—(1) As soon as any amount of qualifying income has become exempt from tax under section 97P, that amount shall be credited to an account to be kept by the overseas enterprise for the purposes of this section.
(2) Where that account is in credit at the date on which any dividends are paid by the overseas enterprise out of income which has been exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.
(3) So much of the amount of any dividends so debited to that account as is received by a shareholder of the overseas enterprise shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.
(4) 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 Part, 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.
(5) Notwithstanding subsections (3) and (4), no dividend paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.
(6) Any dividends debited to the account shall be treated as having been distributed to the shareholders of the overseas enterprise or any particular class of the shareholders in accordance with the proportion of their shareholdings in the overseas enterprise.
(7) The overseas enterprise or any company to which this section applies shall deliver to the Comptroller a statement of the account made up to any date specified by him, if the Comptroller so requires by written notice.
(8) Notwithstanding section 97P and subsections (1) to (7), where it appears to the Comptroller that —
any amount of exempted income of an overseas enterprise; or
any dividend exempted in the hands of any shareholder,
ought not to have been exempted by reason of a direction under section 97L, having been made with respect to the overseas enterprise, after any income of that enterprise has been exempted under the provisions of this Act or the revocation under section 99 of a certificate issued to the overseas enterprise, the Comptroller may, subject to section 74 of the Income Tax Act —
make such assessment or additional assessment upon the overseas enterprise or any such shareholders as may appear to be necessary in order to counteract any profit or income obtained from any such amount which ought not to have been exempted; or
direct the overseas enterprise or any such shareholders to debit its account with such amount as the circumstances require.
[36/93; 1/95; 4/98; 44/2002]
(9) Parts XVII and XVIII of the Income Tax Act (Cap. 134) (relating to assessments, objections and appeals) shall apply, with the necessary modifications, to any direction given under subsection (8) as if it were a notice of assessment given under those provisions.