance with subsection (9).
[48/2004]
(9) The average corresponding income for each extension or further extension referred to in subsection (8) shall be determined by taking one-third of the total of the corresponding qualifying income for the 3 years immediately preceding the date of that extension or further extension of its tax relief period, as the case may be.
[48/2004]
(10) Notwithstanding subsections (7), (8) and (9), the Minister may, if he thinks fit, specify any amount to be the average corresponding income in substitution of the amount determined under those subsections.
[48/2004]
19K.
—(1) Subject to subsection (3), the tax relief period of a development and expansion company shall commence on its commencement day and shall continue —
(a)
for such period not exceeding 10 years as the Minister may determine; and
(b)
for such further period or periods, not exceeding 5 years for each period, as the Minister may determine, where the Minister is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose.
[48/2004]
(2) Subject to subsection (3), the Minister may, if he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of a development and expansion company after the expiry of the total tax relief period in subsection (1) for such further period or periods, not exceeding 5 years at any one time, as he may determine.
[48/2004]
(3) The total tax relief period of a development and expansion company under subsections (1) and (2) shall not in the aggregate exceed 20 years.
[48/2004]
(4) Any tax relief period initially granted to a development and expansion company before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Act 2004 which exceeds 10 years shall be deemed to have been granted under this section.
[48/2004]
(5) Where a development and expansion company has been granted tax relief under Part IIIA in force immediately before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2004 in respect of any qualifying activity specified in the certificate issued under section 19J(2), the Minister shall, in extending the tax relief period of the company under subsections (1) and (2), take into account the tax relief period of the company under that Part.
[36/96; 11/2004; 48/2004]
19L.
—(1) As soon as any amount of income of a development and expansion company has been subject to tax at the concessionary rate under section 19J, the net amount of the income after deduction of the tax shall be credited to a special account (referred to in this section as the account) to be kept by the company for the purposes of this section.
[36/96]
(2) Where the account is in credit at the date on which any dividends are paid by the development and expansion company out of the net amount of income credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.
[36/96]
(3) So much of the amount of any dividends so debited to the account as is received by a shareholder of the development and expansion company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.
[36/96]
(4) Notwithstanding subsections (3) and (7), no dividend paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.
[11/2004]
(5) Any dividends debited to the account shall be treated as having been distributed to the shareholders of the development and expansion company or any particular class of the shareholders in accordance with the proportion of their shareholdings in the development and expansion company.
[44/2002]
(6) Section 44 of the Income Tax Act (Cap. 134) shall not apply in respect of any dividends or part thereof which are debited to the account.
[36/96]
(7) Where an amount has been received by way of dividends from a company by a shareholder and the amount is exempt from tax under this section, if that shareholder is a company, any dividends paid by that company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders; and section 44 of the Income Tax Act (Cap. 134) shall not apply to any such dividends or part thereof.
[44/2002]
(8) A development and expansion company shall deliver to the Comptroller a copy of the account made up to any date specified by him whenever called upon to do so by notice in writing.
[36/96]
(9) Notwithstanding subsections (1) to (8), where it appears to the Comptroller that —
(a)
any income of a development and expansion company which has been subject to tax at the concessionary rate under section 19J; or
(b)
any dividends which have been exempted from tax in the hands of any shareholder,
ought not to have been so taxed or exempted for any year of assessment, the Comptroller may, subject to section 74 of the Income Tax Act —
(i)
make an assessment or additional assessment upon the company or any such shareholder as may be necessary in order to make good any loss of tax; or
(ii)
direct the company to debit the account with such amount as the circumstances require.
[36/96; 44/2002]
19M.
—(1) Subject to subsections (2) and (3), the qualifying income of a development and expansion company shall be ascertained in accordance with the provisions of the Income Tax Act after making such adjustments as may be necessary in consequence of any direction given under section 19P.
