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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

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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On 20/08/2014, you requested the version as published on or before 20/08/2014.
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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.
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.
(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)  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.
(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.
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.
(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.
(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.
Definitions
(12)  In this section, and section 43C (except in relation to the definition of “insurer”) —
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” will be inserted immediately before the definition of “income of the shareholders’ fund” as follows from the year of assessment 2015, as set out in section 21(1)(b) 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 under any of the following life policies of any life insurance fund established under the Insurance Act:
(a)
in relation to direct life insurance, any life policy other than a Singapore life policy;
(b)
in relation to facultative life reinsurance, a policy issued to reinsure liability under any life policy referred to in paragraph (a); and
(c)
in relation to treaty life reinsurance, a reinsurance policy where —
(i)
the ceding party is a company incorporated outside Singapore and not resident in Singapore, or is not a permanent establishment in Singapore; or
(ii)
the liability in respect of any life policy referred to in paragraph (a) is ceded by a party which is a company incorporated and resident in Singapore or a permanent establishment in Singapore;
2  The definition of “offshore life business” will be deleted and substituted as follows from the year of assessment 2015, as set out in section 21(1)(c) 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 any risk outside Singapore and —
(a)
in relation to direct general insurance or facultative general reinsurance, the insured is not a person resident in Singapore or a permanent establishment in Singapore; and
(b)
in relation to treaty general reinsurance, not less than 75% of the total risk in terms of gross premiums is outside Singapore,
and where any such risk is in transit in Singapore, it shall be deemed to be outside Singapore;
3  The definition of “offshore risk” will be deleted and substituted as follows from the year of assessment 2015, as set out in section 21(1)(e) 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;
4“Singapore life policy” means a life policy as described in the definition of “Singapore policy” in the Insurance Act;
4  The definition of “Singapore life policy” will be deleted from the year of assessment 2015, as set out in section 21(1)(f) of the Income Tax (Amendment) Act 2013 (Act 19 of 2013).
“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]