§ 14I — Further or double deduction for salary expenditure for employees posted overseas

14I.—(1) Where the Comptroller is satisfied that —(a)

an approved firm or company resident and carrying on business in Singapore has incurred, at any time between 1 July 2015 and 31 December 2025 (both dates inclusive), salary expenditure specified for it under subsection (7) for its employees posted to an overseas establishment of the firm or company; and

(b)

the firm or company has satisfied the conditions precedent imposed under subsection (6) for a deduction under this section,

then there is to be allowed to the firm or company —

(c)

where such expenditure is allowable as a deduction under section 14, a further deduction of the amount of such expenditure in addition to the deduction allowed under that section; or

(d)

where such expenditure is not allowable as a deduction under section 14, a deduction equal to twice the amount of such expenditure.[2/2016; 41/2020]

(2) No deduction is to be allowed under subsection (1) for salary expenditure that is incurred more than 3 years after either of the following dates:(a)

the date the overseas establishment is incorporated, established or formed;

(b)

if the overseas establishment (being a company) is an overseas establishment of the approved firm or company as a result of any shareholding of the approved firm or company in the establishment, but the firm or company did not hold any shares in the overseas establishment on the date of the establishment’s incorporation, the earliest date on which the firm or company acquires any shares in the overseas establishment.[2/2016]

(3) Subject to subsection (4), the amount of salary expenditure allowed as a deduction for a year of assessment under subsection (1) must not exceed the amount specified for the firm or company under subsection (8).[2/2016]

(4) The sum of —(a)

the amount of expenditure allowed as a deduction or a further deduction to a firm or company under subsection (1); and

(b)

any amount of expenditure allowed as a deduction or a further deduction to the firm or company under section 14H(1),

must not exceed $1 million for each year of assessment.

[2/2016]

(5) The Minister or an authorised body may approve a firm or company for the purposes of claiming a deduction under subsection (1).[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(6) When approving a firm or company under subsection (5), the Minister or authorised body may impose conditions precedent and conditions subsequent for a deduction under this section.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(7) When approving a firm or company under subsection (5), the Minister or authorised body must specify the salary expenditure for which the firm or company may be allowed the deduction by reference to —(a)

the employees for whom the expenditure is incurred;

(b)

the overseas establishment in which they work;

(c)

the work which they carry out in the overseas establishment; and

(d)

the period in which the expenditure is incurred.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(8) When approving a firm or company under subsection (5), the Minister or authorised body may also specify the maximum amount of expenditure for which the deduction is allowed.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(9) No approval may be granted under subsection (5) after 31 December 2025.[2/2016; 41/2020]

(10) No deduction may be allowed under subsection (1) in respect of —(a)

any expenditure incurred during the basis period for a year of assessment by a firm or company if —(i)

any part of its income for that year of assessment is exempt or partly exempt from tax under section 13A, 13E, 13P or 13S;

(ii)

any part of its income for that year of assessment is subject to tax at a concessionary rate of tax under section 43C, 43D, 43E, 43G, 43I, 43J, 43L, 43P, 43Q, 43R, 43U, 43V or 43X, or the regulations made under any of those sections; or

(iii)

it is given tax relief under Part 2, 3 or 4 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 for that year of assessment, or is given an investment allowance under Part 8 of that Act for that year of assessment; or

(b)

any expenditure to the extent it is or is to be subsidised by a grant or subsidy from the Government or a statutory board.[2/2016; 45/2018]

(11) Despite subsection (10), the Minister or an authorised body may, in any particular case, subject to such conditions precedent and conditions subsequent as the Minister or authorised body may impose, allow a deduction of any expenditure referred to in subsection (10)(a).[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(12) A firm or company is not entitled to a deduction under subsection (1) for any salary expenditure if and to the extent that an overseas establishment of the firm or company has been allowed at any time a deduction for it under any law relating to income tax or tax of a similar character of a country outside Singapore.[2/2016]

(13) Despite anything in this section, where it appears to the Comptroller that in any year of assessment any deduction which has been allowed under this section ought not to have been allowed, the Comptroller may, within the year of assessment or within 4 years after the expiry of that year of assessment, make such assessment or additional assessment upon the firm or company as may be necessary to make good any loss of tax.[2/2016]

(14) If a condition subsequent imposed under subsection (6) is not complied with in respect of any deduction allowed to a firm or company under subsection (1) or part of such deduction, the deduction or part of the deduction is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the non‑compliance.[2/2016]

(15) If a condition subsequent imposed under subsection (11) is not complied with, the deduction allowed to the firm or company under that subsection is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the non‑compliance.[2/2016]

