Singapore legislation
Section 89
of Economic Expansion Incentives (Relief from Income Tax) Act
Section 89
Computation of eligible consultancy revenue and exemption from tax
(1)
The total income of a consultancy company in respect of its profession or business which includes its consultancy services on approved overseas projects shall be ascertained (after making such adjustments as may be necessary in consequence of any direction given under section 48 as made applicable by section 88), for any accounting period during its tax relief period in accordance with the provisions of the Income Tax Act (Cap. 134), and, in particular, the following provisions shall apply:
income from sources other than the consultancy services shall be excluded and separately assessed;
the allowances provided for in sections 16, 17, 18, 19, 19A, 20, 21 and 22 (where applicable) of the Income Tax Act shall be taken into account notwithstanding that no claim for those 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 those allowances, 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 section 23(2) and (4) of the Income Tax Act (Cap. 134) shall be taken into account;
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, 19A, 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, 19A, 20 and 21 of the Income Tax Act and losses incurred in respect of the profession or business referred to in this subsection shall, during the tax relief period, only be deducted against the income derived from that profession or business; and
subject to 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 income of a consultancy 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 amount of the eligible consultancy revenue of that company over its base eligible consultancy revenue bears to the total amount of its consultancy revenue.
(2A)
One-half of the amount of the income of a consultancy company which qualifies for the relief as ascertained in subsection (2) shall not form part of the chargeable income of the company for that year of assessment and shall be exempt from tax.
(3)
The base eligible consultancy revenue referred to in subsection (2) shall be —
where a consultancy company has been carrying on such consultancy services for 3 or more years immediately preceding the date of its application under this Part, an amount equal to one-third of its consultancy revenue in respect of overseas projects which are in the opinion of the Minister of the same kind as that specified in its certificate for approved overseas projects for the 3 years immediately preceding the date of its application under this Part; and
where a consultancy company has been carrying on such consultancy services for less than 3 years immediately preceding the date of its application under this Part, such amount as the Minister may specify having regard to the consultancy revenue of other consultancy companies.
(4)
This section shall apply to a consultancy firm subject to such provisions as the Minister may by regulations prescribe for the purpose of ascertaining the amount of income which qualifies for the relief.