Singapore legislation
Section 97Q
of Economic Expansion Incentives (Relief from Income Tax) Act
Section 97Q
Certain dividends exempted from income tax
(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 of dividends exempt from tax under subsection (3) has been received by a shareholder which is a holding company, the amount shall be credited to a designated account to be kept by the holding company for the purposes of this section.
(4A)
Where the designated account is in credit at the date on which any dividends are paid by the holding company out of the income which has been credited to the designated account, an amount equal to the dividends or to the credit in that account, whichever is the less, shall be debited to the designated account.
(4B)
So much of the amount of any dividends debited to the designated account as is received by a shareholder of the holding company shall, if the Comptroller is satisfied with the entries in the designated account, be exempt from tax in the hands of the shareholder.
(4C)
Where an amount of dividends exempt from tax under subsection (4B) has been received on or after 11th July 1997 by a shareholder which is a relevant holding company, any dividends paid by the relevant 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.
(4D)
Notwithstanding subsections (3), (4B) and (4C), no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder.
(5)
The overseas enterprise or the holding company shall deliver to the Comptroller a statement of the account or designated account, as the case may be, made up to any date specified by him, if the Comptroller so requires by written notice.
(6)
Notwithstanding section 97P and subsections (1) to (5), 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, including any dividend paid by a holding company to which subsection (4B) applies or by a relevant holding company to which subsection (4C) applies,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 (Cap. 134) —
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 or designated account, as the case may be, with such amount as the circumstances require.
(7)
Parts XVII and XVIII of the Income Tax Act (Cap. 134) (relating to objections and appeals) shall apply, with the necessary modifications, to any direction given under subsection (6) as if it were a notice of assessment given under those provisions.
(8)
Section 44 of the Income Tax Act shall not apply to any dividends or part thereof which are exempt from tax under this section.
(9)
For the purposes of this section, the Minister or such person as he may appoint may approve as a holding company any company which owns less than 50% beneficial interest in the issued share capital of the company paying the dividends at the time such dividends are received by the company.
(10)
Subsections (4) to (8) shall apply, with the necessary modifications, to any dividends received by a relevant holding company where the Comptroller is satisfied that such dividends are paid out of any income exempt from tax under this section.
(11)
In this section —
Definition
“holding company” means a company which owns not less than 50% beneficial interest in the issued share capital of the overseas enterprise paying the dividends at the time such dividends are received by the company, and includes a company approved under subsection (9);
Definition
“relevant holding company” means any holding company of another holding company.