§ 37O — Deduction for acquisition of shares of companies

37O.—(1) Subject to this section, where —(a)

a Singapore company (called in this section the acquiring company);

(b)

any one or more subsidiaries of the Singapore company that is or are wholly‑owned by the Singapore company, and is incorporated for the primary purpose of acquiring and holding shares in other companies (called in this section the acquiring subsidiary); or

(c)

both the acquiring company and any one or more acquiring subsidiaries,

incurs or incur capital expenditure during the period from 1 April 2010 to 31 December 2030 (both dates inclusive) for any qualifying acquisition of ordinary shares in another company (called in this section the target company), the acquiring company may claim the deductions specified in subsection (1A), in accordance with this section.

[2/2016; 41/2020]

[Act 25 of 2025 wef 08/12/2025]

(1A) The deductions for the purposes of subsection (1) are as follows:(a)

a deduction for the capital expenditure referred to in that subsection; and

(b)

a deduction of an amount equivalent to twice the amount of transaction costs incurred for qualifying acquisitions made during the period from 17 February 2012 to 31 December 2030 (both dates inclusive).[2/2016; 41/2020]

[Act 25 of 2025 wef 08/12/2025]

(2) Any claim for deduction under this section must be made at the time of lodgment of the return of income for the year of assessment relating to the basis period of the acquiring company in which the capital expenditure is incurred or within such further time as the Comptroller may allow.

(3) For the purposes of subsections (1) and (2), capital expenditure for an acquisition of ordinary shares in a target company is treated as being incurred on the date of the acquisition of those shares.

Qualifying acquisitions

(4) In this section, a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary is any of the following:(a)

an acquisition made during the period from 1 April 2010 to 31 March 2015 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total more than 50% of the total number of ordinary shares in the target company where, before the date of the acquisition, such total ownership was 50% or less of the total number of ordinary shares in the target company;

(b)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (a);

(c)

an acquisition made during the period from 1 April 2010 to 31 March 2015 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total 75% or more of the total number of ordinary shares in the target company where —(i)

before the date of the acquisition, such total ownership was more than 50% but less than 75% of the total number of ordinary shares in the target company; and

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (a);

(d)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (c) and is before 1 April 2016,

provided that at the end of that basis period of the acquiring company, such total ownership is more than 50% (in the case of paragraphs (a) and (b)) or 75% or more (in the case of paragraphs (c) and (d)) of the total number of ordinary shares in the target company.

[2/2016]

(4A) In this section, and subject to the applicable condition in subsection (4B) being met, each of the following is also a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary:(a)

an acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total 20% or more but 50% or less of the total number of ordinary shares in the target company, where —(i)

before the date of the acquisition, such total ownership was less than 20% of the total number of ordinary shares in the target company; and

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (c);[Act 25 of 2025 wef 08/12/2025]

(b)

any other acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (a);[Act 25 of 2025 wef 08/12/2025]

(c)

an acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total more than 50% of the total number of ordinary shares in the target company where, before the date of the acquisition, such total ownership was 50% or less of the total number of ordinary shares in the target company;[Act 25 of 2025 wef 08/12/2025]

(d)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (c);

(e)

an acquisition made on or after 1 April 2015 but before 1 April 2016 that results in the acquiring company and its acquiring subsidiaries owning together in total 75% or more of the total number of ordinary shares in the target company where —(i)

before the date of the acquisition, such total ownership was more than 50% but less than 75% of the total number of ordinary shares in the target company;

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (c); and

(iii)

before 1 April 2015 and not earlier than 12 months before the acquisition, the acquiring company or its acquiring subsidiary had made an acquisition of ordinary shares of any amount in the target company;

(f)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (e) and is before 1 April 2016.[2/2016; 41/2020]

(4B) In subsection (4A), the conditions are —(a)

in the case of paragraphs (a) and (b) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (a) of that subsection is between 20% and 50% (both inclusive);

(b)

in the case of paragraphs (c) and (d) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (c) of that subsection is more than 50%; or

(c)

in the case of paragraphs (e) and (f) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (e) of that subsection is 75% or more.[2/2016]

(5) An acquiring company may elect for its qualifying acquisitions to be, instead of those mentioned in the provisions in the first column of the following table, acquisitions —(a)

the dates of which fall within a prescribed period; and

(b)

which include an acquisition mentioned in the provisions set out opposite in the second column of the table,

and the provisions of this section apply to the acquisitions so elected subject to such modifications as may be prescribed:

Original acquisitions

under:

Elected acquisitions to

include an acquisition

under:

subsection (4)(a) and (b), or subsection (4)(c) and (d)

subsection (4)(a) or (c)

subsection (4A)(c) and (d), or subsection (4A)(e) and (f)

subsection (4A)(c) or (e)

[2/2016]

(5A) The election under subsection (5) may only be made for acquisitions made during the period from 1 April 2010 to 31 March 2016 (both dates inclusive).[2/2016]

(6) The election under subsection (5) must be made by the acquiring company at the time of lodgment of the return of its income for the year of assessment relating to the basis period of the acquiring company in which the date of the acquisition mentioned in subsection (4)(a) or (c) or subsection (4A)(c) or (e) (as the case may be) falls, or within such further time as the Comptroller may allow.[2/2016]

Deductions allowable in respect of capital expenditure claimed

(7) For the purpose of subsection (1) and subject to subsections (11), (11A), (11AB), (11B), (11C) and (19) and the regulations made under subsection (24), deductions in respect of capital expenditure for a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary (as the case may be) are to be allowed as follows:(a)

to the extent the capital expenditure is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls, the deduction allowed is the amount specified in subsection (8) for acquisitions mentioned in subsection (4), and the amount specified in subsection (8A) for acquisitions mentioned in subsection (4A), for each of 5 successive years of assessment (called in this section the 1st, 2nd, 3rd, 4th and 5th years of assessment, respectively), beginning with the year of assessment relating to the basis period of the acquiring company in which the date of the acquisition of the shares falls;

(b)

to the extent the capital expenditure is contingent consideration that is incurred in a basis period of the acquiring company after the basis period of the acquiring company for the 1st year of assessment, the deduction allowed is —(i)

where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, the amount specified in subsection (9) for acquisitions mentioned in subsection (4), and the amount specified in subsection (9A) for acquisitions mentioned in subsection (4A), for that year of assessment and for each successive year of assessment up to and including the 5th year of assessment; or

(ii)

where the contingent consideration is incurred in the basis period of the acquiring company for the 5th year of assessment or a subsequent year of assessment, the amount specified in subsection (10) for acquisitions mentioned in subsection (4), and the amount specified in subsection (10A) for acquisitions mentioned in subsection (4A), for that year of assessment.[2/2016; 34/2016]

(8) Subject to subsections (13) and (19), the amount referred to in subsection (7)(a) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where A

is the capital expenditure to the extent that it is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls.

[2/2016]

(8A) Subject to subsections (13) and (19), the amount referred to in subsection (7)(a) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where A

is the capital expenditure to the extent that it is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls.

[2/2016]

(9) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(i) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where B

is the contingent consideration that is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, whichever is applicable; and

C

is —

(a)

2 (where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd year of assessment);

(b)

3 (where the contingent consideration is incurred in the basis period of the acquiring company for the 3rd year of assessment); or

(c)

4 (where the contingent consideration is incurred in the basis period of the acquiring company for the 4th year of assessment),

whichever is applicable.

[2/2016]

(9A) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(i) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where B

is the contingent consideration that is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, whichever is applicable; and

C

is —

(a)

2 (where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd year of assessment);

(b)

3 (where the contingent consideration is incurred in the basis period of the acquiring company for the 3rd year of assessment); or

(c)

4 (where the contingent consideration is incurred in the basis period of the acquiring company for the 4th year of assessment),

whichever is applicable.

[2/2016]

(10) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(ii) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where D

is the contingent consideration that is incurred in the basis period of the acquiring company for the 5th year of assessment or the subsequent year of assessment, whichever is applicable.

[2/2016]

(10A) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(ii) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where D

is the contingent consideration that is incurred in the basis period of the acquiring company for the 5th year of assessment or the subsequent year of assessment, whichever is applicable.

[2/2016]

(11) The following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company:(a)

where the aggregate of the amounts of “A” mentioned in subsection (8) in respect of all such qualifying acquisitions exceeds $100 million, the amount by which the aggregate exceeds $100 million is disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the aggregate mentioned in paragraph (a) does not exceed $100 million but the aggregate of the following exceeds $100 million:(i)

the aggregate mentioned in paragraph (a);

(ii)

the aggregate of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the 1st year of assessment and in any earlier year of assessment other than the 1st year of assessment,

the amount by which the aggregate of sub‑paragraphs (i) and (ii) exceeds $100 million is to be disregarded for the purposes of the deduction to be allowed under this section.

