Clause 2

tin in the form of ore, ingots or slabs;

natural rubber;

crude palm oil, palm kernel oil and palm kernels;

crude coconut oil, copra and coconuts;

logs including sawn timber;

crude petroleum and petroleum products;

spices (raw and unprocessed);

pepper; and

such other commodities as may be excluded by the Minister by notification in the Gazette;“qualifying manufactured goods” means Singapore manufactured goods in respect of which one or more certificates of origin or other documents indicating that the goods are manufactured in Singapore have been issued by the Department of Trade for the purpose of the export of such goods;“relevant export sales” means the export sales of an international trading company in respect of qualifying manufactured goods and Singapore domestic produce or in respect of qualifying commodities, as the case may be;“Singapore domestic produce” means eggs, chicken, orchids and aquarium fish produced in Singapore and such other domestic produce as may be approved by the Minister.International trading company37B.—

Where a company is engaged in —

international trade in qualifying manufactured goods or Singapore domestic produce and the export sales of such goods or produce separately or in combination exceed or are expected to exceed ten million dollars per annum; or

entrepot trade in any qualifying commodities and the export sales of such qualifying commodities exceed or are expected to exceed twenty million dollars per annum,the company may apply in the prescribed form to the Minister for approval as an international trading company.(2) The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he thinks fit.(3) The Minister may issue separate certificates to an international trading company for the purposes of paragraphs (a) and (b) of subsection (1).(4) Every certificate issued under this section shall specify a date as the commencement day from which the company shall be entitled to tax relief under this Part.(5) The Minister may in his discretion upon the application of an international trading company amend its certificate by substituting for the commencement day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the commencement day in relation to that certificate.(6) A company shall furnish to the Minister at the time of application to be an international trading company a statement of all its associated companies and export agents and the activities they are engaged in and such other particulars as may be required; and where there is any change in such particulars the company shall notify the Minister as soon as possible of such change.Tax relief period of international trading company37C. The tax relief period of an international trading company, in relation to any certificate issued to that company, shall commence on the commencement day and shall continue for a period of five years.Power to give direction37D. For the purposes of the Income Tax Act (Cap. 141) and this Act, the Comptroller may direct that —

any sums payable to an international trading company in any accounting period which but for the provisions of this Act might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated as not having been payable in that period but as having been payable on such date, after that period, as the Comptroller thinks fit and, where that date is after the end of the tax relief period of the international trading company, as having been so payable on that date as a sum payable in respect of its post tax relief trade or business; and

any expenses incurred by an international trading company within one year after the end of its tax relief period which but for the provisions of this Act might reasonably and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred within that year but as having been incurred on such date, during its tax relief period, as the Comptroller thinks fit.Application of Part X of Income Tax Act (Cap. 141)37E.—

Part X of the Income Tax Act (relating to returns of income) applies in all respects as if the whole of the income of an international trading company were chargeable to tax.(2) The annual return of income shall be accompanied by such evidence as, in the opinion of the Comptroller, is necessary to verify the income derived from the export sales of qualifying manufactured goods, Singapore domestic produce and qualifying commodities.Ascertainment of income in respect of other trade or business37F. Where during its tax relief period an international trading company carries on any trade or business which is distinct from the trade or business which includes its relevant export sales, separate accounts shall be maintained in respect of that distinct trade or business and in respect of the same accounting period, and the income from that distinct trade or business shall be computed and assessed in accordance with the provisions of the Income Tax Act (Cap. 141) with such adjustments as the Comptroller thinks reasonable and proper.Computation of export income and exemption from tax37G.—

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 37D), 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, 20, 21 and 22 (where applicable) of the Income Tax Act shall be taken into account notwithstanding that no claim for such 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 such allowances, the provisions of section 23 of the Income Tax Act 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 subsections (2) and (3) of section 23 of the Income Tax Act (Cap. 141) shall be taken into account;

the provisions of 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, 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, 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 the provisions of 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; and subject to section 37H, one-half of the amount of the export income which qualifies for the relief as ascertained in this subsection 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 three 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 three qualifying years immediately preceding that basis period, and for the purposes of this paragraph a “qualifying year” is a year in which the export sales —

in respect of qualifying manufactured goods or Singapore domestic produce exceed ten million dollars; and

in respect of qualifying commodities exceed twenty million dollars.(4) Where an international trading company —

was engaged in the trading of qualifying manufactured goods, Singapore domestic produce or qualifying commodities for less than three 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 three qualifying years for the purpose of determining its relevant base export value under paragraph (b) of subsection (3), 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.Conditions for relief37H. The tax relief provided under section 37G shall, for a year of assessment, apply only if —

an international trading company has complied with the conditions stipulated under this Part and such other conditions as may be specified in its certificate; and

in the case of a company engaged in international trade under paragraph (a) of subsection (1) of section 37B, the export sales in respect of the qualifying manufactured goods or Singapore domestic produce exceed ten million dollars in the basis period for that year of assessment; or

in the case of a company engaged in entrepot trade under paragraph (b) of subsection (1) of section 37B, the export sales in respect of the qualifying commodities exceed twenty million dollars in the basis period for that year of assessment.Certain dividends exempted from income tax37I.—

As soon as any amount of chargeable income of an international trading company has become exempt under section 37G, that amount shall be credited to a tax exempt account to be kept by the company for the purposes of this Part.(2) Where a tax exempt account is in credit at the date on which any dividends are paid by a company, out of income which has been so 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 the tax exempt account as is received by a shareholder of the company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder:Provided that where the dividend is paid on any share of a preferential nature, it shall not be exempt from tax in the hands of the shareholder.(4) Any dividends debited to the tax exempt account shall be treated as having been distributed to the shareholders of the company or any particular class of those shareholders in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit.(5) The company shall deliver to the Comptroller a copy of the tax exempt account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.(6) Where an amount has been received by way of dividend from a company by a shareholder and the amount is exempt from tax under this Part, if that shareholder is a company, any dividends paid by that 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.Recovery of tax exempted37J. Notwithstanding any other provisions of this Part, where it appears to the Comptroller that —

any amount of exempted income of an international trading company; or

any dividend exempted in the hands of any shareholder,ought not to have been exempted by reason of a direction made under section 37D or the revocation under section 48 of the certificate issued under section 37B to the company, the Comptroller may at any time within twelve years from the date of the direction or revocation —

make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to recover such tax as may have been exempted under this Part; or

direct the company to debit its tax exempt account with such amount as the circumstances require.Application of Income Tax Act (Cap. 141)37K.—

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, mutatis mutandis, to any direction given under section 37J as if it were a notice of assessment given under those provisions.(2) Section 44 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is exempted from tax under this Part.Application of certain sections of this Act to international trading company37L. Sections 28, 29, 34, 35, 36 and 37 shall apply, mutatis mutandis, to an international trading company as they apply to an export enterprise and the reference to export product or export produce in those sections shall be read as a reference to qualifying manufactured goods, Singapore domestic produce or qualifying commodities.”.