§ 13O — Exemption of income of company incorporated and resident in Singapore arising from funds managed by fund manager in Singapore

13O.—(1) Subject to such conditions as may be prescribed by regulations, specified in the letter of approval of the company, or specified from time to time by the Minister or an authorised body and either notified to the company or published in a manner that the Minister or authorised body reasonably believes will bring the conditions to the notice of the company, there is exempt from tax such income as the Minister may by regulations prescribe of a company incorporated and resident in Singapore and approved by the Minister or an authorised body (called in this section an approved company) arising from funds managed —(a)

in Singapore by a fund manager; or

(b)

by a person approved by the Minister or authorised body.[Act 41 of 2020 wef 06/12/2022]

[Act 35 of 2024 wef 17/02/2024]

(1A) The approval of a person under subsection (1) is subject to such conditions as the Minister or an authorised body may impose.[Act 35 of 2024 wef 17/02/2024]

(1B) The Minister or authorised body may at any time add, vary or delete a condition of an approval under subsection (1A), including (to avoid doubt) an approval given before the date of commencement of section 9(c) of the Income Tax (Amendment) Act 2024.[Act 35 of 2024 wef 27/11/2024]

(1C) Any addition, variation or deletion of a condition under subsection (1B) must be given to the approved company or published in a manner that the Minister or authorised body reasonably believes will bring the addition, variation or deletion to the attention of the approved company.[Act 35 of 2024 wef 27/11/2024]

(2) No approval may be granted under subsection (1) after 31 December 2029.[37/2014; 32/2019]

[Act 35 of 2024 wef 27/11/2024]

(3) Where —(a)

income of any approved company has been exempt from tax under subsection (1) in any year of assessment; and

(b)

a person (called in this section the relevant owner), either alone or together with the relevant owner’s associates, beneficially owns on the relevant day issued securities of the approved company the value of which is more than the prescribed percentage of the total value of all issued securities of the approved company on the relevant day,

then the relevant owner is liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula

where A

is the percentage which the value of the issued securities of the approved company beneficially owned on the relevant day by the relevant owner bears to the total value of all issued securities of the approved company on the relevant day;

B

is the amount of income of the approved company as reflected in the audited account of the approved company for the basis period relating to that year of assessment; and

C

is the tax rate specified in section 43(1)(a) applicable to that year of assessment.

(4) Subsection (3) does not apply to a relevant owner if —(a)

the Comptroller permits the relevant owner to take steps to reduce the ownership of the issued securities by the relevant owner or the relevant owner’s associates within such period as the Comptroller may specify, being a period of no more than 3 months from the relevant day; and

(b)

by the end of the specified period, the value of the issued securities beneficially owned by the relevant owner together with the relevant owner’s associates is no more than the prescribed percentage of the total value of all issued securities of the approved company on the relevant day.

(5) Despite subsection (3), where —(a)

income of any approved company has been exempt from tax under subsection (1) in any year of assessment;

(b)

a person, either alone or together with the person’s associates, beneficially owns on the relevant day any issued securities of the approved company; and

(c)

the person mentioned in paragraph (b) is a non‑bona fide entity,

then the person mentioned in paragraph (b) is not liable to pay the penalty referred to in subsection (3); but a person (called in this section the liable person) who —

(d)

beneficially owns on the relevant day equity interests of the person mentioned in paragraph (b); and

(e)

is not himself, herself or itself a non‑bona fide entity,

is liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula specified in subsection (5A), if, and only if, the total of —

(f)

the value of the equity interests of the approved company beneficially owned by the liable person on the relevant day; and

(g)

the value of the equity interests of the approved company beneficially owned by the associates of the liable person on the relevant day,

exceeds the prescribed percentage of the total value of all the equity interests of the approved company on that day.

(5A) The formula for the penalty referred to in subsection (5) is as follows:

where A

is the percentage which the value of the equity interests of the approved company beneficially owned on the relevant day by the liable person bears to the total value of all equity interests of the approved company on the relevant day;

B

is the amount of income of the approved company as reflected in the audited account of the approved company for the basis period relating to that year of assessment; and

C

is the tax rate applicable to that year of assessment as specified in section 43(1)(a).

(5B) Subsection (4) applies, with the necessary modifications, to the liable person as it applies to a relevant owner as if the reference to subsection (3) is a reference to subsection (5).