[11/2004]
(2) In determining the qualifying income of a development and expansion company for the basis period for any year of assessment —
(a)
the allowances provided for in sections 16 to 22 of the Income Tax Act shall be taken into account notwithstanding that no claim for such allowances has been made;
(b)
the allowances referred to in paragraph (a) for that year of assessment shall firstly be deducted against the qualifying income of the company, and any unabsorbed allowances shall be deducted against the other income of the company subject to tax at a different rate of tax under this Act or the Income Tax Act (Cap. 134) in accordance with subsection (3);
(c)
the balance, if any, of the allowances after the deduction in paragraph (b) shall be available for deduction for any subsequent year of assessment in accordance with sections 22A and 23 of the Income Tax Act and shall be made in the manner provided in that paragraph;
(d)
any loss incurred for that basis period shall be deducted in accordance with subsection (3) against the other income of the company subject to tax at a different rate of tax under this Act or the Income Tax Act;
(e)
the balance, if any, of the losses after the deduction in paragraph (d) shall be available for deduction for any subsequent year of assessment in accordance with section 37 of the Income Tax Act firstly against the qualifying income of the company, and any balance of the losses shall be deducted against the other income of the company subject to tax at a different rate of tax under this Act or the Income Tax Act in accordance with subsection (3);
(f)
any unabsorbed donation for that year of assessment shall be deducted in accordance with subsection (3) against the other income of the company subject to tax at a different rate of tax under this Act or the Income Tax Act; and
(g)
the balance, if any, of the donations after the deduction in paragraph (f) shall be available for deduction for any subsequent year of assessment in accordance with section 37 of the Income Tax Act firstly against the qualifying income of the company, and any balance of the donations shall be deducted against the other income of the company subject to tax at a different rate of tax under this Act or the Income Tax Act in accordance with subsection (3).
[11/2004]
(3) Section 37B of the Income Tax Act shall apply, with the necessary modifications, in relation to —
(a)
the deduction of the allowances provided for in sections 16 to 22 of that Act; and
(b)
the losses or donations under section 37 of that Act in respect of —
(i)
the qualifying income of a development and expansion company; and
(ii)
such part of the development and expansion company’s income as is subject to tax at a different rate of tax under this Act or the Income Tax Act (Cap. 134).
[11/2004]
(4) For the purpose of the application under subsection (3), any reference in section 37B of the Income Tax Act to income of a company subject to tax at a higher or lower rate of tax or income of the company subject to tax at a higher or lower rate of tax, as the case may be, shall be read as a reference to its qualifying income.
[11/2004]
19N.
—(1) Where, during its tax relief period, a development and expansion company carries on any trade or business other than its qualifying activities, separate accounts shall be maintained in respect of that other trade or business and in respect of the same accounting period; and the income from that other trade or business shall be computed and assessed in accordance with the Income Tax Act with such adjustments as the Comptroller thinks reasonable and proper.
[11/2004]
(2) Where, in the opinion of the Comptroller, the carrying on of such other trade or business is subordinate or incidental to the carrying on of the qualifying activities of the development and expansion company, the income or loss arising from such other trade or business shall be deemed to form part of the income or loss of the company from its qualifying activities.
[11/2004]
19O. The Minister may, in relation to development and expansion companies, by regulations provide for —
(a)
the manner in which expenses, capital allowances and donations allowable under the Income Tax Act are to be deducted; and
(b)
the deduction of capital allowances, losses and donations otherwise than in accordance with sections 23 and 37 of the Income Tax Act (Cap. 134).
[11/2004]
19P. For the purposes of this Act and the Income Tax Act, the Comptroller may direct that —
(a)
any sum payable to a development and expansion company in its tax relief period which might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated as not having been payable in that period but as having been payable on such date, after that period, as the Comptroller thinks fit; and
(b)
any expense incurred by a development and expansion company within one year after the end of its tax relief period which might reasonably and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred within that year but as having been incurred for the purposes of its qualifying activities and on such date, during its tax relief period, as the Comptroller thinks fit.
[11/2004]