4 March 2012
The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2012 was passed in Parliament on 18 January 2012 and assented to by the President on 21 February 2012. It amends the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 2005 Revised Edition), ie:
- Sections 5 (Application for and issue and amendment of pioneer certificate), 6 (Tax relief period of pioneer enterprise) and 7 (Provisions governing old and new trade or business) are deemed to have come into operation on 1 April 2010.
- Definition provided for “certificate”, in order to clarify that the word includes any letter or other document issued by the Minister to a company pursuant to an application made by the company under a provision of the Act (section 3).
- The removal of the requirement that a tax relief period of a pioneer service company under Part III must be at least five years by deleting the words “a period of 5 years or such longer period, not exceeding 15 years” and substituting the words “such period, not exceeding 15 years” (section 18).
- Amendment to section 19J (by inserting a new subsection 5A) to increase the concessionary tax rate applicable to the expansion income derived by a company that is approved as a Development and Expansion Company to at least the sum of 0.5% and the preceding tax rate, for income derived on or after the approval or during the extension, and after the 10th year and 15th year of its tax relief period. This will apply to a company that is approved as a Development and Expansion Company on or after the date the Economic Expansion Incentives (Relief from Income Tax)(Amendment) Act 2012 is published in the Gazette, or which is granted an extension of its tax relief period on or after that date. Subsections (8), (9) and (10) which require the average corresponding income of a development and expansion company to be recomputed for any extension of its tax relief period after 10 years, will continue to apply to a company approved as a Development and Expansion Company, and which has been granted an extension of that period, before the date the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2012 is published in the Gazette. The average corresponding income of a company is the amount of its income that will not be subject to the concessionary tax rate.
- Amendment to section 19K (Tax relief period of development and expansion company) to require the Minister, when he extends the tax relief period of a company to which new section 19KA applies, to take into account the non-extendable tax relief period of five years under that new section.
- The insertion of a new section 19KA which makes special provisions for a company which engages in GST zero-rated international legal services and is approved as a development and expansion company in the period between 1 April 2010 and 31 March 2015 (both dates inclusive). The tax relief period for the company is a non-extendable five years and its expansion income from such international legal services is subject to a 10% tax rate. The new section 19KA does not apply to a company that has been approved under section 13V(1) of the Income Tax Act (Cap. 134) (which provides for exemption of income derived by a law practice from international arbitration held in Singapore).
- Amendment to section 19L(9) where the Comptroller may make assessment on company if its income ought not to have been taxed at the concessionary rate arising from the insertion of the new section 19KA.
The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Act 2012 was published in the electronic Government Gazette on 29 February 2012.