(16) Where a firm or company has been allowed a deduction under subsection (1) even though it is not entitled to it or a part of it by reason of subsection (12), the deduction or part of the deduction is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the facts by reason of which the firm or company is not entitled to the deduction or part of it.[2/2016]

(17) If, at any time after a firm or company has been allowed a deduction under subsection (1) for any salary expenditure, the firm or company is reimbursed for any amount of the expenditure, the amount of the deduction that corresponds to the expenditure reimbursed is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the reimbursement.[2/2016]

(18) In this section —“overseas establishment”, in relation to an approved firm or company, means any of the following:(a)

a branch, representative office, or subsidiary of the firm or company that is established, formed or incorporated in a country outside Singapore;

(b)

a partnership of which the firm or company is a partner, that is established or formed in a country outside Singapore;

(c)

such other entity as the Minister or authorised body approves as an overseas establishment of the firm or company at the time of the approval of the firm or company under subsection (5);[Act 41 of 2020 wef 12/04/2024]

“salary expenditure”, in relation to an employee of a firm or company, means expenditure comprising wages and salary for the employee, but excludes any bonus, commission, gratuity, leave pay, perquisite, allowance, or any other payment (whether in cash or kind) prescribed under section 7.[2/2016]

(19) In this section, a firm or company is treated as having incurred salary expenditure for its employees posted to an overseas establishment of the firm or company, if —(a)

it directly incurs that amount of expenditure for which it is not reimbursed; or

(b)

the overseas establishment directly incurs that amount of expenditure and the firm or company is liable to reimburse the overseas establishment for it, and the incurring of the expenditure and of the liability both occur —(i)

when the firm or company is an approved firm or company resident and carrying on business in Singapore; and

(ii)

in the period between 1 July 2015 and 31 December 2025 (both dates inclusive).[2/2016; 41/2020]

(20) In a case referred to in subsection (19)(b), the date on which salary expenditure is treated as incurred for the purposes of subsection (2) is the later of the date it is incurred by the overseas establishment and the date the firm or company incurs the liability to reimburse the overseas establishment.[2/2016]

(21) In relation to a deduction under this section, a condition is a condition subsequent if or to the extent that it can only be satisfied after the deduction is allowed, and a condition is a condition precedent if or to the extent that it is not a condition subsequent; and accordingly a condition may, depending on the circumstances, be either a condition precedent or a condition subsequent.[14KA

[2/2016]

—(1) Where the Comptroller is satisfied that —(a)

an approved firm or company resident and carrying on business in Singapore has incurred, at any time between 1 July 2015 and 31 December 2025 (both dates inclusive), salary expenditure specified for it under subsection (7) for its employees posted to an overseas establishment of the firm or company; and

(b)

the firm or company has satisfied the conditions precedent imposed under subsection (6) for a deduction under this section,

then there is to be allowed to the firm or company —

(c)

where such expenditure is allowable as a deduction under section 14, a further deduction of the amount of such expenditure in addition to the deduction allowed under that section; or

(d)

where such expenditure is not allowable as a deduction under section 14, a deduction equal to twice the amount of such expenditure.[2/2016; 41/2020]

(2) No deduction is to be allowed under subsection (1) for salary expenditure that is incurred more than 3 years after either of the following dates:(a)

the date the overseas establishment is incorporated, established or formed;

(b)

if the overseas establishment (being a company) is an overseas establishment of the approved firm or company as a result of any shareholding of the approved firm or company in the establishment, but the firm or company did not hold any shares in the overseas establishment on the date of the establishment’s incorporation, the earliest date on which the firm or company acquires any shares in the overseas establishment.[2/2016]

(3) Subject to subsection (4), the amount of salary expenditure allowed as a deduction for a year of assessment under subsection (1) must not exceed the amount specified for the firm or company under subsection (8).[2/2016]

(4) The sum of —(a)

the amount of expenditure allowed as a deduction or a further deduction to a firm or company under subsection (1); and

(b)

any amount of expenditure allowed as a deduction or a further deduction to the firm or company under section 14H(1),

must not exceed $1 million for each year of assessment.

