Singapore legislation
Section 51
of Economic Expansion Incentives (Relief from Income Tax) Act
Section 51
Computation of export income and exemption from tax
(1)
The total income of an international trading company, in respect of its trade or business which includes its relevant export sales, shall be ascertained (after making such adjustments as may be necessary in consequence of any direction given under section 48), for any accounting period during its tax relief period in accordance with the provisions of the Income Tax Act, and, in particular, the following provisions shall apply:
income from any commissions and other non-trading sources shall be excluded and separately assessed;
the allowances provided for in sections 16, 17, 18, 19, 19A, 20, 21 and 22 (where applicable) of the Income Tax Act shall be taken into account notwithstanding that no claim for those allowances has been made, and where in any year of assessment full effect cannot, by reason of an insufficiency of profits for that year of assessment, be given to those allowances, section 23 of the Income Tax Act (Cap. 134) shall apply;
the amount of any unabsorbed allowances in respect of any year of assessment immediately preceding the tax relief period which would otherwise be available under section 23(2) and (4) of the Income Tax Act shall be taken into account;
section 37 of the Income Tax Act shall apply in respect of any loss incurred prior to or during its tax relief period;
any unabsorbed allowances granted under sections 16, 17, 19, 19A, 20 and 21 of the Income Tax Act and losses incurred in respect of any distinct trade or business shall be brought into the computation;
any unabsorbed allowances granted under sections 16, 17, 19, 19A, 20 and 21 of the Income Tax Act and losses incurred in respect of the trade or business referred to in this subsection shall, during the tax relief period, only be deducted against the income derived from that trade or business;
subject to sections 23 and 37 of the Income Tax Act, any allowances and losses which remain unabsorbed at the end of the tax relief period shall be available for deduction in its post tax relief period.
(2)
The amount of the export income of an international trading company which will qualify for the relief for any year of assessment shall be deemed to be such amount which bears to the total income ascertained under subsection (1) the same proportion as the excess of the total value of the relevant export sales over the relevant base export value bears to the total amount of the sums received or receivable in respect of its total sales.
(2A)
Subject to section 52, one-half of the amount of the export income which qualifies for the relief as ascertained in subsection (2) shall not form part of the chargeable income of the international trading company for that year of assessment and shall be exempt from tax.
(3)
The relevant base export value referred to in subsection (2) shall be —
for the basis period for the first year of assessment within the tax relief period of an international trading company, a sum equal to one-third of the total value of the relevant export sales during the 3 years immediately preceding the date of its application to be an international trading company; and
for the basis period for any subsequent year of assessment within the tax relief period, a sum equal to one-third of the total value of the relevant export sales during the 3 qualifying years immediately preceding that basis period.
(3A)
For the purposes of subsection (3)(b), a “qualifying year” is a year in which the export sales —
in respect of qualifying manufactured goods or Singapore domestic produce exceed $10 million; and
in respect of qualifying commodities exceed $20 million.
(4)
Where an international trading company —
was engaged in the trading of qualifying manufactured goods, Singapore domestic produce or qualifying commodities for less than 3 years immediately preceding its application under this Part;
during its tax relief period has acquired any sales in respect of qualifying manufactured goods, Singapore domestic produce or qualifying commodities from any person or has acquired the beneficial interest, directly or indirectly, of any company engaged in similar trade or business; or
has less than 3 qualifying years for the purpose of determining its relevant base export value under subsection (3)(b),the Minister may specify such other relevant base export value for one or more basis periods as he thinks fit having regard to the circumstances of the case.