(6) For the purposes of subsections (5)(d), (f) and (g) and (5A), if —(a)

a person beneficially owns (including by virtue of one or more applications of this subsection) equity interests of a person (called in this subsection a first level entity); and

(b)

the first level entity beneficially owns equity interests of another person (called in this subsection a second level entity),

then the firstmentioned person is taken to beneficially own equity interests of the second level entity; and the percentage which the value of those equity interests bears to the total value of all equity interests of the second level entity is computed in accordance with the formula

where A

is the percentage which the value of equity interests of the first level entity beneficially owned by the firstmentioned person bears to the total value of all equity interests of the first level entity; and

B

is the percentage which the value of equity interests of the second level entity beneficially owned by the first level entity bears to the total value of all equity interests of the second level entity.

(6A) The Minister or an authorised body may at any time, in the discretion of the Minister or authorised body and subject to such conditions as the Minister or authorised body may impose, remit or refund, wholly or in part, the penalty that is payable or paid by a person under subsection (3) or (5); and section 92(2B) to (2E) applies, with the necessary modifications, to any non‑compliance with any such condition as it applies to the non‑compliance with a condition imposed under section 92(2).[37/2014]

[Act 41 of 2020 wef 06/12/2022]

(7) Regulations made under this section may —(a)

provide for the determination of the amount of income of any approved company to be exempt from tax;

(b)

provide for the circumstances under which a person would be considered to be an associate for the purposes of this section;

(c)

exempt any person or class of persons from subsection (3) or (5); [Act 35 of 2024 wef 27/11/2024]

(ca)

provide for the revocation, or the suspension for a period specified by the Minister or authorised body, of an approval granted under subsection (1) (including one that is granted before the date of commencement of the regulations) for non-compliance with a condition of the approval, and for any revocation to take effect from any date, including (if it is just and reasonable to do so) —(i)

a date before the date of the non-compliance with the condition; or

(ii)

if the condition is to be complied with over a period of time, before the date of commencement of that period; and[Act 35 of 2024 wef 27/11/2024]

(d)

make provision generally for giving full effect to or for carrying out the purposes of this section.

(7A) To avoid doubt, where —(a)

an exemption had been allowed under this section on the income of an approved company;

(b)

the exemption would not have been allowed had the company not been approved under subsection (1) on the date the income accrued to or was derived or received by the company; and

(c)

the approval is revoked under regulations made under subsection (7)(ca) with effect from or before that date,

the Comptroller may make an assessment or additional assessment under section 74 on the company.

[Act 35 of 2024 wef 27/11/2024]

(7B) Where the approval of a company under subsection (1) is suspended pursuant to regulations made under subsection (7)(ca), the company is treated as not an approved company during the period of suspension.[Act 35 of 2024 wef 27/11/2024]

(8) In this section —“equity interest” means —(a)

in relation to a company, any issued security of that company; or

(b)

in relation to a person other than a company, such right or interest as may be prescribed;

“issued securities”, in relation to a company, means —(a)

issued debentures of, or issued stocks or shares in, the company;

(b)

any right, option or derivative in respect of any such debentures, stocks or shares; or

(c)

such other securities of the company as may be prescribed;

“non‑bona fide entity” means a person not resident in Singapore (excluding a permanent establishment in Singapore) who —(a)

is set up solely for the purpose of avoiding or reducing payment of tax or penalty under this Act; or

(b)

does not carry out any substantial business activity for a genuine commercial reason;

“relevant day” means —(a)

the last day of the basis period of the approved company for the year of assessment referred to in subsection (3) or (5), as the case may be; or

(b)

if within that basis period the approved company ceases to be so approved, the last day it was so approved;

“value” —(a)

in relation to issued securities of a company other than those prescribed under paragraph (c) of the definition of “issued securities”, means —(i)

where the relevant day is before 1 April 2014, the value of those securities at the time of their issue by the company; and

(ii)

where the relevant day falls on or after 1 April 2014, the net asset value of those securities as at the relevant day; or

(b)

in relation to issued securities of a company prescribed under paragraph (c) of the definition of “issued securities”, means —(i)

where the relevant day is before 1 April 2014, the value of those securities at the prescribed time; and

(ii)

where the relevant day falls on or after 1 April 2014, the net asset value of those securities as at the relevant day.[37/2014; 2/2016]

(9) The Minister may by regulations make such transitional and saving provisions as the Minister may consider necessary or expedient in relation to the repeal of section 13R of this Act as in force immediately before 1 September 2007.[13R