(11A) The following provisions apply for the purpose of determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company, and are qualifying acquisitions referred to in subsection (11AA):(a)

where the sum of the amounts of “A” mentioned in subsection (8A) in respect of all such qualifying acquisitions exceeds $20 million, the amount by which the sum exceeds $20 million is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $20 million but the sum of the following exceeds $20 million:(i)

the sum mentioned in paragraph (a);

(ii)

the sum of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the 1st year of assessment and in any earlier year of assessment other than the 1st year of assessment,

the amount by which the sum of sub‑paragraphs (i) and (ii) exceeds $20 million is to be disregarded for the purposes of the deduction to be allowed under this section.

[2/2016; 34/2016]

(11AA) Subsection (11A) applies to the following qualifying acquisitions:(a)

a qualifying acquisition made before 1 April 2016 except (if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made on or after 1 April 2016) a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) that has the same target company as that of the anchor acquisition;

(b)

if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made before 1 April 2016, a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) made on or after 1 April 2016 that has the same target company as the anchor acquisition.[34/2016]

(11AB) The following provisions apply for the purpose of determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company, and are qualifying acquisitions mentioned in subsection (11AC):(a)

where the sum of the amounts of “A” mentioned in subsection (8A) in respect of all such qualifying acquisitions exceeds $40 million, the amount by which the sum exceeds $40 million is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $40 million but the sum of the following exceeds $40 million:(i)

the sum mentioned in paragraph (a);

(ii)

the sum of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the first year of assessment and in any earlier year of assessment other than the first year of assessment,

the amount by which the sum of sub‑paragraphs (i) and (ii) exceeds $40 million is to be disregarded for the purposes of the deduction to be allowed under this section.

[34/2016]

(11AC) Subsection (11AB) applies to the following qualifying acquisitions:(a)

a qualifying acquisition made on or after 1 April 2016 except (if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made before 1 April 2016) a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) that has the same target company as the anchor acquisition;

(b)

if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made on or after 1 April 2016, a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) made before 1 April 2016 that has the same target company as the anchor acquisition.[34/2016]

(11B) Despite subsections (11) and (11A), the following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in target companies whose dates of acquisition fall within one basis period of the acquiring company, if the qualifying acquisitions in that basis period include at least one acquisition mentioned in subsection (4)(a) or (c), and at least one acquisition mentioned in subsection (4A)(a), (c) or (e) that is made before 1 April 2016, but does not include any acquisition mentioned in subsection (4A)(a) or (c) that is made on or after 1 April 2016:(a)

where the sum of the following exceeds $5 million:(i)

the amount determined by the formula “0.05 × A” in subsection (8) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(ii)

the amount determined by the formula “0.25 × A” in subsection (8A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $5 million but the sum of the following exceeds $5 million:(i)

the sum mentioned in paragraph (a);

(ii)

the amount determined by the formula “0.05 × B” in subsection (9) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(iii)

the amount determined by the formula “0.25 × B” in subsection (9A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A);

(iv)

the amount determined by the formula “0.05 × D” in subsection (10) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(v)

the amount determined by the formula “0.25 × D” in subsection (10A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section.

[2/2016; 34/2016]

(11C) Despite subsections (11), (11A) and (11AB), the following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in target companies whose dates of acquisition fall within one basis period of the acquiring company, if the qualifying acquisitions in that basis period include at least one acquisition mentioned in subsection (4)(a) or (c) or subsection (4A)(a), (c) or (e) that is made before 1 April 2016, and at least one acquisition mentioned in subsection (4A)(a) and (c) that is made on or after 1 April 2016:(a)

where the sum of the following (called in this subsection X) exceeds $5 million:(i)

the sum of the amounts determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (4):(A)

“0.05 × A” in subsection (8);

(B)

“0.05 × B” in subsection (9);

(C)

“0.05 × D” in subsection (10);

(ii)

the sum of the amounts determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (11AA):(A)

“0.25 × A” in subsection (8A);

(B)

“0.25 × B” in subsection (9A);

(C)

“0.25 × D” in subsection (10A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section in respect of those acquisitions;

(b)

where the sum of the amounts (called in this subsection Y) determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (11AC):(i)

“0.25 × A” in subsection (8A);

(ii)

“0.25 × B” in subsection (9A);

(iii)

“0.25 × D” in subsection (10A);

exceeds $10 million, the excess is to be disregarded for the purposes of the deduction to be allowed under this section in respect of those acquisitions;

(c)

despite paragraphs (a) and (b), where the sum of X and Y exceeds $10 million, the excess is to be disregarded for the purposes of the deduction to be allowed under this section for all of the acquisitions mentioned in those paragraphs.[34/2016]

(12) For the purposes of subsections (8), (8A), (9), (9A), (10), (10A), (11), (11A), (11B) and (11C), the amount of any consideration paid for any qualifying acquisition that comprises shares in the acquiring company, is the market value of the shares in the acquiring company as at the date of the acquisition of the shares and, if it is not possible to determine such value, the net asset value of those shares in the acquiring company at the end of its accounting period immediately before the date of the acquisition of those shares.[2/2016; 34/2016]

(13) Despite subsections (8), (8A), (9), (9A), (10) and (10A), where any amount of “A” referred to in subsection (8) or (8A), “B” referred to in subsection (9) or (9A), or “D” referred to in subsection (10) or (10A), that is paid by the acquiring company or the acquiring subsidiary (as the case may be) in respect of any qualifying acquisition is greater than the amount which would have been paid if the acquiring company or the acquiring subsidiary (as the case may be) were not a related party of any of the shareholders in the target company, the firstmentioned amount is substituted with the second‑mentioned amount, and any question regarding the quantum of the second‑mentioned amount is to be determined by the Comptroller.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(14) A deduction under this section to an acquiring company must be made against the balance of its statutory income after the deductions allowed under sections 37(3), 37A and 37F.

(15) Section 14C(4) and (5) applies in relation to the deduction to be allowed in this section, as it applies in relation to the deduction of the expenditure and payments referred to in section 14C(1)(aa), (c) and (f), subject to the following modifications:(a)

a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37G or 37R) is a reference to the deduction to be allowed in this section;[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to a specified amount of the expenditure or payments in section 14C(4) is a reference to an amount computed in accordance with the formula

where E

is the deduction to be allowed in this section;

F

is the rate of tax specified in section 43(1)(a); and

G

is —

(i)

in a case where the concessionary income (as defined in section 14C(5)) derived by the person from the trade or business carried on by the person is subject to tax at a single concessionary rate of tax, that rate; or

(ii)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.

Deductions allowable in respect of transaction costs claimed

(15A) For the purpose of subsection (1), a deduction in respect of transaction costs for qualifying acquisitions of ordinary shares in a target company is subject to the following:(a)

the deduction in relation to any transaction costs incurred must be allowed for —(i)

the year of assessment in which a claim is first made for the deduction allowable in respect of the capital expenditure incurred on the qualifying acquisition to which those transaction costs relate; or

(ii)

the year of assessment which relates to the basis period in which those transaction costs are incurred,

whichever is the later; and

(b)

the deduction is subject to a limit of $100,000 in transaction costs incurred in relation to all qualifying acquisitions of ordinary shares in all target companies (whether by the acquiring company, or by one or more of its acquiring subsidiaries, or by a combination of both) for which claims are first made in the year of assessment mentioned in paragraph (a)(i) for the deductions allowable in respect of the capital expenditure incurred on those acquisitions.

Conditions for deductions

(16) A deduction under this section for a qualifying acquisition (called the subject acquisition) may be made to an acquiring company for any year of assessment only if —(a)

where the subject acquisition is one mentioned in subsection (4)(a) or (c) or (4A)(c) or (e) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition (being a date on or after 17 February 2012), the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C); and

(iv)

the target company, or a subsidiary that is —(A)

if the date of the subject acquisition is before 17 February 2012, wholly‑owned by the target company directly; or

(B)

if the date of the subject acquisition is on or after 17 February 2012, wholly‑owned by the target company whether directly or indirectly,

satisfies the conditions in subsection (16D);

(b)

where the subject acquisition is one mentioned in subsection (4)(b) or (d) or (4A)(d) or (f) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition (being a date on or after 17 February 2012), the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is —(A)

if the date of the acquisition is before 17 February 2012, wholly‑owned by the target company directly; or

(B)

if the date of the acquisition is on or after 17 February 2012, wholly‑owned by the target company whether directly or indirectly,

satisfies the conditions in subsection (16D); and

(v)

the conditions in paragraph (a) are also satisfied in relation to —(A)

where the subject acquisition is one mentioned in subsection (4)(b) — a qualifying acquisition mentioned in subsection (4)(a);

(B)

where the subject acquisition is one mentioned in subsection (4)(d) — a qualifying acquisition mentioned in subsection (4)(c);

