—(1) Subject to this section, where the Comptroller is satisfied that the following expenses have been incurred by a financial institution, there shall be allowed a further deduction of the amount of such expenses in addition to the amount allowed under section 14 —
salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to an approved employee engaged in the research and development of any approved new financial activity;
legal expenses, excluding expenses incurred in respect of litigation, which, in the opinion of the Comptroller, are directly attributable to the research and development of any approved new financial activity;
expenses incurred in respect of any approved course of instruction or training conducted in Singapore by an approved employee; and
fees and other benefits paid or granted under or arising out of a contract for financial consultancy services, whether in money or otherwise, to an approved consultant engaged in the research and development of any approved new financial activity, where —
the contract is for a period of not less than 6 months; and
the approved consultant is not absent from Singapore for more than 30 days in the aggregate during the period of the contract.
[28/92; 26/93; 32/95]
(2) The maximum amount of expenses to be allowed under subsection (1) to any financial institution in the basis period for any year of assessment shall not exceed 30% of such amount as would have been the statutory income of the financial institution for that year of assessment had the further deduction not been allowed.
(3) Any expenses in excess of the amount allowed under subsection (2) shall not be carried forward to any subsequent year of assessment.
(4) The Minister or such person as he may appoint may —
approve any financial institution for such period not exceeding 5 years as he may specify and such approval may be extended for further periods not exceeding 5 years at a time; and
impose such conditions as he thinks fit when approving the institution, employee or new financial activity and may specify the period or periods for which deduction is to be allowed under this section.
(5) No deduction shall be allowed to a financial institution in respect of any expenses which are not allowed as a deduction under section 14.
[27/2009 wef 01/01/2010]
(5A) No approval or extension of approval shall be granted under this section on or after 1st January 2010.
(6) In this section —
“approved” means approved by the Minister or such person as he may appoint;
“financial institution” means a bank, merchant bank, securities dealer, investment adviser or futures broker which is approved for the purposes of this section;
“new financial activity” means a new or innovative financial activity or instrument which falls within the following categories of activities or instruments:
derivatives trading including share options, currency options and interest rate options;
swap transactions excluding plain vanilla swaps;
technical trading computer systems and software;
risk management services which employ sophisticated hedging techniques and instruments;
development of synthetic securities and instruments linked to derivatives;
research on foreign securities; and
such other category of activities or instruments as may be prescribed.