Singapore legislation
Section 19L
of Economic Expansion Incentives (Relief from Income Tax) Act
Section 19L
Certain dividends exempted from income tax
(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.
(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.
(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.
(4)
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.
(5)
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.
(6)
Where any amount has been received by way of dividend from a development and expansion company by a shareholder and the amount is exempt from tax under this Part, if that shareholder is a company (referred to in this section as the holding company) which holds, throughout its tax relief period (or such shorter period as the Minister may approve), the beneficial interest in all the issued shares of the company (or in not less than such proportion of those shares as the Minister may approve) 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 that amount, shall be exempt from tax in the hands of those shareholders; and section 44 of the Income Tax Act shall not apply in respect of any such dividends or part thereof so exempted.
(7)
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.
(8)
Notwithstanding subsections (1) to (7), where it appears to the Comptroller that —
any income of a development and expansion company which has been subject to tax at the concessionary rate under section 19J; or
any dividends, including any dividends paid by a holding company under subsection (6), 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 (Cap. 134) —
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
direct the company to debit the account with such amount as the circumstances require.