Singapore legislation
Clause 9
of Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill
Clause 9
Amendment of section 40
Section 40 of the principal Act is amended —
by deleting subsection (3A) and substituting the following subsection:“(3A) Notwithstanding subsections (3) and (9) —
no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder;
any dividend paid on any share of a preferential nature shall be deemed as interest income of the shareholder if the dividend is paid by a company —
which has not been subjected to the provisions of section 44 of the Income Tax Act (Cap. 134) in force immediately before 1st January 2003; or
which before 1st January 2003 had been subjected to the provisions of section 44 of that Act in force immediately before that date and the dividend is paid on or after —
the 44A balance of the company referred to in section 44A of that Act becomes nil;
the company exercises the option referred to in section 44(6A) of that Act; or
31st December 2007,whichever is the earliest; and
any dividend paid on any share of a preferential nature shall be deemed as interest expense of the company if the company so elects.”;
by deleting the words “in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit” in the 3rd, penultimate and last lines of subsection (4) and substituting the words “in accordance with the proportion of their shareholdings in the export enterprise”;
by deleting the words “including any dividend paid by a holding company to which subsection (9) applies,” in subsection (6)(b); and
by deleting subsection (9) and substituting the following subsection:“(9) Where an amount has been received by way of dividends from a company by a shareholder and the amount is exempt from tax under this section, 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; and section 44 of the Income Tax Act (Cap. 134) shall not apply to any such dividends or part thereof.”.