Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Bill

The Minister may, if he considers it expedient in the public interest to do so, approve an industry, which is not being carried on in Singapore on a scale adequate to the economic needs of Singapore and for which in his opinion there are favourable prospects for development, to be a pioneer industry and any specific product of that industry to be a pioneer product.(2) The Minister may revoke any approval given under this section but any such revocation shall not affect the operation of any pioneer certificate issued to any pioneer enterprise before the revocation.(3) Any industry which has been approved as a pioneer industry or any product which has been approved as a pioneer product before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Act 2004 shall be deemed to have been approved under this section.”.

by deleting the words “sections 16, 17, 18, 19,” in subsections (1A) and (1B) (6th line) and substituting in each case the words “sections 16, 17, 18, 19, 19A, 19B,”;

by inserting, immediately after the words “more than 50%” in subsection (3)(a), the words “, or such other percentage as the Minister may determine,”;

by deleting the word “fixed” in subsections (3) (3rd line) and (3B);

by deleting the words “sections 16, 17, 18, 19, 19A,” in subsections (3) (14th and 15th lines) and (4) and substituting in each case the words “sections 16, 17, 18, 19, 19A, 19B,”; and

by deleting subsection (5) and substituting the following subsection:“(5) In subsections (3) and (3B), “capital expenditure” means capital expenditure in connection with a pioneer product, on factory building (excluding land) in Singapore, on any new plant or new machinery used in Singapore and on intellectual property rights for use in Singapore and, subject to the approval of the Minister, on any secondhand plant or secondhand machinery used in Singapore.”.

by deleting subsections (1) and (2) and substituting the following subsections:“(1) Subject to subsection (2A), the tax relief period of a development and expansion company shall commence on its commencement day and shall continue —

for such period not exceeding 10 years as the Minister may determine; and

for such further period or periods, not exceeding 5 years for each period, as the Minister may determine, where the Minister is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose.(2) Subject to subsection (2A), the Minister may, if he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of a development and expansion company after the expiry of the total tax relief period in subsection (1) for such further period or periods, not exceeding 5 years at any one time, as he may determine.(2A) The total tax relief period of a development and expansion company under subsections (1) and (2) shall not in the aggregate exceed 20 years.(2B) Any tax relief period initially granted to a development and expansion company before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Act 2004 which exceeds 10 years shall be deemed to have been granted under this section.”; and

by deleting the words “subsection (2)” in subsection (3) and substituting the words “subsections (1) and (2)”.

As soon as any amount of chargeable income of a company which has been granted an investment allowance has become exempt under section 71, that amount shall be credited to a tax exempt account to be kept by the company for the purposes of this Part.(2) Where a tax exempt account is in credit at the date on which any dividends are paid by a company, out of income which has been so exempted, 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 tax exempt account as is received by a shareholder of the company shall, if the Comptroller is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.(4) Notwithstanding subsections (3) and (7), no dividends paid on any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder.(5) Any dividends debited to the tax exempt account shall be treated as having been distributed to the shareholders of the company or any particular class of the shareholders in accordance with the proportion of their shareholdings in the company.(6) The company shall deliver to the Comptroller a copy of the account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.(7) Where an amount has been received by way of dividend from a company by a shareholder and the amount is exempt from tax under this Part, 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.”.

Notwithstanding the amendment of sections 97S to 97V, 97X and 97Y by the Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Act 2004, sections 97S to 97V, 97X and 97Y in force immediately before 27th February 2004 shall continue to apply and have effect to any technopreneur start-up company approved before that date.(2) In this section, “technopreneur start-up company” means a company approved as a technopreneur start-up company under section 97T(2) in force immediately before the date of commencement of the Economic Expansion Incentives (Relief from Income Tax) (Amendment No. 2) Act 2004.”.