§ 37B — Group relief for Singapore companies

37B.—(1) Subject to the provisions of this section, a transferor company may transfer any qualifying deduction for any year of assessment to a claimant company of the same group which has claimed the qualifying deduction against its assessable income for the same year of assessment.(2) A transfer of a qualifying deduction for any year of assessment may be made only if the transferor company and the claimant company, for that year of assessment —(a)

are members of the same group on the last day of the basis period;

(b)

have accounting periods ending on the same day; and

(c)

have made an election under subsection (11).

(3) For the purposes of this section, 2 Singapore companies are members of the same group if —(a)

at least 75% of the total number of issued ordinary shares in one company are beneficially held, directly or indirectly, by the other; or

(b)

at least 75% of the total number of issued ordinary shares in each of the 2 companies are beneficially held, directly or indirectly, by a third Singapore company.

(4) A Singapore company that beneficially holds, directly or indirectly, at least 75% of the total number of issued ordinary shares in another Singapore company, does not satisfy subsection (3) unless additionally it is beneficially entitled to at least 75% of —(a)

any residual profits of the other company available for distribution to that company’s equity holders; and

(b)

any residual assets of the other company available for distribution to that company’s equity holders on a winding up.

(5) For the purpose of subsection (3), where a Singapore company beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a second Singapore company which in turn beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a third Singapore company, the Singapore company is deemed to have a beneficial ownership of the number of issued ordinary shares of the third Singapore company equal to such fraction of the total number as results from the multiplication of those 2 fractions; and where the third Singapore company beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a fourth Singapore company, the Singapore company is deemed to have a beneficial ownership of the number of issued ordinary shares of the fourth Singapore company equal to such fraction of the total number as results from the multiplication of those 3 fractions, and so on.

(6) A transfer of qualifying deduction may be —(a)

made by a transferor company to more than one claimant company, provided that the amount of qualifying deduction transferred is fully deducted against the assessable income of the first claimant company before any excess qualifying deduction is transferred and deducted against the assessable income of the second claimant company and so on; or

(b)

claimed by a claimant company from more than one transferor company, provided that the amount of qualifying deduction transferred from the first transferor company is fully deducted against the assessable income of the claimant company before any qualifying deduction transferred from a second transferor company is deducted against the assessable income of the claimant company and so on.

(7) Qualifying deductions must be transferred to a claimant company in accordance with the priority specified in the election made under subsection (11), and in the following order:(a)

any allowance specified in subsection (14)(a);

(b)

any loss specified in subsection (14)(b);

(c)

any donation specified in subsection (14)(c).

(8) Where, in any year of assessment, a transfer of qualifying deduction cannot be effected in accordance with the order of priority specified by any transferor company or claimant company in its election made under subsection (11), the transfer is to be allowed in such manner as the Comptroller thinks reasonable and proper.

(9) Subject to subsection (10), the amount of qualifying deduction that may be transferred to a claimant company from a transferor company for any year of assessment is —(a)

the available assessable income of the claimant company equal to

where A

is the number of days in the continuous period ending on the last day of the basis period for that year of assessment during which the companies are members of the same group or, if the continuous periods of the transferor company and the claimant company are different, the number of days in the shorter of the continuous periods;

B

is the number of days in the basis period of the claimant company for that year of assessment; and

C

is the assessable income of the claimant company for that year of assessment; or

(b)

the available qualifying deduction of the transferor company equal to

where A

has the meaning given by paragraph (a);

D

is the number of days in the basis period of the transferor company for that year of assessment; and

E

is the amount of qualifying deduction of the transferor company for that year of assessment,

whichever is the lower.

(10) Where, for any year of assessment, there are 2 or more —(a)

claims for any qualifying deduction by a claimant company, the available assessable income of the claimant company is, for the purpose of subsection (9)(a),

where A, B and C

have the meanings given by subsection (9)(a); and

F

is the aggregate of the amounts of qualifying deductions previously claimed from any other transferor company for the same year of assessment, if any;

(b)

transfers of any qualifying deduction by a transferor company, the available qualifying deduction of the transferor company is, for the purpose of subsection (9)(b),

where A, D and E

have the meanings given by subsection (9)(b); and

G

is the aggregate of the amounts of qualifying deductions previously transferred to any other claimant company for the same year of assessment, if any.