(C)

where the subject acquisition is one mentioned in subsection (4A)(d) — a qualifying acquisition mentioned in subsection (4A)(c); or

(D)

where the subject acquisition is one mentioned in subsection (4A)(f) — a qualifying acquisition mentioned in subsection (4A)(e);

(c)

where the subject acquisition is one mentioned in subsection (4A)(a) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition, the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is wholly‑owned by the target company whether directly or indirectly, satisfies the conditions in subsection (16D); and

(v)

the conditions prescribed under subsection (16E) are satisfied; and

(d)

where the subject acquisition is one mentioned in subsection (4A)(b) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition, the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is wholly‑owned by the target company whether directly or indirectly, satisfies the conditions in subsection (16D);

(v)

the conditions prescribed under subsection (16E) are satisfied; and

(vi)

the conditions in paragraph (c) are also satisfied in relation to a qualifying acquisition mentioned in subsection (4A)(a).[2/2016]

(16A) The conditions in subsection (16)(a)(i), (b)(i), (c)(i) and (d)(i) are —(a)

the acquiring company is carrying on a trade or business in Singapore on the date of the acquisition of the shares;

(b)

the acquiring company has in its employment at least 3 local employees at all times during the period of 12 months immediately before that date;

(c)

unless otherwise prescribed under subsection (24), the acquiring company is not connected to the target company for at least 2 years immediately before that date; and

(d)

in a case where the acquiring company is a subsidiary of another company, the acquiring company has a Singapore company as its ultimate holding company on that date.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(16B) The conditions in subsection (16)(a)(ii), (b)(ii), (c)(ii) and (d)(ii) are —(a)

the acquiring subsidiary does not carry on a trade or business in Singapore or elsewhere on the date of the acquisition of the shares;

(b)

the acquiring subsidiary does not claim any deduction for any capital expenditure or transaction costs under this section for that year of assessment or any stamp duty relief under section 15A of the Stamp Duties Act 1929; and

(c)

the acquiring subsidiary is on that date wholly‑owned by the acquiring company —(i)

directly, in the case of subsection (16)(a)(ii) or (b)(ii) where the date of the qualifying acquisition is before 17 February 2012; and

(ii)

whether directly or indirectly, in every other case.[2/2016]

(16C) The conditions in subsection (16)(a)(iii), (b)(iii), (c)(iii) and (d)(iii) are —(a)

the intermediate company is wholly‑owned (whether directly or indirectly) by the acquiring company on the date of the acquisition of the shares;

(b)

the intermediate company is incorporated for the primary purpose of acquiring and holding shares in other companies;

(c)

the intermediate company does not carry on a trade or business in Singapore or elsewhere on that date; and

(d)

the intermediate company does not claim any deduction for any capital expenditure or transaction costs under this section for that year of assessment or any stamp duty relief under section 15A of the Stamp Duties Act 1929.[2/2016]

(16D) The conditions in subsection (16)(a)(iv), (b)(iv), (c)(iv) and (d)(iv) are —(a)

the target company or the subsidiary carries on a trade or business in Singapore or elsewhere on the date of the acquisition of the shares; and

(b)

the target company or the subsidiary has in its employment at least 3 employees at all times during the period of 12 months immediately before that date.[2/2016]

(16E) For the purposes of subsections (16)(c)(v) and (d)(v) and (17)(db), the Minister may by regulations prescribe such conditions as the Minister considers necessary to ensure that the acquiring company or acquiring subsidiary is not merely a passive shareholder of the target company, including requiring the company or subsidiary to exert significant influence (within the meaning of FRS 28, SFRS(I) 1‑28, or SFRS for Small Entities) over the target company.[2/2016; 32/2019; 27/2021]

(16F) In subsection (16E), “FRS 28”, “SFRS(I) 1‑28” and “SFRS for Small Entities” mean the financial reporting standards known respectively as —(a)

Financial Reporting Standard 28 (Investments in Associates and Joint Ventures);

(b)

Singapore Financial Reporting Standard (International) 1‑28 (Investments in Associates and Joint Ventures); and

(c)

Singapore Financial Reporting Standard for Small Entities,

that are made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time.

[32/2019]

[Act 36 of 2022 wef 01/04/2023]

(17) No deduction in respect of any qualifying acquisition of ordinary shares in a target company may be made to the acquiring company for the year of assessment relating to the basis period of the acquiring company in which any of the following events occurs or for any subsequent year:(a)

where the qualifying acquisition is one mentioned in subsection (4) or (4A)(c), (d), (e) or (f), after the date of the acquisition of the shares, the target company issues additional ordinary shares which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to 50% or less;

(aa)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), after the date of the acquisition of the shares, the target company issues additional ordinary shares which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to less than 20%;

(b)

the acquiring company —(i)

ceases to carry on a trade or business in Singapore; or

(ii)

ceases to have at least 3 local employees;

(c)

where the qualifying acquisition is one mentioned in subsection (4)(a) or (b) or (4A)(c) or (d), the acquiring company or the acquiring subsidiary (as the case may be) divests of its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to 50% or less, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(d)

where the qualifying acquisition is one mentioned in subsection (4)(c) or (d) or (4A)(e) or (f), the acquiring company or the acquiring subsidiary (as the case may be) divests of its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to a percentage below 75%, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(da)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), the acquiring company or the acquiring subsidiary (as the case may be) divests its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to any percentage below 20%, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(db)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), the acquiring company or the acquiring subsidiary (as the case may be) fails to satisfy any condition prescribed under subsection (16E);

(e)

the acquiring company or, if the acquiring company is a subsidiary of another company, its ultimate holding company, ceases to be a Singapore company; or[Act 33 of 2022 wef 04/11/2022]

(f)

the acquiring subsidiary and every intermediate company through which the acquiring subsidiary is indirectly owned by the acquiring company —(i)

carries on any trade or business in Singapore or elsewhere;

(ii)

claims a deduction under this section for capital expenditure or transaction costs incurred or claims any stamp duty relief under section 15A of the Stamp Duties Act 1929; or

(iii)

ceases to be wholly‑owned by the acquiring company —(A)

directly, in the case of a qualifying acquisition the date of which is before 17 February 2012; and

(B)

whether directly or indirectly, in the case of a qualifying acquisition the date of which is on or after 17 February 2012.[2/2016; 27/2021]

(18) If the Comptroller is satisfied that the shareholders of the acquiring company on the first day of the year of assessment in which the deduction is to be allowed in respect of a qualifying acquisition are not substantially the same as its shareholders on the date of the acquisition of the shares, then no deduction in respect of the qualifying acquisition may be made to the acquiring company for the year of assessment relating to the basis period of the acquiring company in which the deduction is to be allowed and for any subsequent year of assessment.

Modifications for groups of companies

(19) Where the acquiring company or the acquiring subsidiary (as the case may be) and the target company are part of the same group of companies on the date of a qualifying acquisition of ordinary shares in a target company by the acquiring company or the acquiring subsidiary (as the case may be), no deduction may be made under this section in respect of that qualifying acquisition unless the total number of ordinary shares acquired by the acquiring company or the acquiring subsidiary (as the case may be) results in an increase in the total number of ordinary shares of the target company held on that date by all companies in the group (excluding the target company) and, where there is such an increase —(a)

a deduction is only allowed under this section for; and

(b)

references in subsections (7) to (10A) to any capital expenditure for a qualifying acquisition are accordingly references to,

the capital expenditure in respect of the number of such shares that corresponds to such increase.

[2/2016]

(19A) The Minister or such person as he may appoint may, for any particular qualifying acquisition made during the period from 17 February 2012 to 31 March 2020 (both dates inclusive), waive the requirement in subsections (16A)(d) and (17)(e) in relation to the ultimate holding company of the acquiring company, subject to such conditions that the Minister or the person he has appointed may impose.[2/2016; 41/2020]

(19B) If —(a)

any requirement under subsections (16A)(d) and (17)(e) has been waived (whether before, on or after 2 December 2019) for an acquiring company in respect of any qualifying acquisition under subsection (19A); and

(b)

the acquiring company fails to comply with a condition subsequent imposed under subsection (19A) for such waiver,

then, if the Minister or the person appointed by the Minister is satisfied, having regard to the acquiring company’s representation and all the relevant circumstances of the case, that it is just and reasonable to do so, the Minister or appointed person —

(c)

may make a determination that the company is not entitled to any deduction in respect of the qualifying acquisition for each year of assessment beginning with a specified year of assessment; and

(d)

must give a written notice of the determination to the Comptroller and the company.[32/2019]

(19C) If a determination has been made under subsection (19B), then (despite anything in this section) —(a)

any deduction that has already been made to the acquiring company in respect of the qualifying acquisition for each year of assessment beginning with the specified year of assessment is treated for the purposes of this section as having been wrongly allowed, and the Comptroller may, subject to section 74, make an assessment or additional assessment on the company for those years of assessment to make good any tax shortfall; and

(b)

no deduction may be made to the company for the qualifying acquisition —(i)

for any year of assessment after the year or years of assessment mentioned in paragraph (a); or

(ii)

if no deduction has been made to the company for the specified year of assessment, for the specified year of assessment and each subsequent year of assessment.[32/2019]

Carry forward of deductions

(20) Subject to subsection (21), where in any year of assessment full effect cannot, by reason of an insufficiency of gains or profits chargeable for that year of assessment, be given to any deduction falling to be allowed under this section, the balance of the deduction is to be added to, and is deemed to form part of the corresponding deduction (if any) for the next succeeding year of assessment, and if no such corresponding deduction falls to be allowed for that year, is deemed to constitute the corresponding deduction for that year, and so on for subsequent years of assessment.

