Singapore legislation
Section 19F
of Economic Expansion Incentives (Relief from Income Tax) Act
Section 19F
Certain dividends exempted from income tax
(1)
As soon as any amount of income of a post-pioneer company has been subject to tax at the concessionary rate under section 19B, 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 post-pioneer company for the purposes of this section.
(2)
Where the account is in credit at the date on which any dividends are paid by the post-pioneer company out of the net amount of the 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.
(3)
So much of the amount of any dividends so debited to the account as is received by a shareholder of the post-pioneer company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.
(3A)
Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.
(4)
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.
(5)
Where an amount of dividends debited to the account has been received by a shareholder, and that shareholder is a company (referred to in this section as the holding company) which holds, throughout its tax relief period, the beneficial interest in all the issued shares of the post-pioneer company (or in not less than such proportion of those shares as the Minister may require at the time when the post-pioneer certificate is issued to the post-pioneer company) any dividends paid by the holding company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of such amount, shall be exempt from tax in the hands of those shareholders; and section 44 of the Income Tax Act shall not apply to any such dividends or part thereof so exempt.
(5A)
Any holding company may, with the approval of the Minister and subject to such conditions as he may impose, pay such exempt dividends to its shareholders even if it has not held the requisite shareholding in the post-pioneer company for the whole of the tax relief period.
(6)
A 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.
(7)
Notwithstanding subsections (1) to (6), where it appears to the Comptroller that —
any income of a post-pioneer company which has been subject to tax at the concessionary rate under section 19B; or
any dividend, including a dividend paid by a holding company under subsection (5), which has 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 (Cap. 134) —
make such 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
direct the company to debit the account with such amount as the circumstances require.