(11) Every transferor company and every claimant company of the same group must, at the time of lodgment of their returns of income for any year of assessment or within such further time as the Comptroller may allow, make an irrevocable election to transfer or claim qualifying deductions, as the case may be.

(12) An election under subsection (11) must be accompanied by —(a)

such particulars as the Comptroller may require; and

(b)

a list of companies, in order of priority, to which qualifying deductions would be transferred or from which such deductions would be claimed, as the case may be.

(13) Despite subsection (11), where at the time of furnishing its return of income under section 62(1) for any year of assessment —(a)

a company has assessable income, but is subsequently determined by the Comptroller to have any qualifying deduction for that year of assessment; or

(b)

a company has any qualifying deduction, but is subsequently determined by the Comptroller to have assessable income for that year of assessment,

the Comptroller may —

(c)

allow the company to make an election under subsection (11); and

(d)

allow any company of the same group to include that company in its list of companies submitted previously by it under subsection (11),

within such time and in such manner as the Comptroller may determine.

(14) For the purposes of this section, subject to subsection (15) and sections 35, 37 and 37A, qualifying deductions, in relation to a transferor company, for each year of assessment, are —(a)

any allowance falling to be made under section 16, 17, 18A (repealed), 18B, 18C, 19, 19A, 19B, 19C, 19D or 20 for that year of assessment that is in excess of the transferor company’s income from all sources chargeable to tax for that year of assessment;

(b)

any loss incurred by the transferor company in the basis period for that year of assessment in any trade or business which, if it had been a profit would have been assessable under this Act, and which is not deducted for that year of assessment because of insufficiency of statutory income of the transferor company; and

(c)

any donation made by the transferor company under section 37(3)(b), (c), (d) or (f) in the year preceding that year of assessment that is not deducted for that year of assessment because of insufficiency of statutory income of the transferor company.

(15) Despite subsection (14), the following companies are not entitled to transfer the following items of qualifying deductions:(a)

any company to which section 10D applies, in respect of qualifying deductions under subsection (14)(a) (except in relation to allowances falling under sections 16, 17, 18B and 18C) and (b);

(b)

any company to which section 97D or 97G of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004 or section 97V of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 19 April 2016 applies, in respect of qualifying deductions under subsection (14)(b) where the loss is deemed to be a loss incurred from a trade or business for the purposes of any of those sections;

(c)

any company, in respect of qualifying deductions under subsection (14) relating to any income that is fully exempt from tax under the provisions of this Act or the Economic Expansion Incentives (Relief from Income Tax) Act 1967;

(d)

any company, in respect of qualifying deductions under subsection (14) relating to any income the tax on which is remitted under the provisions of this Act, unless the Minister otherwise approves.[37/2014; 11/2016; 32/2019]

(15A) This section does not entitle —(a)

a company that is a life insurer to transfer to another company that is a life insurer, any qualifying deduction relating to any income from a participating fund of the firstmentioned life insurer that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C; or

(b)

a company that is a life insurer to claim any qualifying deduction of another company that is a life insurer against any income of the firstmentioned insurer from a participating fund that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C.[27/2021]

(16) Despite subsections (9) and (10), where the Comptroller discovers that any transfer or claim of qualifying deduction which has been made from or to any company is or has become excessive, the Comptroller may make an assessment upon the company under section 74 on the amount which, in the Comptroller’s opinion, ought to have been charged to tax.

(17) Section 37A applies, with the necessary modifications, to the transfer of any qualifying deduction from a transferor company to a claimant company, where applicable, and for the purpose of such application, any reference in section 37A(4) and (5) to —(a)

unabsorbed allowances, losses or donations is a reference to qualifying deductions;

(b)

corresponding allowances, losses or donations is a reference to allowances, losses or donations;

(c)

income of a company subject to tax at a higher or lower rate of tax (as the case may be) is a reference to income of a transferor company subject to tax at a higher or lower rate of tax, respectively; and

(d)

chargeable income of the company is a reference to chargeable income of a claimant company.[41/2020]

