Clause 4

Any company —

which is a pioneer enterprise or a pioneer service company on or after 1st April 1986;

which is an export enterprise on or after 1st April 1986 and which had been a pioneer enterprise immediately before its tax relief period as an export enterprise,may apply in the prescribed form to the Minister for approval as a post-pioneer 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 may impose.(3) Every certificate issued to a post-pioneer company under this section shall specify —

a date as the commencement day from which the company shall be entitled to tax relief under this Part;

its qualifying activities; and

the concessionary rate of tax to be levied for the purposes of this Part.(4) The Minister may, in his discretion, upon an application of a post-pioneer company, amend its certificate by substituting for the commencement day specified therein such other date as he thinks fit and thereupon the provisions of this Part shall have effect as if that date were the commencement day in relation to that certificate.(5) Notwithstanding section 43 of the Income Tax Act (Cap. 134), tax at such concessionary rate, not being less than 10% as the Minister may specify, shall be levied and paid for each year of assessment upon the income derived by a post-pioneer company during its tax relief period from its qualifying activities.Tax relief period of post-pioneer company19C. The tax relief period of a post-pioneer company shall commence on its commencement day and shall continue for a period not exceeding 5 years as the Minister may determine.Ascertainment of income in respect of other trade or business19D.—

Where during its tax relief period a post-pioneer company carries on any trade or business other than its qualifying activities, separate accounts shall be maintained in respect of that other trade or business and in respect of the same accounting period, and the income from that other trade or business shall be computed and assessed in accordance with the Income Tax Act with such adjustments as the Comptroller thinks reasonable and proper.(2) Where in the opinion of the Comptroller the carrying on of such other trade or business is subordinate or incidental to the carrying on of the qualifying activities of the post-pioneer company, the income or loss arising from such other trade or business shall be deemed to form part of the income or loss of the post-pioneer company in respect of its qualifying activities.Deduction of losses19E. The Minister may, in relation to post-pioneer companies, by regulations provide for —

the manner in which expenses, capital allowances and donations allowable under the Income Tax Act are to be deducted; and

the deduction of capital allowances and of losses otherwise than in accordance with sections 23 and 37(2) of the Income Tax Act (Cap. 134).Certain dividends exempted from income tax19F.—

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:Provided that where the 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 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 (Cap. 134) shall not apply to any such dividends or part thereof so exempt:Provided that the 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 within 12 years after the end of that year of assessment —

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.”.