§ 13S — Exemption of income derived by law practice from international arbitration held in Singapore

13S.—(1) Any law practice intending to provide legal services in connection with any international arbitration may, from 1 July 2007 to 30 June 2017 (both dates inclusive), apply to the Minister, or such person as the Minister may appoint, for approval as an approved law practice.(2) Where the Minister, or such person as the Minister may appoint, considers it expedient in the public interest to do so, the Minister or appointed person may approve the application and issue a letter to the law practice subject to such conditions as the Minister or appointed person thinks fit.

(2A) No approval under this section may be granted to any law practice which is approved on or after 1 April 2010 as a development and expansion company under Part 4 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in respect of international services that qualify for zero‑rating under section 21(3) of the Goods and Services Tax Act 1993, and such approval remains in force.

(3) Every letter issued under subsection (2) must specify a date as the commencement day from which the approved law practice is entitled to tax relief under this section.

(4) The tax relief period of an approved law practice commences on its commencement day and continues for such period, not exceeding 5 years, as is specified in the letter issued to it under subsection (2).

(5) The amount of the income of an approved law practice which will qualify for the relief for any year of assessment is the excess of the total amount of the qualifying income of the approved law practice for the basis period for that year of assessment over its base income.

(6) Where an approved law practice has satisfied the conditions specified in the letter issued to it under subsection (2), one‑half of the amount of the income of the approved law practice for any year of assessment for a basis period that falls within the tax relief period which qualifies for the relief as ascertained under subsection (5) does not form part of the statutory income of the approved law practice for that year of assessment and is exempt from tax.

(6A) For the purpose of satisfying the Comptroller that its income qualifies for relief under this section, the approved law practice must provide, not later than 5 years after the end of its tax relief period, evidence of the place of hearing or intended place of hearing (as the case may be) of the international arbitration.

(7) Where an approved law practice is a law corporation, the exemption under section 43(6) or (6C) (as the case may be) does not apply to the balance of the qualifying income exceeding the base income of the approved law practice that is not exempt under subsection (6).[45/2018]

(8) The base income mentioned in subsection (5) is —(a)

where an approved law practice had in the period of 3 years immediately preceding the commencement day provided legal services in connection with any qualifying international arbitration —(i)

the amount ascertained by dividing the total income derived from providing those legal services in the period by the actual number of years in the period in which those legal services were provided; or

(ii)

if the amount ascertained under sub‑paragraph (i) is less than zero, deemed to be zero; or

(b)

such amount as the Minister may specify.

(9) The Comptroller must determine the manner and extent to which allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses and losses allowable under this Act which are attributable to the qualifying income of an approved law practice are to be deducted.

(10) In determining the qualifying income of an approved law practice for the basis period for any year of assessment, there are to be deducted from the income —(a)

expenses allowable under this Act for that year of assessment which are attributable to that income; and

(b)

any allowances for that year of assessment under section 19, 19A, 20, 21 or 22 attributable to that income even if no claim for those allowances has been made.

(11) The Comptroller may require an auditor to certify the income derived by an approved law practice from legal services in connection with any qualifying international arbitration and any direct costs and expenses incurred therefor.

(12) Where an approved law practice has in any year of assessment during the tax relief period incurred any loss from providing legal services in connection with any qualifying international arbitration or any allowances attributable to the qualifying income remaining unabsorbed, 50% of the loss or allowances, in each case, is to be deducted as provided for in section 23 or 37 (as the case may be) and the balance is disregarded.

(13) [Deleted by Act 19 of 2013]

(14) [Deleted by Act 19 of 2013]

(15) In this section —“arbitral tribunal”, “award”, “international arbitration” and “party” have the meanings given by the International Arbitration Act 1994;

“client”, “foreign law practice”, “Formal Law Alliance”, “Joint Law Venture”, “law corporation” and “Singapore law practice” have the meanings given by the Legal Profession Act 1966;

“hearing” means a hearing by the arbitral tribunal on the substance of the dispute;

“law practice” means a Singapore law practice, foreign law practice, Formal Law Alliance or Joint Law Venture;

