Clause 19

by deleting the word “This” in subsection (1) and substituting the words “Subject to section 34A, this”;

by deleting the words “insurance company” wherever they appear in subsections (1) to (9) and substituting in each case the word “insurer”;

by deleting the words “Insurance companies” in the heading of subsection (3) and substituting the word “Insurers”;

by deleting the words “insurance companies” in the headings of subsections (3), (5), (6) and (9) and in the section heading and substituting in each case the word “insurers”;

by deleting the word “company” wherever it appears in subsections (3)(b) and (d), (8)(a), (b), (c) (7th, 13th and penultimate lines) and (d) and (9) and substituting in each case the word “insurer”;

by deleting the word “company” in the 4th and 6th lines of subsection (8)(c) and substituting the words “insurer (being a company)”;

by deleting paragraph (d) of subsection (3) and substituting the following paragraph:“(d)from the net amount so arrived at, deducting the actual losses (less the amount recovered in respect thereof under reinsurance), the distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office.”;

by deleting subsection (6) and substituting the following subsection:“(6) In the case of a life insurer, whether mutual or proprietary, the gains or profits on which tax is payable shall be ascertained by taking the aggregate of —

in the case of insurance funds established and maintained for Singapore policies, the amount computed in the following manner:

taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act (Cap. 142);

adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;

deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;

adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; and

adding thereto the balance so arrived at the life insurance surplus in relation to the non-participating fund and the investment-linked fund;

in the case of shareholders’ fund established in Singapore, the income therein less any expenses (including management expenses) incurred in the production of such income; and

in the case of insurance funds established and maintained for offshore policies, the amount computed in the following manner:

taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act (Cap. 142);

adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;

deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;

adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act;

adding thereto the offshore life insurance surplus in relation to the non-participating fund and the investment-linked fund; and

deducting from the balance so arrived at such income that is subject to tax at the concessionary rate of tax prescribed by regulations made under section 43C.”;

by deleting paragraph (a) of subsection (7) and substituting the following paragraph:“(a)only such part of the following income as may be specified in those regulations shall be included:

the amount in relation to insurance funds established and maintained for offshore policies, computed in the following manner:

taking the amount allocated out of the participating fund by way of bonus to the participating policies in accordance with section 17(6)(b) of the Insurance Act (Cap. 142);

adding thereto the amount allocated to the surplus account of the participating fund in accordance with section 17(6)(c) or (7) of the Insurance Act;

deducting from the balance so arrived at any receipt of the participating fund which is not chargeable to tax and adding thereto any expense of the participating fund which is not deductible for the purposes of this Act;

adding thereto the amount relating to investment income earned on assets representing the balance in the surplus account, after deducting any receipt which is not chargeable to tax and not allowing as a deduction any expense which is not deductible for the purposes of this Act; and

adding thereto the offshore life insurance surplus in relation to the non-participating fund and the investment-linked fund; and

the income of the shareholders’ fund established in Singapore as is attributable to the offshore life business; and”;

by deleting paragraph (d) of subsection (8) and substituting the following paragraph:“(d)in a case where, immediately before the life insurer ceases business permanently without transferring the business to any person in Singapore, there is an amount remaining in the participating fund which is not allocated by way of bonus to any participating policy, the Comptroller may make such adjustment to the tax liability of the life insurer as he thinks fit.”;

by inserting, immediately after subsection (9), the following subsections:“(9A) For the purposes of this section, the Minister may make regulations —

to provide for such transitional, supplementary and consequential matters as he may consider necessary or expedient; and

generally to give effect to or for carrying out the purposes of this section.(9B) Notwithstanding the amendment of this section by the Income Tax (Amendment) Act 2006, section 26 in force immediately before the amendment shall apply to the income of an insurer derived before the year of assessment 2006.”;

by inserting, immediately after the definition of “income of the shareholders’ fund” in subsection (10), the following definitions:“ “insurer” means —

a company registered under the Insurance Act (Cap.142) to carry on insurance business in Singapore; or

a person (including a partnership) permitted under the Insurance Act to carry on insurance business in Singapore under a foreign insurer scheme;“investment-linked fund” means an insurance fund for investment-linked policies established and maintained under section 17(1A) of the Insurance Act;“investment-linked policies”, “non-participating policies” and “participating policies” have the same meanings as in the First Schedule to the Insurance Act;”;

by deleting the definition of “life insurance surplus” in subsection (10) and substituting the following definition:“ “life insurance surplus”, in relation to the non-participating fund and the investment-linked fund of an insurer, means the amount ascertained —

by taking the aggregate of —

the gross premiums (including consideration paid or payable for the purchase of annuities) from Singapore non-participating and Singapore investment-linked policies of any life insurance fund established and maintained under the Insurance Act (less any premiums returned to the insured and premiums paid or payable on reinsurance);

the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to Singapore non-participating and Singapore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act; and

the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of any life insurance fund established and maintained under the Insurance Act relating to Singapore non-participating and Singapore investment-linked policies; and

by deducting from that aggregate —

distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office;

policy moneys paid or payable in respect of Singapore non-participating and Singapore investment-linked policies (less any amount recovered or recoverable in respect thereof under reinsurance);

moneys paid or payable on the surrender of Singapore non-participating and Singapore investment-linked policies; and

the net increase between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to Singapore non-participating and Singapore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act;”;

by inserting, immediately after the definition of “life policy” in subsection (10), the following definition:“ “non-participating fund” means an insurance fund established and maintained under section 17(2) of the Insurance Act (Cap. 142) which comprises wholly of non-participating policies;”;

by deleting the definition of “offshore life insurance surplus” in subsection (10) and substituting the following definition:“ “offshore life insurance surplus”, in relation to the non-participating fund and the investment-linked fund of an insurer, means the amount ascertained —

by taking the aggregate of —

the gross premiums (including consideration paid or payable for the purchase of annuities) from offshore non-participating and offshore investment-linked policies of any life insurance fund established and maintained under the Insurance Act (less any premiums returned to the insured and premiums paid or payable on reinsurance);

the net decrease between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act relating to offshore non-participating and offshore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act; and

the investment income and gains or profits derived from the sale of investments and other income, whether derived from Singapore or elsewhere, of any life insurance fund established and maintained under the Insurance Act relating to offshore non-participating and offshore investment-linked policies; and

by deducting from that aggregate —

distribution expenses and management expenses incurred in the production of the income referred to in paragraph (a) and, in respect of a branch in Singapore, a fair proportion of the expenses of its head office;

policy moneys paid or payable in respect of offshore non-participating and offshore investment-linked policies (less any amount recovered or recoverable in respect thereof under reinsurance);

moneys paid or payable on the surrender of offshore non-participating and offshore investment-linked policies; and

the net increase between the beginning and ending values of the policy liabilities of any life insurance fund established and maintained under the Insurance Act (Cap. 142) relating to offshore non-participating and offshore investment-linked policies of the period for which the gains or profits are ascertained, both values being determined in accordance with that Act;”; and

by inserting, immediately after the definition of “offshore risk” in subsection (10), the following definitions:“ “participating fund” means an insurance fund established and maintained under section 17(2) of the Insurance Act which comprises wholly or partly of participating policies;“policy liabilities”, in relation to the non-participating fund and the investment-linked fund of an insurer, means liabilities in respect of policies for which the non-participating fund and investment-linked fund are established and maintained under section 17 of the Insurance Act;”.