Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2012 deemed to have come into operation on 1 April 2011

On By taxsgIn e-Gazette, Legislative Updates

28 February 2012

The Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development)Notification 2012, published on 24 February 2012, is deemed to have come into operation on 1 April 2011.

The Notification defines ‘qualifying payments’ to be any interest, commission, fee or other payment or any income derived from loans considered derived from Singapore under section 12(6) of the Income Tax Act (ITA), and outlines the tax exemption conditions of those qualifying payments in respect of financial institutions.

The Notification provides for tax exemption on any payments which a bank or finance company in Singapore is liable to make to a person who is neither a resident in Singapore nor a PE in Singapore where:

(i) the payment is liable to be made during the period from 1 April 2011 to 31 March 2021 (both  dates  inclusive) under:

  • a contract which took  effect before 1 April  2011
  • a  contract which is extended or renewed, where the extension or renewal took effect before 1 April 2011, or
  • a debt security which was issued before 1 April 2011

(ii)  the payment is liable to be made under a contract which takes effect on a date which falls within the period from 1 April 2011 to 31 March 2021 (both dates inclusive)

(iii)  the payment is liable to be made:

  • under a contract which is extended or renewed, where the extension or renewal takes effect on a date which falls within the period from 1 April  2011 to 31 March 2021 (both dates inclusive), and
  • on or after the date on which such extension or renewal takes effect, or

(iv) the payment is liable to be made under a debt security which is issued on a date which falls within the period from 1 April 2011 to 31 March 2021 (both dates inclusive).

A qualifying payment must be made by a specified approved payer. The exemption however does not apply to qualifying payments made by a person or an approved payer in connection with an arrangement referred to in section 33(1) of the Income Tax Act whereby the Comptroller may disregard certain transactions and dispositions.

Source: e-Gazette