(18) For the purposes of this section, the Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(19) In this section —“assessable income”, in relation to a claimant company or transferor company, means assessable income of the company as determined under section 37 after deducting any deduction allowed under section 37F and investment allowance under Part 8 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967;[Act 39 of 2023 wef 29/12/2023]

“claimant company” or “transferor company” means a Singapore company that claims or transfers, respectively, any qualifying deduction under subsection (1) but does not include a company approved as —(a)

a technology company under section 94(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(b)

a venture company under section 97B(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(c)

a technology investment company under section 97C(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(d)

an overseas investment company under section 97C(4) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004; or

(e)

a start‑up company under section 97T(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 19 April 2016;

“commercial loan” means any borrowing which entitles the creditor to any return which is of only —(a)

a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(b)

a fixed rate per cent of the profits of the company;

“equity holder”, in relation to a Singapore company, means any holder of ordinary shares in the company or any creditor of the company in respect of any non‑commercial loan;

“non‑commercial loan” means any borrowing other than a commercial loan;

“ordinary share” means any share other than a treasury share or a share which carries only a right to any dividend which is of —(a)

a fixed amount or at a fixed rate per cent of the value of the shares; or

(b)

a fixed rate per cent of the profits of the company;

“residual assets”, in relation to a Singapore company, means net assets of the company after distribution made to —(a)

creditors of the company in respect of commercial loans; and

(b)

holders of shares other than ordinary shares,

and where the company has no residual asset, a notional amount of $100 is deemed to be the residual assets of the company;

“residual profits”, in relation to a Singapore company, means profits of the company after deducting any dividend which is of —(a)

a fixed amount or at a fixed rate per cent of the value of the shares of the company; or

(b)

a fixed rate per cent of the profits of the company,

but before deducting any return due to any non‑commercial loan creditor which is not of —

(c)

a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(d)

a fixed rate per cent of the profits of the company,

and where the company has no residual profit, a notional amount of $100 is deemed to be the residual profits of the company;

“Singapore company” means any company incorporated in Singapore.[37C

[37/2014; 11/2016; 32/2019]

—(1) Subject to the provisions of this section, a transferor company may transfer any qualifying deduction for any year of assessment to a claimant company of the same group which has claimed the qualifying deduction against its assessable income for the same year of assessment.

(2) A transfer of a qualifying deduction for any year of assessment may be made only if the transferor company and the claimant company, for that year of assessment —(a)

are members of the same group on the last day of the basis period;

(b)

have accounting periods ending on the same day; and

(c)

have made an election under subsection (11).

(3) For the purposes of this section, 2 Singapore companies are members of the same group if —(a)

at least 75% of the total number of issued ordinary shares in one company are beneficially held, directly or indirectly, by the other; or

(b)

at least 75% of the total number of issued ordinary shares in each of the 2 companies are beneficially held, directly or indirectly, by a third Singapore company.

(4) A Singapore company that beneficially holds, directly or indirectly, at least 75% of the total number of issued ordinary shares in another Singapore company, does not satisfy subsection (3) unless additionally it is beneficially entitled to at least 75% of —(a)

any residual profits of the other company available for distribution to that company’s equity holders; and

(b)

any residual assets of the other company available for distribution to that company’s equity holders on a winding up.

(5) For the purpose of subsection (3), where a Singapore company beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a second Singapore company which in turn beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a third Singapore company, the Singapore company is deemed to have a beneficial ownership of the number of issued ordinary shares of the third Singapore company equal to such fraction of the total number as results from the multiplication of those 2 fractions; and where the third Singapore company beneficially owns, directly or indirectly, a fraction of the total number of issued ordinary shares of a fourth Singapore company, the Singapore company is deemed to have a beneficial ownership of the number of issued ordinary shares of the fourth Singapore company equal to such fraction of the total number as results from the multiplication of those 3 fractions, and so on.

(6) A transfer of qualifying deduction may be —(a)

made by a transferor company to more than one claimant company, provided that the amount of qualifying deduction transferred is fully deducted against the assessable income of the first claimant company before any excess qualifying deduction is transferred and deducted against the assessable income of the second claimant company and so on; or

(b)

claimed by a claimant company from more than one transferor company, provided that the amount of qualifying deduction transferred from the first transferor company is fully deducted against the assessable income of the claimant company before any qualifying deduction transferred from a second transferor company is deducted against the assessable income of the claimant company and so on.