(21) No balance may be added to and be deemed to form part of the corresponding deduction (if any) to be given to an acquiring company under subsection (20) for a year of assessment unless the Comptroller is satisfied that the shareholders of the acquiring company on the last day of the year of assessment in which the deduction was claimed were substantially the same as the shareholders of the acquiring company on the first day of the firstmentioned year of assessment; and such balance must not be allowed in any subsequent year of assessment.

Exemption

(22) The Minister or such person as the Minister may appoint may, where there is a substantial change in the shareholders of a company and the Minister or appointed person is satisfied that such change is not for the purpose of deriving any tax benefit or obtaining any tax advantage, exempt that company from the provisions of subsections (18) and (21).

Deductions that ought not to have been allowed

(23) Despite section 74(1) and (4), where it appears to the Comptroller that a deduction or any part thereof under this section which has been allowed to any acquiring company in any year of assessment ought not to have been allowed by virtue of —(a)

the occurrence of any event specified in subsection (17) or (18);

(b)

the failure of the acquiring company or the acquiring subsidiary (as the case may be) to pay the consideration for acquiring the shares of the target company in full within 6 months from the date of the acquisition of the shares or, in the case of consideration that is contingent consideration, within 6 months from the date the contingent consideration is incurred;

(c)

a reduction in the consideration paid in relation to the share acquisition upon satisfaction of indemnity conditions as may be specified in the agreement for the sale of the ordinary shares of the target company; or

(d)

section 33,

the Comptroller may, at any time, for the purposes of making good any loss of tax attributable to the deduction or part thereof, assess the person who has utilised the deduction at such amount or additional amount as according to the Comptroller’s judgment ought to have been charged, and this subsection also applies with the necessary modifications to any assessment which results in any unabsorbed allowances or losses.

Regulations

(24) The Minister may make regulations —(a)

to provide for the disallowance of or for the adjustments to be made to the amount of any deduction allowed in any year of assessment under this section where the acquiring company or the acquiring subsidiary (as the case may be) divests itself of any of the ordinary shares it holds in the target company;

(b)

to provide for the application of this section to a business trust, subject to such modifications as may be prescribed, including treating, in prescribed circumstances, a business trust and any company whose shares are trust property thereof as companies within a group of companies, and a holding of units in a business trust as a holding of shares in a company;

(c)

to prescribe such matters as are required or authorised to be prescribed under this section; and

(d)

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

Interpretation

(25) In this section —“capital expenditure”, in relation to any acquisition of shares, means consideration for the shares acquired whether paid in cash or in shares of the acquiring company or both, but excludes transaction costs (including but not limited to due diligence and valuation costs) and any other similar costs;

“central hirer”, in relation to a central hiring arrangement for a group of related parties, means the person who carries out hiring functions for those parties under the arrangement;[Act 33 of 2022 wef 04/11/2022]

“central hiring arrangement” means an arrangement for a group of related parties entered into for a bona fide commercial reason, where the hiring functions of the parties in the group are carried out by a single person;[Act 33 of 2022 wef 04/11/2022]

“contingent consideration”, in relation to an acquisition of ordinary shares in a target company, means such part of the total consideration for the acquisition that would be incurred only upon the satisfaction of such conditions in respect of the target company as may be specified in the agreement for the acquisition entered into by the acquiring company or the acquiring subsidiary, as the case may be;

“group of companies” means 2 or more companies each of which is either a holding company or subsidiary of the other or any of the others;

[Deleted by Act 33 of 2022 wef 04/11/2022]

“local employee” means an individual who —(a)

is a citizen of Singapore or a Singapore permanent resident;

(b)

makes contributions in respect of the income derived from his or her employment with the acquiring company to the Central Provident Fund which are obligatory under the Central Provident Fund Act 1953; and

(c)

is any of the following:(i)

an employee of the acquiring company;

(ii)

for the year of assessment 2020 or a subsequent year of assessment — an individual who is engaged by the central hirer of a central hiring arrangement for a group of related parties which includes the acquiring company —(A)

who is deployed to work solely for the acquiring company; and

(B)

whose salary and other remuneration is borne, directly or indirectly, by the acquiring company and not claimed by the central hirer as a deduction against the central hirer’s own income;

(iii)

for the year of assessment 2020 or a subsequent year of assessment — an employee of another person (called B) —(A)

who is seconded to the acquiring company under a bona fide commercial arrangement to work solely for the acquiring company; and

(B)

whose salary and other remuneration is borne, directly or indirectly, by the acquiring company and not claimed by B as a deduction against B’s own income,

but excludes a director as defined in section 4 of the Companies Act 1967;

[Act 33 of 2022 wef 04/11/2022]

“Singapore company” means a company incorporated in Singapore and resident in Singapore;

“transaction costs” means professional fees that are necessarily incurred for the qualifying acquisition of ordinary shares in the target company —(a)

including legal fees, accounting or tax advisor’s fees and valuation fees; but

(b)

excluding any professional fees (including the fees mentioned in paragraph (a)) incurred in respect of loan arrangements and costs incidental thereto, borrowing costs, and stamp duty and any other taxes, incurred for the qualifying acquisition of ordinary shares in the target company;

“ultimate holding company” has the meaning given by section 5A of the Companies Act 1967.

(26) In this section, the date of acquisition of ordinary shares in a target company is —(a)

the date on which the agreement for the sale of those shares is entered into by the acquiring company or the acquiring subsidiary, as the case may be; or

(b)

in the absence of an agreement mentioned in paragraph (a), the date of the transfer of those shares from the target company to the acquiring company or the acquiring subsidiary, as the case may be.

(27) For the purposes of subsection (16A), a company is connected with another if —(a)

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

(b)

at least 75% of the total number of ordinary shares in each of the 2 companies are beneficially held, directly or indirectly, by a third company.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(28) For the purposes of subsections (18), (21) and (22) —(a)

the shareholders of the acquiring company at any date are not deemed to be substantially the same as the shareholders of that company at any other date unless, on both those dates, not less than 50% of the total number of issued shares of the company are held by or on behalf of the same persons;

(b)

shares in the acquiring company held by or on behalf of another company are deemed to be held by the shareholders of the last mentioned company; and

(c)

shares held by or on behalf of the trustee of the estate of a deceased shareholder or by or on behalf of the person entitled to those shares as beneficiaries under the will or any intestacy of a deceased shareholder are deemed to be held by that deceased shareholder.

(29) In this section, a reference to capital expenditure and transaction costs excludes any such expenditure and costs to the extent that they are or are to be subsidised by grants or subsidies from the Government or a statutory board.[37L

—(1) Subject to this section, where —(a)

a Singapore company (called in this section the acquiring company);

(b)

any one or more subsidiaries of the Singapore company that is or are wholly‑owned by the Singapore company, and is incorporated for the primary purpose of acquiring and holding shares in other companies (called in this section the acquiring subsidiary); or

(c)

both the acquiring company and any one or more acquiring subsidiaries,

incurs or incur capital expenditure during the period from 1 April 2010 to 31 December 2030 (both dates inclusive) for any qualifying acquisition of ordinary shares in another company (called in this section the target company), the acquiring company may claim the deductions specified in subsection (1A), in accordance with this section.

[2/2016; 41/2020]

[Act 25 of 2025 wef 08/12/2025]

(1A) The deductions for the purposes of subsection (1) are as follows:(a)

a deduction for the capital expenditure referred to in that subsection; and

(b)

a deduction of an amount equivalent to twice the amount of transaction costs incurred for qualifying acquisitions made during the period from 17 February 2012 to 31 December 2030 (both dates inclusive).[2/2016; 41/2020]

[Act 25 of 2025 wef 08/12/2025]

(2) Any claim for deduction under this section must be made at the time of lodgment of the return of income for the year of assessment relating to the basis period of the acquiring company in which the capital expenditure is incurred or within such further time as the Comptroller may allow.