“legal services in connection with any qualifying international arbitration” —(a)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2007 and 30 June 2012 (both dates inclusive), means any professional work of a legal nature provided for the purposes of an international arbitration during the eligible period by any lawyer of the law practice for its client who is a party to the arbitration the hearing of which is held in Singapore during its tax relief period or the period referred to in subsection (8)(a), as the case may be; or

(b)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2012 and 30 June 2017 (both dates inclusive), means any professional work of a legal nature provided for the purposes of an international arbitration during the eligible period by any lawyer of the law practice for its client who is a party to the arbitration the hearing of which is held or would (if there had been a hearing) have been held in Singapore;

“qualifying income” means the income derived by an approved law practice from the provision of legal services in connection with any qualifying international arbitration.[37/2014]

(16) For the purposes of the definition of “legal services in connection with any qualifying international arbitration” in subsection (15), “eligible period” means —(a)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2007 and 30 June 2012 (both dates inclusive), the period beginning on the initial date specified in sub‑paragraph (i) or (ii), whichever is applicable, and ending on the terminal date specified in sub‑paragraph (iii) or (iv), whichever is applicable:(i)

where the client in question is the claimant serving the request for arbitration, the initial date is the date of issue of the request;

(ii)

where the client in question is the respondent being served the request for arbitration, the initial date is the date of receipt of the request for arbitration by the client or law practice;

(iii)

a terminal date which is the date on which the final award is made by the arbitral tribunal;

(iv)

a terminal date which is the date on which the arbitration proceeding has otherwise finally terminated; or

(b)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2012 and 30 June 2017 (both dates inclusive), the period beginning on the initial date specified in sub‑paragraph (i) or (ii), whichever is applicable, and ending on the terminal date specified in sub‑paragraph (iii) or (iv), whichever is applicable:(i)

where the client in question is the claimant serving the request for arbitration, the initial date is the date of issue of the request;

(ii)

where the client in question is the respondent being served the request for arbitration, the initial date is the date of receipt of the request for arbitration by the client or law practice;

(iii)

a terminal date which is the date on which the final award is made by the arbitral tribunal;

(iv)

a terminal date which is the date on which the arbitration proceeding has otherwise finally terminated, whether or not there was a hearing.[13V

—(1) Any law practice intending to provide legal services in connection with any international arbitration may, from 1 July 2007 to 30 June 2017 (both dates inclusive), apply to the Minister, or such person as the Minister may appoint, for approval as an approved law practice.

(2) Where the Minister, or such person as the Minister may appoint, considers it expedient in the public interest to do so, the Minister or appointed person may approve the application and issue a letter to the law practice subject to such conditions as the Minister or appointed person thinks fit.

(2A) No approval under this section may be granted to any law practice which is approved on or after 1 April 2010 as a development and expansion company under Part 4 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in respect of international services that qualify for zero‑rating under section 21(3) of the Goods and Services Tax Act 1993, and such approval remains in force.

(3) Every letter issued under subsection (2) must specify a date as the commencement day from which the approved law practice is entitled to tax relief under this section.

(4) The tax relief period of an approved law practice commences on its commencement day and continues for such period, not exceeding 5 years, as is specified in the letter issued to it under subsection (2).

(5) The amount of the income of an approved law practice which will qualify for the relief for any year of assessment is the excess of the total amount of the qualifying income of the approved law practice for the basis period for that year of assessment over its base income.

(6) Where an approved law practice has satisfied the conditions specified in the letter issued to it under subsection (2), one‑half of the amount of the income of the approved law practice for any year of assessment for a basis period that falls within the tax relief period which qualifies for the relief as ascertained under subsection (5) does not form part of the statutory income of the approved law practice for that year of assessment and is exempt from tax.

(6A) For the purpose of satisfying the Comptroller that its income qualifies for relief under this section, the approved law practice must provide, not later than 5 years after the end of its tax relief period, evidence of the place of hearing or intended place of hearing (as the case may be) of the international arbitration.

(7) Where an approved law practice is a law corporation, the exemption under section 43(6) or (6C) (as the case may be) does not apply to the balance of the qualifying income exceeding the base income of the approved law practice that is not exempt under subsection (6).[45/2018]

(8) The base income mentioned in subsection (5) is —(a)

where an approved law practice had in the period of 3 years immediately preceding the commencement day provided legal services in connection with any qualifying international arbitration —(i)

the amount ascertained by dividing the total income derived from providing those legal services in the period by the actual number of years in the period in which those legal services were provided; or

(ii)

if the amount ascertained under sub‑paragraph (i) is less than zero, deemed to be zero; or

(b)

such amount as the Minister may specify.