—(1) Subject to such conditions as may be prescribed by regulations, specified in the letter of approval of the company, or specified from time to time by the Minister or an authorised body and either notified to the company or published in a manner that the Minister or authorised body reasonably believes will bring the conditions to the notice of the company, there is exempt from tax such income as the Minister may by regulations prescribe of a company incorporated and resident in Singapore and approved by the Minister or an authorised body (called in this section an approved company) arising from funds managed —(a)

in Singapore by a fund manager; or

(b)

by a person approved by the Minister or authorised body.[Act 41 of 2020 wef 06/12/2022]

[Act 35 of 2024 wef 17/02/2024]

(1A) The approval of a person under subsection (1) is subject to such conditions as the Minister or an authorised body may impose.[Act 35 of 2024 wef 17/02/2024]

(1B) The Minister or authorised body may at any time add, vary or delete a condition of an approval under subsection (1A), including (to avoid doubt) an approval given before the date of commencement of section 9(c) of the Income Tax (Amendment) Act 2024.[Act 35 of 2024 wef 27/11/2024]

(1C) Any addition, variation or deletion of a condition under subsection (1B) must be given to the approved company or published in a manner that the Minister or authorised body reasonably believes will bring the addition, variation or deletion to the attention of the approved company.[Act 35 of 2024 wef 27/11/2024]

(2) No approval may be granted under subsection (1) after 31 December 2029.[37/2014; 32/2019]

[Act 35 of 2024 wef 27/11/2024]

(3) Where —(a)

income of any approved company has been exempt from tax under subsection (1) in any year of assessment; and

(b)

a person (called in this section the relevant owner), either alone or together with the relevant owner’s associates, beneficially owns on the relevant day issued securities of the approved company the value of which is more than the prescribed percentage of the total value of all issued securities of the approved company on the relevant day,

then the relevant owner is liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula

where A

is the percentage which the value of the issued securities of the approved company beneficially owned on the relevant day by the relevant owner bears to the total value of all issued securities of the approved company on the relevant day;

B

is the amount of income of the approved company as reflected in the audited account of the approved company for the basis period relating to that year of assessment; and

C

is the tax rate specified in section 43(1)(a) applicable to that year of assessment.

(4) Subsection (3) does not apply to a relevant owner if —(a)

the Comptroller permits the relevant owner to take steps to reduce the ownership of the issued securities by the relevant owner or the relevant owner’s associates within such period as the Comptroller may specify, being a period of no more than 3 months from the relevant day; and

(b)

by the end of the specified period, the value of the issued securities beneficially owned by the relevant owner together with the relevant owner’s associates is no more than the prescribed percentage of the total value of all issued securities of the approved company on the relevant day.

(5) Despite subsection (3), where —(a)

income of any approved company has been exempt from tax under subsection (1) in any year of assessment;

(b)

a person, either alone or together with the person’s associates, beneficially owns on the relevant day any issued securities of the approved company; and

(c)

the person mentioned in paragraph (b) is a non‑bona fide entity,

then the person mentioned in paragraph (b) is not liable to pay the penalty referred to in subsection (3); but a person (called in this section the liable person) who —

(d)

beneficially owns on the relevant day equity interests of the person mentioned in paragraph (b); and

(e)

is not himself, herself or itself a non‑bona fide entity,

is liable to pay to the Comptroller, in such manner and within such reasonable time as may be determined by the Comptroller, a penalty to be computed in accordance with the formula specified in subsection (5A), if, and only if, the total of —

(f)

the value of the equity interests of the approved company beneficially owned by the liable person on the relevant day; and

(g)

the value of the equity interests of the approved company beneficially owned by the associates of the liable person on the relevant day,

exceeds the prescribed percentage of the total value of all the equity interests of the approved company on that day.

(5A) The formula for the penalty referred to in subsection (5) is as follows:

where A

is the percentage which the value of the equity interests of the approved company beneficially owned on the relevant day by the liable person bears to the total value of all equity interests of the approved company on the relevant day;

B

is the amount of income of the approved company as reflected in the audited account of the approved company for the basis period relating to that year of assessment; and

C

is the tax rate applicable to that year of assessment as specified in section 43(1)(a).

(5B) Subsection (4) applies, with the necessary modifications, to the liable person as it applies to a relevant owner as if the reference to subsection (3) is a reference to subsection (5).

