Economic Expansion Incentives (Relief from Income Tax) Act 1967 · 2020 Revised Edition · Part 7 · Royalties, Fees and Development Contributions
40B. Reduction of tax for royalties, fees or contributions payable under agreements or arrangements for purposes of approved activities
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The Minister may specify, in an approved activity certificate issued to a company in respect of an approved activity, that any relevant royalties, fees or contributions for that activity that are payable to a non‑resident person during the period of approval for that activity as specified in that certificate (called in this section the approval period) are subject to a tax incentive specified in that certificate, subject to any conditions that the Minister may specify in the certificate.
certificate
“certificate” includes a letter or other document issued by the Minister to a company pursuant to an application made by the company under a provision of this Act;
For the purposes of subsection (1), the Minister may specify different tax incentives (including different concessionary rates) for different classes, categories or descriptions of —
approved activities;
relevant royalties, fees or contributions for an approved activity; or
non‑resident persons to whom relevant royalties, fees or contributions for an approved activity are payable.
Without limiting subsection (1), the Minister may under subsection (1) impose the condition in subsection (4) for the application of a tax incentive to any item of relevant royalties, fees or contributions for an approved activity payable to a non‑resident person.
The condition is that the tax incentive only applies if, at the time the item of relevant royalties, fees or contributions is payable to the non‑resident person, the highest rate of tax of a similar character to income tax imposed by the Income Tax Act 1947 (by whatever name called) that is levied —
under the law of the territory that the non‑resident person is a tax resident in; and
on any gains or profits from any trade or business carried on by the non‑resident person in that territory at that time,is more than 0%.
Despite section 43(1) of the Income Tax Act 1947, subject to subsection (7), where an approved activity certificate specifies that any relevant royalties, fees or contributions for an approved activity that are payable to a non‑resident person during the approval period for that activity are exempt from tax, then those relevant royalties, fees or contributions are exempt from tax if the conditions specified in the certificate for that tax incentive are satisfied.
Despite section 43(1) of the Income Tax Act 1947, subject to subsection (7), where an approved activity certificate specifies that a concessionary rate of tax is to be levied on any relevant royalties, fees or contributions for an approved activity that are payable to a non‑resident person during the approval period for that activity, then tax at that rate is levied and payable on those relevant royalties, fees or contributions, if the conditions specified in the certificate for that tax incentive are satisfied.
Any tax incentive specified in an approved activity certificate for an approved activity does not apply to any relevant royalties, fees or contributions of the approved activity that are approved royalties, fees or contributions under Division 1 of this Part at the time the relevant royalties, fees or contributions are payable to the non‑resident person.
approved royalties, fees or contributions
“approved royalties, fees or contributions” means royalties, technical assistance fees or contributions to research and development costs which have been approved under section 37 to be approved royalties, fees or contributions;
In this section —
“relevant royalties, fees or contributions”, in relation to an approved activity, means any royalties or technical assistance fees or contributions to research and development costs payable by the company to the non‑resident person —
royalties or technical assistance fees
“royalties or technical assistance fees” includes —(a)any royalties, rentals or other amounts paid as consideration for the use of, or the right to use, copyright, scientific works, patents, designs, plans, secret processes, formulae, trade marks, licences or other like property or rights;(b)income derived from the alienation of property or information mentioned in paragraph (a); and(c)other amounts paid in consideration of services rendered by a non-resident person or the person’s employee in connection with the use of property or rights belonging to, or the initial operation of any plant, machinery or other apparatus purchased from, the non-resident person,but does not include royalties, rentals or other amounts paid in respect of the operation of mines, quarries or other places of extraction of natural resources; or fees paid to an individual for the performance of professional services in Singapore other than as an employee;
under an agreement or arrangement which the company entered into with the non‑resident person for the purposes of carrying on that approved activity; and
company
“company” means any company incorporated or registered in accordance with the provisions of any written law relating to companies;
where the agreement or arrangement is subsequently amended or varied, under the amended or varied agreement or arrangement if the amendment or variation was for the purposes of carrying on that approved activity;
“tax incentive” means —
an exemption from tax; or
a concessionary rate of tax.