(3) For the purposes of subsections (1) and (2), capital expenditure for an acquisition of ordinary shares in a target company is treated as being incurred on the date of the acquisition of those shares.

(4) In this section, a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary is any of the following:(a)

an acquisition made during the period from 1 April 2010 to 31 March 2015 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total more than 50% of the total number of ordinary shares in the target company where, before the date of the acquisition, such total ownership was 50% or less of the total number of ordinary shares in the target company;

(b)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (a);

(c)

an acquisition made during the period from 1 April 2010 to 31 March 2015 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total 75% or more of the total number of ordinary shares in the target company where —(i)

before the date of the acquisition, such total ownership was more than 50% but less than 75% of the total number of ordinary shares in the target company; and

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (a);

(d)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (c) and is before 1 April 2016,

provided that at the end of that basis period of the acquiring company, such total ownership is more than 50% (in the case of paragraphs (a) and (b)) or 75% or more (in the case of paragraphs (c) and (d)) of the total number of ordinary shares in the target company.

[2/2016]

(4A) In this section, and subject to the applicable condition in subsection (4B) being met, each of the following is also a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary:(a)

an acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total 20% or more but 50% or less of the total number of ordinary shares in the target company, where —(i)

before the date of the acquisition, such total ownership was less than 20% of the total number of ordinary shares in the target company; and

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (c);[Act 25 of 2025 wef 08/12/2025]

(b)

any other acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (a);[Act 25 of 2025 wef 08/12/2025]

(c)

an acquisition made during the period from 1 April 2015 to 31 December 2030 (both dates inclusive) that results in the acquiring company and its acquiring subsidiaries owning together in total more than 50% of the total number of ordinary shares in the target company where, before the date of the acquisition, such total ownership was 50% or less of the total number of ordinary shares in the target company;[Act 25 of 2025 wef 08/12/2025]

(d)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (c);

(e)

an acquisition made on or after 1 April 2015 but before 1 April 2016 that results in the acquiring company and its acquiring subsidiaries owning together in total 75% or more of the total number of ordinary shares in the target company where —(i)

before the date of the acquisition, such total ownership was more than 50% but less than 75% of the total number of ordinary shares in the target company;

(ii)

the date of the acquisition does not fall in the same basis period of the acquiring company as the date of the acquisition mentioned in paragraph (c); and

(iii)

before 1 April 2015 and not earlier than 12 months before the acquisition, the acquiring company or its acquiring subsidiary had made an acquisition of ordinary shares of any amount in the target company;

(f)

any other acquisition the date of which falls in the same basis period of the acquiring company as that of the acquisition mentioned in paragraph (e) and is before 1 April 2016.[2/2016; 41/2020]

(4B) In subsection (4A), the conditions are —(a)

in the case of paragraphs (a) and (b) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (a) of that subsection is between 20% and 50% (both inclusive);

(b)

in the case of paragraphs (c) and (d) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (c) of that subsection is more than 50%; or

(c)

in the case of paragraphs (e) and (f) of that subsection, at the end of that basis period of the acquiring company, the total ownership of ordinary shares in the target company mentioned in paragraph (e) of that subsection is 75% or more.[2/2016]

(5) An acquiring company may elect for its qualifying acquisitions to be, instead of those mentioned in the provisions in the first column of the following table, acquisitions —(a)

the dates of which fall within a prescribed period; and

(b)

which include an acquisition mentioned in the provisions set out opposite in the second column of the table,

and the provisions of this section apply to the acquisitions so elected subject to such modifications as may be prescribed:

Original acquisitions

under:

Elected acquisitions to

include an acquisition

under:

subsection (4)(a) and (b), or subsection (4)(c) and (d)

subsection (4)(a) or (c)

subsection (4A)(c) and (d), or subsection (4A)(e) and (f)

subsection (4A)(c) or (e)

[2/2016]

(5A) The election under subsection (5) may only be made for acquisitions made during the period from 1 April 2010 to 31 March 2016 (both dates inclusive).[2/2016]

(6) The election under subsection (5) must be made by the acquiring company at the time of lodgment of the return of its income for the year of assessment relating to the basis period of the acquiring company in which the date of the acquisition mentioned in subsection (4)(a) or (c) or subsection (4A)(c) or (e) (as the case may be) falls, or within such further time as the Comptroller may allow.[2/2016]

(7) For the purpose of subsection (1) and subject to subsections (11), (11A), (11AB), (11B), (11C) and (19) and the regulations made under subsection (24), deductions in respect of capital expenditure for a qualifying acquisition of ordinary shares in a target company by an acquiring company or an acquiring subsidiary (as the case may be) are to be allowed as follows:(a)

to the extent the capital expenditure is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls, the deduction allowed is the amount specified in subsection (8) for acquisitions mentioned in subsection (4), and the amount specified in subsection (8A) for acquisitions mentioned in subsection (4A), for each of 5 successive years of assessment (called in this section the 1st, 2nd, 3rd, 4th and 5th years of assessment, respectively), beginning with the year of assessment relating to the basis period of the acquiring company in which the date of the acquisition of the shares falls;

(b)

to the extent the capital expenditure is contingent consideration that is incurred in a basis period of the acquiring company after the basis period of the acquiring company for the 1st year of assessment, the deduction allowed is —(i)

where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, the amount specified in subsection (9) for acquisitions mentioned in subsection (4), and the amount specified in subsection (9A) for acquisitions mentioned in subsection (4A), for that year of assessment and for each successive year of assessment up to and including the 5th year of assessment; or

(ii)

where the contingent consideration is incurred in the basis period of the acquiring company for the 5th year of assessment or a subsequent year of assessment, the amount specified in subsection (10) for acquisitions mentioned in subsection (4), and the amount specified in subsection (10A) for acquisitions mentioned in subsection (4A), for that year of assessment.[2/2016; 34/2016]

(8) Subject to subsections (13) and (19), the amount referred to in subsection (7)(a) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where A

is the capital expenditure to the extent that it is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls.

[2/2016]

(8A) Subject to subsections (13) and (19), the amount referred to in subsection (7)(a) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where A

is the capital expenditure to the extent that it is not contingent consideration or, if it is contingent consideration, is incurred in the same basis period of the acquiring company as that in which the date of the acquisition of the shares falls.

[2/2016]

(9) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(i) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where B

is the contingent consideration that is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, whichever is applicable; and

C

is —

(a)

2 (where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd year of assessment);

(b)

3 (where the contingent consideration is incurred in the basis period of the acquiring company for the 3rd year of assessment); or

(c)

4 (where the contingent consideration is incurred in the basis period of the acquiring company for the 4th year of assessment),

whichever is applicable.

[2/2016]

(9A) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(i) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where B

is the contingent consideration that is incurred in the basis period of the acquiring company for the 2nd, 3rd or 4th year of assessment, whichever is applicable; and

C

is —

(a)

2 (where the contingent consideration is incurred in the basis period of the acquiring company for the 2nd year of assessment);

(b)

3 (where the contingent consideration is incurred in the basis period of the acquiring company for the 3rd year of assessment); or

(c)

4 (where the contingent consideration is incurred in the basis period of the acquiring company for the 4th year of assessment),

whichever is applicable.

[2/2016]

(10) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(ii) for an acquisition mentioned in subsection (4) is calculated in accordance with the formula

where D

is the contingent consideration that is incurred in the basis period of the acquiring company for the 5th year of assessment or the subsequent year of assessment, whichever is applicable.

[2/2016]

(10A) Subject to subsections (13) and (19), the amount mentioned in subsection (7)(b)(ii) for an acquisition mentioned in subsection (4A) is calculated in accordance with the formula

where D

is the contingent consideration that is incurred in the basis period of the acquiring company for the 5th year of assessment or the subsequent year of assessment, whichever is applicable.

[2/2016]

(11) The following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company:(a)

where the aggregate of the amounts of “A” mentioned in subsection (8) in respect of all such qualifying acquisitions exceeds $100 million, the amount by which the aggregate exceeds $100 million is disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the aggregate mentioned in paragraph (a) does not exceed $100 million but the aggregate of the following exceeds $100 million:(i)

the aggregate mentioned in paragraph (a);

(ii)

the aggregate of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the 1st year of assessment and in any earlier year of assessment other than the 1st year of assessment,

the amount by which the aggregate of sub‑paragraphs (i) and (ii) exceeds $100 million is to be disregarded for the purposes of the deduction to be allowed under this section.

(11A) The following provisions apply for the purpose of determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company, and are qualifying acquisitions referred to in subsection (11AA):(a)

where the sum of the amounts of “A” mentioned in subsection (8A) in respect of all such qualifying acquisitions exceeds $20 million, the amount by which the sum exceeds $20 million is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $20 million but the sum of the following exceeds $20 million:(i)

the sum mentioned in paragraph (a);

(ii)

the sum of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the 1st year of assessment and in any earlier year of assessment other than the 1st year of assessment,

the amount by which the sum of sub‑paragraphs (i) and (ii) exceeds $20 million is to be disregarded for the purposes of the deduction to be allowed under this section.