(7) Qualifying deductions must be transferred to a claimant company in accordance with the priority specified in the election made under subsection (11), and in the following order:(a)

any allowance specified in subsection (14)(a);

(b)

any loss specified in subsection (14)(b);

(c)

any donation specified in subsection (14)(c).

(8) Where, in any year of assessment, a transfer of qualifying deduction cannot be effected in accordance with the order of priority specified by any transferor company or claimant company in its election made under subsection (11), the transfer is to be allowed in such manner as the Comptroller thinks reasonable and proper.

(9) Subject to subsection (10), the amount of qualifying deduction that may be transferred to a claimant company from a transferor company for any year of assessment is —(a)

the available assessable income of the claimant company equal to

where A

is the number of days in the continuous period ending on the last day of the basis period for that year of assessment during which the companies are members of the same group or, if the continuous periods of the transferor company and the claimant company are different, the number of days in the shorter of the continuous periods;

B

is the number of days in the basis period of the claimant company for that year of assessment; and

C

is the assessable income of the claimant company for that year of assessment; or

(b)

the available qualifying deduction of the transferor company equal to

where A

has the meaning given by paragraph (a);

D

is the number of days in the basis period of the transferor company for that year of assessment; and

E

is the amount of qualifying deduction of the transferor company for that year of assessment,

whichever is the lower.

(10) Where, for any year of assessment, there are 2 or more —(a)

claims for any qualifying deduction by a claimant company, the available assessable income of the claimant company is, for the purpose of subsection (9)(a),

where A, B and C

have the meanings given by subsection (9)(a); and

F

is the aggregate of the amounts of qualifying deductions previously claimed from any other transferor company for the same year of assessment, if any;

(b)

transfers of any qualifying deduction by a transferor company, the available qualifying deduction of the transferor company is, for the purpose of subsection (9)(b),

where A, D and E

have the meanings given by subsection (9)(b); and

G

is the aggregate of the amounts of qualifying deductions previously transferred to any other claimant company for the same year of assessment, if any.

(11) Every transferor company and every claimant company of the same group must, at the time of lodgment of their returns of income for any year of assessment or within such further time as the Comptroller may allow, make an irrevocable election to transfer or claim qualifying deductions, as the case may be.

(12) An election under subsection (11) must be accompanied by —(a)

such particulars as the Comptroller may require; and

(b)

a list of companies, in order of priority, to which qualifying deductions would be transferred or from which such deductions would be claimed, as the case may be.

(13) Despite subsection (11), where at the time of furnishing its return of income under section 62(1) for any year of assessment —(a)

a company has assessable income, but is subsequently determined by the Comptroller to have any qualifying deduction for that year of assessment; or

(b)

a company has any qualifying deduction, but is subsequently determined by the Comptroller to have assessable income for that year of assessment,

the Comptroller may —

(c)

allow the company to make an election under subsection (11); and

(d)

allow any company of the same group to include that company in its list of companies submitted previously by it under subsection (11),

within such time and in such manner as the Comptroller may determine.

(14) For the purposes of this section, subject to subsection (15) and sections 35, 37 and 37A, qualifying deductions, in relation to a transferor company, for each year of assessment, are —(a)

any allowance falling to be made under section 16, 17, 18A (repealed), 18B, 18C, 19, 19A, 19B, 19C, 19D or 20 for that year of assessment that is in excess of the transferor company’s income from all sources chargeable to tax for that year of assessment;

(b)

any loss incurred by the transferor company in the basis period for that year of assessment in any trade or business which, if it had been a profit would have been assessable under this Act, and which is not deducted for that year of assessment because of insufficiency of statutory income of the transferor company; and

(c)

any donation made by the transferor company under section 37(3)(b), (c), (d) or (f) in the year preceding that year of assessment that is not deducted for that year of assessment because of insufficiency of statutory income of the transferor company.