(6) For the purposes of subsections (5)(d), (f) and (g) and (5A), if —(a)

a person beneficially owns (including by virtue of one or more applications of this subsection) equity interests of a person (called in this subsection a first level entity); and

(b)

the first level entity beneficially owns equity interests of another person (called in this subsection a second level entity),

then the firstmentioned person is taken to beneficially own equity interests of the second level entity; and the percentage which the value of those equity interests bears to the total value of all equity interests of the second level entity is computed in accordance with the formula

where A

is the percentage which the value of equity interests of the first level entity beneficially owned by the firstmentioned person bears to the total value of all equity interests of the first level entity; and

B

is the percentage which the value of equity interests of the second level entity beneficially owned by the first level entity bears to the total value of all equity interests of the second level entity.

(6A) The Minister or an authorised body may at any time, in the discretion of the Minister or authorised body and subject to such conditions as the Minister or authorised body may impose, remit or refund, wholly or in part, the penalty that is payable or paid by a person under subsection (3) or (5); and section 92(2B) to (2E) applies, with the necessary modifications, to any non‑compliance with any such condition as it applies to the non‑compliance with a condition imposed under section 92(2).[37/2014]

[Act 41 of 2020 wef 06/12/2022]

(7) Regulations made under this section may —(a)

provide for the determination of the amount of income of any approved company to be exempt from tax;

(b)

provide for the circumstances under which a person would be considered to be an associate for the purposes of this section;

(c)

exempt any person or class of persons from subsection (3) or (5); [Act 35 of 2024 wef 27/11/2024]

(ca)

provide for the revocation, or the suspension for a period specified by the Minister or authorised body, of an approval granted under subsection (1) (including one that is granted before the date of commencement of the regulations) for non-compliance with a condition of the approval, and for any revocation to take effect from any date, including (if it is just and reasonable to do so) —(i)

a date before the date of the non-compliance with the condition; or

(ii)

if the condition is to be complied with over a period of time, before the date of commencement of that period; and[Act 35 of 2024 wef 27/11/2024]

(d)

make provision generally for giving full effect to or for carrying out the purposes of this section.

(7A) To avoid doubt, where —(a)

an exemption had been allowed under this section on the income of an approved company;

(b)

the exemption would not have been allowed had the company not been approved under subsection (1) on the date the income accrued to or was derived or received by the company; and

(c)

the approval is revoked under regulations made under subsection (7)(ca) with effect from or before that date,

the Comptroller may make an assessment or additional assessment under section 74 on the company.

[Act 35 of 2024 wef 27/11/2024]

(7B) Where the approval of a company under subsection (1) is suspended pursuant to regulations made under subsection (7)(ca), the company is treated as not an approved company during the period of suspension.[Act 35 of 2024 wef 27/11/2024]

(8) In this section —“equity interest” means —(a)

in relation to a company, any issued security of that company; or

(b)

in relation to a person other than a company, such right or interest as may be prescribed;

“issued securities”, in relation to a company, means —(a)

issued debentures of, or issued stocks or shares in, the company;

(b)

any right, option or derivative in respect of any such debentures, stocks or shares; or

(c)

such other securities of the company as may be prescribed;

“non‑bona fide entity” means a person not resident in Singapore (excluding a permanent establishment in Singapore) who —(a)

is set up solely for the purpose of avoiding or reducing payment of tax or penalty under this Act; or

(b)

does not carry out any substantial business activity for a genuine commercial reason;

“relevant day” means —(a)

the last day of the basis period of the approved company for the year of assessment referred to in subsection (3) or (5), as the case may be; or

(b)

if within that basis period the approved company ceases to be so approved, the last day it was so approved;

“value” —(a)

in relation to issued securities of a company other than those prescribed under paragraph (c) of the definition of “issued securities”, means —(i)

where the relevant day is before 1 April 2014, the value of those securities at the time of their issue by the company; and

(ii)

where the relevant day falls on or after 1 April 2014, the net asset value of those securities as at the relevant day; or

(b)

in relation to issued securities of a company prescribed under paragraph (c) of the definition of “issued securities”, means —(i)

where the relevant day is before 1 April 2014, the value of those securities at the prescribed time; and

(ii)

where the relevant day falls on or after 1 April 2014, the net asset value of those securities as at the relevant day.[37/2014; 2/2016]

(9) The Minister may by regulations make such transitional and saving provisions as the Minister may consider necessary or expedient in relation to the repeal of section 13R of this Act as in force immediately before 1 September 2007.[13R