[2/2016; 34/2016]

(11AA) Subsection (11A) applies to the following qualifying acquisitions:(a)

a qualifying acquisition made before 1 April 2016 except (if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made on or after 1 April 2016) a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) that has the same target company as that of the anchor acquisition;

(b)

if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made before 1 April 2016, a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) made on or after 1 April 2016 that has the same target company as the anchor acquisition.[34/2016]

(11AB) The following provisions apply for the purpose of determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in one or more target companies whose dates of acquisition fall within one basis period of the acquiring company, and are qualifying acquisitions mentioned in subsection (11AC):(a)

where the sum of the amounts of “A” mentioned in subsection (8A) in respect of all such qualifying acquisitions exceeds $40 million, the amount by which the sum exceeds $40 million is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $40 million but the sum of the following exceeds $40 million:(i)

the sum mentioned in paragraph (a);

(ii)

the sum of all contingent consideration in respect of all such qualifying acquisitions incurred in the basis period of the acquiring company for any year of assessment subsequent to the first year of assessment and in any earlier year of assessment other than the first year of assessment,

the amount by which the sum of sub‑paragraphs (i) and (ii) exceeds $40 million is to be disregarded for the purposes of the deduction to be allowed under this section.

[34/2016]

(11AC) Subsection (11AB) applies to the following qualifying acquisitions:(a)

a qualifying acquisition made on or after 1 April 2016 except (if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made before 1 April 2016) a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) that has the same target company as the anchor acquisition;

(b)

if the qualifying acquisitions in that basis period include an acquisition mentioned in subsection (4A)(a) or (c) (called in this paragraph the anchor acquisition) that is made on or after 1 April 2016, a qualifying acquisition mentioned in subsection (4A)(b) or (d) (as the case may be) made before 1 April 2016 that has the same target company as the anchor acquisition.[34/2016]

(11B) Despite subsections (11) and (11A), the following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in target companies whose dates of acquisition fall within one basis period of the acquiring company, if the qualifying acquisitions in that basis period include at least one acquisition mentioned in subsection (4)(a) or (c), and at least one acquisition mentioned in subsection (4A)(a), (c) or (e) that is made before 1 April 2016, but does not include any acquisition mentioned in subsection (4A)(a) or (c) that is made on or after 1 April 2016:(a)

where the sum of the following exceeds $5 million:(i)

the amount determined by the formula “0.05 × A” in subsection (8) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(ii)

the amount determined by the formula “0.25 × A” in subsection (8A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section;

(b)

where the sum mentioned in paragraph (a) does not exceed $5 million but the sum of the following exceeds $5 million:(i)

the sum mentioned in paragraph (a);

(ii)

the amount determined by the formula “0.05 × B” in subsection (9) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(iii)

the amount determined by the formula “0.25 × B” in subsection (9A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A);

(iv)

the amount determined by the formula “0.05 × D” in subsection (10) in respect of those acquisitions which are acquisitions mentioned in subsection (4);

(v)

the amount determined by the formula “0.25 × D” in subsection (10A) in respect of those acquisitions which are acquisitions mentioned in subsection (4A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section.

[2/2016; 34/2016]

(11C) Despite subsections (11), (11A) and (11AB), the following provisions apply in determining the amount of deductions under subsection (7) to be allowed to the acquiring company for all qualifying acquisitions of ordinary shares in target companies whose dates of acquisition fall within one basis period of the acquiring company, if the qualifying acquisitions in that basis period include at least one acquisition mentioned in subsection (4)(a) or (c) or subsection (4A)(a), (c) or (e) that is made before 1 April 2016, and at least one acquisition mentioned in subsection (4A)(a) and (c) that is made on or after 1 April 2016:(a)

where the sum of the following (called in this subsection X) exceeds $5 million:(i)

the sum of the amounts determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (4):(A)

“0.05 × A” in subsection (8);

(B)

“0.05 × B” in subsection (9);

(C)

“0.05 × D” in subsection (10);

(ii)

the sum of the amounts determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (11AA):(A)

“0.25 × A” in subsection (8A);

(B)

“0.25 × B” in subsection (9A);

(C)

“0.25 × D” in subsection (10A),

the excess is to be disregarded for the purposes of the deduction to be allowed under this section in respect of those acquisitions;

(b)

where the sum of the amounts (called in this subsection Y) determined by the following formulae in respect of those acquisitions which are acquisitions mentioned in subsection (11AC):(i)

“0.25 × A” in subsection (8A);

(ii)

“0.25 × B” in subsection (9A);

(iii)

“0.25 × D” in subsection (10A);

exceeds $10 million, the excess is to be disregarded for the purposes of the deduction to be allowed under this section in respect of those acquisitions;

(c)

despite paragraphs (a) and (b), where the sum of X and Y exceeds $10 million, the excess is to be disregarded for the purposes of the deduction to be allowed under this section for all of the acquisitions mentioned in those paragraphs.[34/2016]

(12) For the purposes of subsections (8), (8A), (9), (9A), (10), (10A), (11), (11A), (11B) and (11C), the amount of any consideration paid for any qualifying acquisition that comprises shares in the acquiring company, is the market value of the shares in the acquiring company as at the date of the acquisition of the shares and, if it is not possible to determine such value, the net asset value of those shares in the acquiring company at the end of its accounting period immediately before the date of the acquisition of those shares.[2/2016; 34/2016]

(13) Despite subsections (8), (8A), (9), (9A), (10) and (10A), where any amount of “A” referred to in subsection (8) or (8A), “B” referred to in subsection (9) or (9A), or “D” referred to in subsection (10) or (10A), that is paid by the acquiring company or the acquiring subsidiary (as the case may be) in respect of any qualifying acquisition is greater than the amount which would have been paid if the acquiring company or the acquiring subsidiary (as the case may be) were not a related party of any of the shareholders in the target company, the firstmentioned amount is substituted with the second‑mentioned amount, and any question regarding the quantum of the second‑mentioned amount is to be determined by the Comptroller.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(14) A deduction under this section to an acquiring company must be made against the balance of its statutory income after the deductions allowed under sections 37(3), 37A and 37F.

(15) Section 14C(4) and (5) applies in relation to the deduction to be allowed in this section, as it applies in relation to the deduction of the expenditure and payments referred to in section 14C(1)(aa), (c) and (f), subject to the following modifications:(a)

a reference to the amount of the expenditure or payments (after deducting any amount in respect of which an election for a cash payout has been made under section 37G or 37R) is a reference to the deduction to be allowed in this section;[Act 30 of 2023 wef 30/10/2023]

(b)

a reference to a specified amount of the expenditure or payments in section 14C(4) is a reference to an amount computed in accordance with the formula

where E

is the deduction to be allowed in this section;

F

is the rate of tax specified in section 43(1)(a); and

G

is —

(i)

in a case where the concessionary income (as defined in section 14C(5)) derived by the person from the trade or business carried on by the person is subject to tax at a single concessionary rate of tax, that rate; or

(ii)

in a case where the concessionary income derived by the person from the trade or business carried on by the person is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.

(15A) For the purpose of subsection (1), a deduction in respect of transaction costs for qualifying acquisitions of ordinary shares in a target company is subject to the following:(a)

the deduction in relation to any transaction costs incurred must be allowed for —(i)

the year of assessment in which a claim is first made for the deduction allowable in respect of the capital expenditure incurred on the qualifying acquisition to which those transaction costs relate; or

(ii)

the year of assessment which relates to the basis period in which those transaction costs are incurred,

whichever is the later; and

(b)

the deduction is subject to a limit of $100,000 in transaction costs incurred in relation to all qualifying acquisitions of ordinary shares in all target companies (whether by the acquiring company, or by one or more of its acquiring subsidiaries, or by a combination of both) for which claims are first made in the year of assessment mentioned in paragraph (a)(i) for the deductions allowable in respect of the capital expenditure incurred on those acquisitions.