(9) The Comptroller must determine the manner and extent to which allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses and losses allowable under this Act which are attributable to the qualifying income of an approved law practice are to be deducted.

(10) In determining the qualifying income of an approved law practice for the basis period for any year of assessment, there are to be deducted from the income —(a)

expenses allowable under this Act for that year of assessment which are attributable to that income; and

(b)

any allowances for that year of assessment under section 19, 19A, 20, 21 or 22 attributable to that income even if no claim for those allowances has been made.

(11) The Comptroller may require an auditor to certify the income derived by an approved law practice from legal services in connection with any qualifying international arbitration and any direct costs and expenses incurred therefor.

(12) Where an approved law practice has in any year of assessment during the tax relief period incurred any loss from providing legal services in connection with any qualifying international arbitration or any allowances attributable to the qualifying income remaining unabsorbed, 50% of the loss or allowances, in each case, is to be deducted as provided for in section 23 or 37 (as the case may be) and the balance is disregarded.

(13) [Deleted by Act 19 of 2013]

(14) [Deleted by Act 19 of 2013]

(15) In this section —“arbitral tribunal”, “award”, “international arbitration” and “party” have the meanings given by the International Arbitration Act 1994;

“client”, “foreign law practice”, “Formal Law Alliance”, “Joint Law Venture”, “law corporation” and “Singapore law practice” have the meanings given by the Legal Profession Act 1966;

“hearing” means a hearing by the arbitral tribunal on the substance of the dispute;

“law practice” means a Singapore law practice, foreign law practice, Formal Law Alliance or Joint Law Venture;

“legal services in connection with any qualifying international arbitration” —(a)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2007 and 30 June 2012 (both dates inclusive), means any professional work of a legal nature provided for the purposes of an international arbitration during the eligible period by any lawyer of the law practice for its client who is a party to the arbitration the hearing of which is held in Singapore during its tax relief period or the period referred to in subsection (8)(a), as the case may be; or

(b)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2012 and 30 June 2017 (both dates inclusive), means any professional work of a legal nature provided for the purposes of an international arbitration during the eligible period by any lawyer of the law practice for its client who is a party to the arbitration the hearing of which is held or would (if there had been a hearing) have been held in Singapore;

“qualifying income” means the income derived by an approved law practice from the provision of legal services in connection with any qualifying international arbitration.[37/2014]

(16) For the purposes of the definition of “legal services in connection with any qualifying international arbitration” in subsection (15), “eligible period” means —(a)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2007 and 30 June 2012 (both dates inclusive), the period beginning on the initial date specified in sub‑paragraph (i) or (ii), whichever is applicable, and ending on the terminal date specified in sub‑paragraph (iii) or (iv), whichever is applicable:(i)

where the client in question is the claimant serving the request for arbitration, the initial date is the date of issue of the request;

(ii)

where the client in question is the respondent being served the request for arbitration, the initial date is the date of receipt of the request for arbitration by the client or law practice;

(iii)

a terminal date which is the date on which the final award is made by the arbitral tribunal;

(iv)

a terminal date which is the date on which the arbitration proceeding has otherwise finally terminated; or

(b)

in relation to an approved law practice whose application for approval is made at any time between 1 July 2012 and 30 June 2017 (both dates inclusive), the period beginning on the initial date specified in sub‑paragraph (i) or (ii), whichever is applicable, and ending on the terminal date specified in sub‑paragraph (iii) or (iv), whichever is applicable:(i)

where the client in question is the claimant serving the request for arbitration, the initial date is the date of issue of the request;

(ii)

where the client in question is the respondent being served the request for arbitration, the initial date is the date of receipt of the request for arbitration by the client or law practice;

(iii)

a terminal date which is the date on which the final award is made by the arbitral tribunal;

(iv)

a terminal date which is the date on which the arbitration proceeding has otherwise finally terminated, whether or not there was a hearing.[13V