[2/2016]

(5) The Minister or an authorised body may approve a firm or company for the purposes of claiming a deduction under subsection (1).[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(6) When approving a firm or company under subsection (5), the Minister or authorised body may impose conditions precedent and conditions subsequent for a deduction under this section.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(7) When approving a firm or company under subsection (5), the Minister or authorised body must specify the salary expenditure for which the firm or company may be allowed the deduction by reference to —(a)

the employees for whom the expenditure is incurred;

(b)

the overseas establishment in which they work;

(c)

the work which they carry out in the overseas establishment; and

(d)

the period in which the expenditure is incurred.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(8) When approving a firm or company under subsection (5), the Minister or authorised body may also specify the maximum amount of expenditure for which the deduction is allowed.[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(9) No approval may be granted under subsection (5) after 31 December 2025.[2/2016; 41/2020]

(10) No deduction may be allowed under subsection (1) in respect of —(a)

any expenditure incurred during the basis period for a year of assessment by a firm or company if —(i)

any part of its income for that year of assessment is exempt or partly exempt from tax under section 13A, 13E, 13P or 13S;

(ii)

any part of its income for that year of assessment is subject to tax at a concessionary rate of tax under section 43C, 43D, 43E, 43G, 43I, 43J, 43L, 43P, 43Q, 43R, 43U, 43V or 43X, or the regulations made under any of those sections; or

(iii)

it is given tax relief under Part 2, 3 or 4 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 for that year of assessment, or is given an investment allowance under Part 8 of that Act for that year of assessment; or

(b)

any expenditure to the extent it is or is to be subsidised by a grant or subsidy from the Government or a statutory board.[2/2016; 45/2018]

(11) Despite subsection (10), the Minister or an authorised body may, in any particular case, subject to such conditions precedent and conditions subsequent as the Minister or authorised body may impose, allow a deduction of any expenditure referred to in subsection (10)(a).[2/2016]

[Act 41 of 2020 wef 12/04/2024]

(12) A firm or company is not entitled to a deduction under subsection (1) for any salary expenditure if and to the extent that an overseas establishment of the firm or company has been allowed at any time a deduction for it under any law relating to income tax or tax of a similar character of a country outside Singapore.[2/2016]

(13) Despite anything in this section, where it appears to the Comptroller that in any year of assessment any deduction which has been allowed under this section ought not to have been allowed, the Comptroller may, within the year of assessment or within 4 years after the expiry of that year of assessment, make such assessment or additional assessment upon the firm or company as may be necessary to make good any loss of tax.[2/2016]

(14) If a condition subsequent imposed under subsection (6) is not complied with in respect of any deduction allowed to a firm or company under subsection (1) or part of such deduction, the deduction or part of the deduction is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the non‑compliance.[2/2016]

(15) If a condition subsequent imposed under subsection (11) is not complied with, the deduction allowed to the firm or company under that subsection is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the non‑compliance.[2/2016]

(16) Where a firm or company has been allowed a deduction under subsection (1) even though it is not entitled to it or a part of it by reason of subsection (12), the deduction or part of the deduction is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the facts by reason of which the firm or company is not entitled to the deduction or part of it.[2/2016]

(17) If, at any time after a firm or company has been allowed a deduction under subsection (1) for any salary expenditure, the firm or company is reimbursed for any amount of the expenditure, the amount of the deduction that corresponds to the expenditure reimbursed is treated as the firm’s or company’s income for the year of assessment in which the Comptroller discovers the reimbursement.[2/2016]

(18) In this section —“overseas establishment”, in relation to an approved firm or company, means any of the following:(a)

a branch, representative office, or subsidiary of the firm or company that is established, formed or incorporated in a country outside Singapore;

(b)

a partnership of which the firm or company is a partner, that is established or formed in a country outside Singapore;

(c)

such other entity as the Minister or authorised body approves as an overseas establishment of the firm or company at the time of the approval of the firm or company under subsection (5);[Act 41 of 2020 wef 12/04/2024]

“salary expenditure”, in relation to an employee of a firm or company, means expenditure comprising wages and salary for the employee, but excludes any bonus, commission, gratuity, leave pay, perquisite, allowance, or any other payment (whether in cash or kind) prescribed under section 7.[2/2016]

(19) In this section, a firm or company is treated as having incurred salary expenditure for its employees posted to an overseas establishment of the firm or company, if —(a)

it directly incurs that amount of expenditure for which it is not reimbursed; or

(b)

the overseas establishment directly incurs that amount of expenditure and the firm or company is liable to reimburse the overseas establishment for it, and the incurring of the expenditure and of the liability both occur —(i)

when the firm or company is an approved firm or company resident and carrying on business in Singapore; and

(ii)

in the period between 1 July 2015 and 31 December 2025 (both dates inclusive).[2/2016; 41/2020]

(20) In a case referred to in subsection (19)(b), the date on which salary expenditure is treated as incurred for the purposes of subsection (2) is the later of the date it is incurred by the overseas establishment and the date the firm or company incurs the liability to reimburse the overseas establishment.[2/2016]

(21) In relation to a deduction under this section, a condition is a condition subsequent if or to the extent that it can only be satisfied after the deduction is allowed, and a condition is a condition precedent if or to the extent that it is not a condition subsequent; and accordingly a condition may, depending on the circumstances, be either a condition precedent or a condition subsequent.[14KA

[2/2016]