(15) Despite subsection (14), the following companies are not entitled to transfer the following items of qualifying deductions:(a)

any company to which section 10D applies, in respect of qualifying deductions under subsection (14)(a) (except in relation to allowances falling under sections 16, 17, 18B and 18C) and (b);

(b)

any company to which section 97D or 97G of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004 or section 97V of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 19 April 2016 applies, in respect of qualifying deductions under subsection (14)(b) where the loss is deemed to be a loss incurred from a trade or business for the purposes of any of those sections;

(c)

any company, in respect of qualifying deductions under subsection (14) relating to any income that is fully exempt from tax under the provisions of this Act or the Economic Expansion Incentives (Relief from Income Tax) Act 1967;

(d)

any company, in respect of qualifying deductions under subsection (14) relating to any income the tax on which is remitted under the provisions of this Act, unless the Minister otherwise approves.[37/2014; 11/2016; 32/2019]

(15A) This section does not entitle —(a)

a company that is a life insurer to transfer to another company that is a life insurer, any qualifying deduction relating to any income from a participating fund of the firstmentioned life insurer that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C; or

(b)

a company that is a life insurer to claim any qualifying deduction of another company that is a life insurer against any income of the firstmentioned insurer from a participating fund that is apportioned to policyholders in accordance with regulations made under section 43(9) or 43C.[27/2021]

(16) Despite subsections (9) and (10), where the Comptroller discovers that any transfer or claim of qualifying deduction which has been made from or to any company is or has become excessive, the Comptroller may make an assessment upon the company under section 74 on the amount which, in the Comptroller’s opinion, ought to have been charged to tax.

(17) Section 37A applies, with the necessary modifications, to the transfer of any qualifying deduction from a transferor company to a claimant company, where applicable, and for the purpose of such application, any reference in section 37A(4) and (5) to —(a)

unabsorbed allowances, losses or donations is a reference to qualifying deductions;

(b)

corresponding allowances, losses or donations is a reference to allowances, losses or donations;

(c)

income of a company subject to tax at a higher or lower rate of tax (as the case may be) is a reference to income of a transferor company subject to tax at a higher or lower rate of tax, respectively; and

(d)

chargeable income of the company is a reference to chargeable income of a claimant company.[41/2020]

(18) For the purposes of this section, the Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(19) In this section —“assessable income”, in relation to a claimant company or transferor company, means assessable income of the company as determined under section 37 after deducting any deduction allowed under section 37F and investment allowance under Part 8 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967;[Act 39 of 2023 wef 29/12/2023]

“claimant company” or “transferor company” means a Singapore company that claims or transfers, respectively, any qualifying deduction under subsection (1) but does not include a company approved as —(a)

a technology company under section 94(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(b)

a venture company under section 97B(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(c)

a technology investment company under section 97C(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004;

(d)

an overseas investment company under section 97C(4) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 28 April 2004; or

(e)

a start‑up company under section 97T(2) of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 in force immediately before 19 April 2016;

“commercial loan” means any borrowing which entitles the creditor to any return which is of only —(a)

a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(b)

a fixed rate per cent of the profits of the company;

“equity holder”, in relation to a Singapore company, means any holder of ordinary shares in the company or any creditor of the company in respect of any non‑commercial loan;

“non‑commercial loan” means any borrowing other than a commercial loan;

“ordinary share” means any share other than a treasury share or a share which carries only a right to any dividend which is of —(a)

a fixed amount or at a fixed rate per cent of the value of the shares; or

(b)

a fixed rate per cent of the profits of the company;

“residual assets”, in relation to a Singapore company, means net assets of the company after distribution made to —(a)

creditors of the company in respect of commercial loans; and

(b)

holders of shares other than ordinary shares,

and where the company has no residual asset, a notional amount of $100 is deemed to be the residual assets of the company;

“residual profits”, in relation to a Singapore company, means profits of the company after deducting any dividend which is of —(a)

a fixed amount or at a fixed rate per cent of the value of the shares of the company; or

(b)

a fixed rate per cent of the profits of the company,

but before deducting any return due to any non‑commercial loan creditor which is not of —

(c)

a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(d)

a fixed rate per cent of the profits of the company,

and where the company has no residual profit, a notional amount of $100 is deemed to be the residual profits of the company;

“Singapore company” means any company incorporated in Singapore.[37C

[37/2014; 11/2016; 32/2019]