(16) A deduction under this section for a qualifying acquisition (called the subject acquisition) may be made to an acquiring company for any year of assessment only if —(a)

where the subject acquisition is one mentioned in subsection (4)(a) or (c) or (4A)(c) or (e) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition (being a date on or after 17 February 2012), the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C); and

(iv)

the target company, or a subsidiary that is —(A)

if the date of the subject acquisition is before 17 February 2012, wholly‑owned by the target company directly; or

(B)

if the date of the subject acquisition is on or after 17 February 2012, wholly‑owned by the target company whether directly or indirectly,

satisfies the conditions in subsection (16D);

(b)

where the subject acquisition is one mentioned in subsection (4)(b) or (d) or (4A)(d) or (f) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition (being a date on or after 17 February 2012), the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is —(A)

if the date of the acquisition is before 17 February 2012, wholly‑owned by the target company directly; or

(B)

if the date of the acquisition is on or after 17 February 2012, wholly‑owned by the target company whether directly or indirectly,

satisfies the conditions in subsection (16D); and

(v)

the conditions in paragraph (a) are also satisfied in relation to —(A)

where the subject acquisition is one mentioned in subsection (4)(b) — a qualifying acquisition mentioned in subsection (4)(a);

(B)

where the subject acquisition is one mentioned in subsection (4)(d) — a qualifying acquisition mentioned in subsection (4)(c);

(C)

where the subject acquisition is one mentioned in subsection (4A)(d) — a qualifying acquisition mentioned in subsection (4A)(c); or

(D)

where the subject acquisition is one mentioned in subsection (4A)(f) — a qualifying acquisition mentioned in subsection (4A)(e);

(c)

where the subject acquisition is one mentioned in subsection (4A)(a) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition, the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is wholly‑owned by the target company whether directly or indirectly, satisfies the conditions in subsection (16D); and

(v)

the conditions prescribed under subsection (16E) are satisfied; and

(d)

where the subject acquisition is one mentioned in subsection (4A)(b) —(i)

the acquiring company satisfies the conditions in subsection (16A);

(ii)

where the subject acquisition is made by an acquiring subsidiary, the acquiring subsidiary satisfies the conditions in subsection (16B);

(iii)

where the subject acquisition is made by an acquiring subsidiary and, on the date of the acquisition, the acquiring subsidiary is indirectly owned by the acquiring company through one or more intermediate companies, every such intermediate company satisfies the conditions in subsection (16C);

(iv)

the target company, or a subsidiary that is wholly‑owned by the target company whether directly or indirectly, satisfies the conditions in subsection (16D);

(v)

the conditions prescribed under subsection (16E) are satisfied; and

(vi)

the conditions in paragraph (c) are also satisfied in relation to a qualifying acquisition mentioned in subsection (4A)(a).[2/2016]

(16A) The conditions in subsection (16)(a)(i), (b)(i), (c)(i) and (d)(i) are —(a)

the acquiring company is carrying on a trade or business in Singapore on the date of the acquisition of the shares;

(b)

the acquiring company has in its employment at least 3 local employees at all times during the period of 12 months immediately before that date;

(c)

unless otherwise prescribed under subsection (24), the acquiring company is not connected to the target company for at least 2 years immediately before that date; and

(d)

in a case where the acquiring company is a subsidiary of another company, the acquiring company has a Singapore company as its ultimate holding company on that date.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(16B) The conditions in subsection (16)(a)(ii), (b)(ii), (c)(ii) and (d)(ii) are —(a)

the acquiring subsidiary does not carry on a trade or business in Singapore or elsewhere on the date of the acquisition of the shares;

(b)

the acquiring subsidiary does not claim any deduction for any capital expenditure or transaction costs under this section for that year of assessment or any stamp duty relief under section 15A of the Stamp Duties Act 1929; and

(c)

the acquiring subsidiary is on that date wholly‑owned by the acquiring company —(i)

directly, in the case of subsection (16)(a)(ii) or (b)(ii) where the date of the qualifying acquisition is before 17 February 2012; and

(ii)

whether directly or indirectly, in every other case.[2/2016]

(16C) The conditions in subsection (16)(a)(iii), (b)(iii), (c)(iii) and (d)(iii) are —(a)

the intermediate company is wholly‑owned (whether directly or indirectly) by the acquiring company on the date of the acquisition of the shares;

(b)

the intermediate company is incorporated for the primary purpose of acquiring and holding shares in other companies;

(c)

the intermediate company does not carry on a trade or business in Singapore or elsewhere on that date; and

(d)

the intermediate company does not claim any deduction for any capital expenditure or transaction costs under this section for that year of assessment or any stamp duty relief under section 15A of the Stamp Duties Act 1929.[2/2016]

(16D) The conditions in subsection (16)(a)(iv), (b)(iv), (c)(iv) and (d)(iv) are —(a)

the target company or the subsidiary carries on a trade or business in Singapore or elsewhere on the date of the acquisition of the shares; and

(b)

the target company or the subsidiary has in its employment at least 3 employees at all times during the period of 12 months immediately before that date.[2/2016]

(16E) For the purposes of subsections (16)(c)(v) and (d)(v) and (17)(db), the Minister may by regulations prescribe such conditions as the Minister considers necessary to ensure that the acquiring company or acquiring subsidiary is not merely a passive shareholder of the target company, including requiring the company or subsidiary to exert significant influence (within the meaning of FRS 28, SFRS(I) 1‑28, or SFRS for Small Entities) over the target company.[2/2016; 32/2019; 27/2021]

(16F) In subsection (16E), “FRS 28”, “SFRS(I) 1‑28” and “SFRS for Small Entities” mean the financial reporting standards known respectively as —(a)

Financial Reporting Standard 28 (Investments in Associates and Joint Ventures);

(b)

Singapore Financial Reporting Standard (International) 1‑28 (Investments in Associates and Joint Ventures); and

(c)

Singapore Financial Reporting Standard for Small Entities,

that are made by the Accounting Standards Committee under Part 3 of the Accounting Standards Act 2007, as amended from time to time.

[32/2019]

[Act 36 of 2022 wef 01/04/2023]

(17) No deduction in respect of any qualifying acquisition of ordinary shares in a target company may be made to the acquiring company for the year of assessment relating to the basis period of the acquiring company in which any of the following events occurs or for any subsequent year:(a)

where the qualifying acquisition is one mentioned in subsection (4) or (4A)(c), (d), (e) or (f), after the date of the acquisition of the shares, the target company issues additional ordinary shares which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to 50% or less;

(aa)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), after the date of the acquisition of the shares, the target company issues additional ordinary shares which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to less than 20%;

(b)

the acquiring company —(i)

ceases to carry on a trade or business in Singapore; or

(ii)

ceases to have at least 3 local employees;

(c)

where the qualifying acquisition is one mentioned in subsection (4)(a) or (b) or (4A)(c) or (d), the acquiring company or the acquiring subsidiary (as the case may be) divests of its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to 50% or less, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(d)

where the qualifying acquisition is one mentioned in subsection (4)(c) or (d) or (4A)(e) or (f), the acquiring company or the acquiring subsidiary (as the case may be) divests of its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to a percentage below 75%, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(da)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), the acquiring company or the acquiring subsidiary (as the case may be) divests its shares in the target company which reduces the total ownership of the acquiring company and its acquiring subsidiaries of the ordinary shares in the target company to any percentage below 20%, and such divestment occurs in a basis period of the acquiring company other than that for the 1st year of assessment;

(db)

where the qualifying acquisition is one mentioned in subsection (4A)(a) or (b), the acquiring company or the acquiring subsidiary (as the case may be) fails to satisfy any condition prescribed under subsection (16E);

(e)

the acquiring company or, if the acquiring company is a subsidiary of another company, its ultimate holding company, ceases to be a Singapore company; or[Act 33 of 2022 wef 04/11/2022]

(f)

the acquiring subsidiary and every intermediate company through which the acquiring subsidiary is indirectly owned by the acquiring company —(i)

carries on any trade or business in Singapore or elsewhere;

(ii)

claims a deduction under this section for capital expenditure or transaction costs incurred or claims any stamp duty relief under section 15A of the Stamp Duties Act 1929; or

(iii)

ceases to be wholly‑owned by the acquiring company —(A)

directly, in the case of a qualifying acquisition the date of which is before 17 February 2012; and

(B)

whether directly or indirectly, in the case of a qualifying acquisition the date of which is on or after 17 February 2012.[2/2016; 27/2021]

(18) If the Comptroller is satisfied that the shareholders of the acquiring company on the first day of the year of assessment in which the deduction is to be allowed in respect of a qualifying acquisition are not substantially the same as its shareholders on the date of the acquisition of the shares, then no deduction in respect of the qualifying acquisition may be made to the acquiring company for the year of assessment relating to the basis period of the acquiring company in which the deduction is to be allowed and for any subsequent year of assessment.

(19) Where the acquiring company or the acquiring subsidiary (as the case may be) and the target company are part of the same group of companies on the date of a qualifying acquisition of ordinary shares in a target company by the acquiring company or the acquiring subsidiary (as the case may be), no deduction may be made under this section in respect of that qualifying acquisition unless the total number of ordinary shares acquired by the acquiring company or the acquiring subsidiary (as the case may be) results in an increase in the total number of ordinary shares of the target company held on that date by all companies in the group (excluding the target company) and, where there is such an increase —(a)

a deduction is only allowed under this section for; and

(b)

references in subsections (7) to (10A) to any capital expenditure for a qualifying acquisition are accordingly references to,

the capital expenditure in respect of the number of such shares that corresponds to such increase.

[2/2016]

(19A) The Minister or such person as he may appoint may, for any particular qualifying acquisition made during the period from 17 February 2012 to 31 March 2020 (both dates inclusive), waive the requirement in subsections (16A)(d) and (17)(e) in relation to the ultimate holding company of the acquiring company, subject to such conditions that the Minister or the person he has appointed may impose.[2/2016; 41/2020]

(19B) If —(a)

any requirement under subsections (16A)(d) and (17)(e) has been waived (whether before, on or after 2 December 2019) for an acquiring company in respect of any qualifying acquisition under subsection (19A); and

(b)

the acquiring company fails to comply with a condition subsequent imposed under subsection (19A) for such waiver,

then, if the Minister or the person appointed by the Minister is satisfied, having regard to the acquiring company’s representation and all the relevant circumstances of the case, that it is just and reasonable to do so, the Minister or appointed person —

(c)

may make a determination that the company is not entitled to any deduction in respect of the qualifying acquisition for each year of assessment beginning with a specified year of assessment; and

(d)

must give a written notice of the determination to the Comptroller and the company.[32/2019]

(19C) If a determination has been made under subsection (19B), then (despite anything in this section) —(a)

any deduction that has already been made to the acquiring company in respect of the qualifying acquisition for each year of assessment beginning with the specified year of assessment is treated for the purposes of this section as having been wrongly allowed, and the Comptroller may, subject to section 74, make an assessment or additional assessment on the company for those years of assessment to make good any tax shortfall; and

(b)

no deduction may be made to the company for the qualifying acquisition —(i)

for any year of assessment after the year or years of assessment mentioned in paragraph (a); or

(ii)

if no deduction has been made to the company for the specified year of assessment, for the specified year of assessment and each subsequent year of assessment.[32/2019]

(20) Subject to subsection (21), where in any year of assessment full effect cannot, by reason of an insufficiency of gains or profits chargeable for that year of assessment, be given to any deduction falling to be allowed under this section, the balance of the deduction is to be added to, and is deemed to form part of the corresponding deduction (if any) for the next succeeding year of assessment, and if no such corresponding deduction falls to be allowed for that year, is deemed to constitute the corresponding deduction for that year, and so on for subsequent years of assessment.

(21) No balance may be added to and be deemed to form part of the corresponding deduction (if any) to be given to an acquiring company under subsection (20) for a year of assessment unless the Comptroller is satisfied that the shareholders of the acquiring company on the last day of the year of assessment in which the deduction was claimed were substantially the same as the shareholders of the acquiring company on the first day of the firstmentioned year of assessment; and such balance must not be allowed in any subsequent year of assessment.

(22) The Minister or such person as the Minister may appoint may, where there is a substantial change in the shareholders of a company and the Minister or appointed person is satisfied that such change is not for the purpose of deriving any tax benefit or obtaining any tax advantage, exempt that company from the provisions of subsections (18) and (21).

(23) Despite section 74(1) and (4), where it appears to the Comptroller that a deduction or any part thereof under this section which has been allowed to any acquiring company in any year of assessment ought not to have been allowed by virtue of —(a)

the occurrence of any event specified in subsection (17) or (18);

(b)

the failure of the acquiring company or the acquiring subsidiary (as the case may be) to pay the consideration for acquiring the shares of the target company in full within 6 months from the date of the acquisition of the shares or, in the case of consideration that is contingent consideration, within 6 months from the date the contingent consideration is incurred;

(c)

a reduction in the consideration paid in relation to the share acquisition upon satisfaction of indemnity conditions as may be specified in the agreement for the sale of the ordinary shares of the target company; or

(d)

section 33,

the Comptroller may, at any time, for the purposes of making good any loss of tax attributable to the deduction or part thereof, assess the person who has utilised the deduction at such amount or additional amount as according to the Comptroller’s judgment ought to have been charged, and this subsection also applies with the necessary modifications to any assessment which results in any unabsorbed allowances or losses.

(24) The Minister may make regulations —(a)

to provide for the disallowance of or for the adjustments to be made to the amount of any deduction allowed in any year of assessment under this section where the acquiring company or the acquiring subsidiary (as the case may be) divests itself of any of the ordinary shares it holds in the target company;

(b)

to provide for the application of this section to a business trust, subject to such modifications as may be prescribed, including treating, in prescribed circumstances, a business trust and any company whose shares are trust property thereof as companies within a group of companies, and a holding of units in a business trust as a holding of shares in a company;

(c)

to prescribe such matters as are required or authorised to be prescribed under this section; and

(d)

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

(25) In this section —“capital expenditure”, in relation to any acquisition of shares, means consideration for the shares acquired whether paid in cash or in shares of the acquiring company or both, but excludes transaction costs (including but not limited to due diligence and valuation costs) and any other similar costs;

“central hirer”, in relation to a central hiring arrangement for a group of related parties, means the person who carries out hiring functions for those parties under the arrangement;[Act 33 of 2022 wef 04/11/2022]

“central hiring arrangement” means an arrangement for a group of related parties entered into for a bona fide commercial reason, where the hiring functions of the parties in the group are carried out by a single person;[Act 33 of 2022 wef 04/11/2022]

“contingent consideration”, in relation to an acquisition of ordinary shares in a target company, means such part of the total consideration for the acquisition that would be incurred only upon the satisfaction of such conditions in respect of the target company as may be specified in the agreement for the acquisition entered into by the acquiring company or the acquiring subsidiary, as the case may be;

“group of companies” means 2 or more companies each of which is either a holding company or subsidiary of the other or any of the others;

[Deleted by Act 33 of 2022 wef 04/11/2022]

“local employee” means an individual who —(a)

is a citizen of Singapore or a Singapore permanent resident;

(b)

makes contributions in respect of the income derived from his or her employment with the acquiring company to the Central Provident Fund which are obligatory under the Central Provident Fund Act 1953; and

(c)

is any of the following:(i)

an employee of the acquiring company;

(ii)

for the year of assessment 2020 or a subsequent year of assessment — an individual who is engaged by the central hirer of a central hiring arrangement for a group of related parties which includes the acquiring company —(A)

who is deployed to work solely for the acquiring company; and

(B)

whose salary and other remuneration is borne, directly or indirectly, by the acquiring company and not claimed by the central hirer as a deduction against the central hirer’s own income;

(iii)

for the year of assessment 2020 or a subsequent year of assessment — an employee of another person (called B) —(A)

who is seconded to the acquiring company under a bona fide commercial arrangement to work solely for the acquiring company; and

(B)

whose salary and other remuneration is borne, directly or indirectly, by the acquiring company and not claimed by B as a deduction against B’s own income,

but excludes a director as defined in section 4 of the Companies Act 1967;

[Act 33 of 2022 wef 04/11/2022]

“Singapore company” means a company incorporated in Singapore and resident in Singapore;

“transaction costs” means professional fees that are necessarily incurred for the qualifying acquisition of ordinary shares in the target company —(a)

including legal fees, accounting or tax advisor’s fees and valuation fees; but

(b)

excluding any professional fees (including the fees mentioned in paragraph (a)) incurred in respect of loan arrangements and costs incidental thereto, borrowing costs, and stamp duty and any other taxes, incurred for the qualifying acquisition of ordinary shares in the target company;

“ultimate holding company” has the meaning given by section 5A of the Companies Act 1967.

(26) In this section, the date of acquisition of ordinary shares in a target company is —(a)

the date on which the agreement for the sale of those shares is entered into by the acquiring company or the acquiring subsidiary, as the case may be; or

(b)

in the absence of an agreement mentioned in paragraph (a), the date of the transfer of those shares from the target company to the acquiring company or the acquiring subsidiary, as the case may be.

(27) For the purposes of subsection (16A), a company is connected with another if —(a)

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

(b)

at least 75% of the total number of ordinary shares in each of the 2 companies are beneficially held, directly or indirectly, by a third company.[2/2016]

[Act 33 of 2022 wef 04/11/2022]

(28) For the purposes of subsections (18), (21) and (22) —(a)

the shareholders of the acquiring company at any date are not deemed to be substantially the same as the shareholders of that company at any other date unless, on both those dates, not less than 50% of the total number of issued shares of the company are held by or on behalf of the same persons;

(b)

shares in the acquiring company held by or on behalf of another company are deemed to be held by the shareholders of the last mentioned company; and

(c)

shares held by or on behalf of the trustee of the estate of a deceased shareholder or by or on behalf of the person entitled to those shares as beneficiaries under the will or any intestacy of a deceased shareholder are deemed to be held by that deceased shareholder.

(29) In this section, a reference to capital expenditure and transaction costs excludes any such expenditure and costs to the extent that they are or are to be subsidised by grants or subsidies from the Government or a statutory board.[37L