PART 2 | Power to approve industry and product as pioneer industry and pioneer product |
4.—(1) The Minister may, if he or she considers it expedient in the public interest to do so, approve an industry, which is not being carried on in Singapore on a scale adequate to the economic needs of Singapore and for which in the Minister’s opinion there are favourable prospects for development, to be a pioneer industry and any specific product of that industry to be a pioneer product.| (2) The Minister may revoke any approval given under this section but any such revocation does not affect the operation of any pioneer certificate issued to any pioneer enterprise before the revocation. |
| (3) Any industry which has been approved as a pioneer industry or any product which has been approved as a pioneer product before 25 November 2004 is deemed to have been approved under this section. |
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| Application for and issue and amendment of pioneer certificate |
| 5.—(1) Any company which is desirous of producing a pioneer product may make a written application to the Minister to be approved as a pioneer enterprise for that pioneer product in such form and with such particulars as may be prescribed. [11/2016] | (2) A company may make an application under subsection (1) to be approved as a pioneer enterprise for more than one pioneer product which it is desirous of producing. [11/2016] |
| (3) Where the Minister is satisfied that it is expedient in the public interest to do so and, in particular, having regard to the production or anticipated production of the pioneer product from all sources of production in Singapore, the Minister may approve that company as a pioneer enterprise for that pioneer product and issue a pioneer certificate to the company in respect of that pioneer product, subject to such conditions as the Minister thinks fit. [11/2016] |
| (4) No company may be approved as a pioneer enterprise on or after 1 January 2029. [11/2016] [Act 39 of 2023 wef 29/12/2023] |
(5) Every pioneer certificate issued under this section to a pioneer enterprise must be in respect of a pioneer product and must specify —| (a) | the pioneer product; and | | (b) | the date on or before which it is expected that the pioneer enterprise will commence to produce in marketable quantities the pioneer product. [11/2016] |
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(6) Where the Minister approves a company as a pioneer enterprise for 2 or more pioneer products, the Minister may issue a single pioneer certificate in respect of those pioneer products if —| (a) | the tax relief periods of the pioneer enterprise for all the pioneer products, as determined by the Minister under section 6, expire on the same day; and | | (b) | the Minister is satisfied that the pioneer enterprise will be producing all the pioneer products as part of the same project. [11/2016] |
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(7) The Minister may, upon the application of any pioneer enterprise, amend a pioneer certificate issued to the pioneer enterprise —| (a) | by substituting for the date referred to in subsection (5)(b) of a pioneer product specified in the pioneer certificate such earlier or later date as the Minister thinks fit, and upon such substitution the provisions of this Act have effect as if the date so substituted were the pioneer enterprise’s production day of that product; | | (b) | by removing any pioneer product from the pioneer certificate with effect from a date determined by the Minister; or | | (c) | by adding to the pioneer certificate any pioneer product and the date on or before which it is expected that the pioneer enterprise will commence to produce that product in marketable quantities, if —| (i) | the tax relief period for the pioneer product expires on the same day as the tax relief period or periods of the other pioneer product or products already specified in the pioneer certificate; and | | (ii) | the Minister is satisfied that the pioneer enterprise will be producing that pioneer product and the other pioneer product or products already specified in the pioneer certificate as part of the same project. [11/2016] |
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(8) Without affecting section 61, the Minister may, on the Minister’s own initiative, remove any pioneer product from a pioneer certificate with effect from a date determined by the Minister, if the Minister is satisfied that the pioneer enterprise has contravened —| (a) | any provision of this Act; or | | (b) | any condition of its approval as a pioneer enterprise. [11/2016] |
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| Tax relief period for pioneer product |
| 6.—(1) The tax relief period of a pioneer enterprise for a pioneer product commences on the production day of that pioneer product and continues for such period, not exceeding 15 years, as the Minister may determine. [11/2016] (2) Subject to subsections (3) and (4), the Minister may, if the Minister is satisfied that it is expedient in the public interest to do so and subject to such conditions as the Minister may impose —| (a) | where the pioneer certificate issued to a pioneer enterprise only specifies one pioneer product, extend the tax relief period in subsection (1) for that product for such further period or periods, not exceeding 5 years at any one time, as the Minister may determine; or | | (b) | where the pioneer certificate issued to a pioneer enterprise specifies more than one pioneer product, extend the tax relief period or periods in subsection (1) for one or more of those products for such further period or periods, not exceeding 5 years at any one time, as the Minister may determine. [11/2016] |
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| (3) The total tax relief period for a pioneer product, together with all extensions, must not in total exceed 15 years. [11/2016] |
| (4) Where the Minister extends the tax relief periods of a pioneer enterprise for more than one of the pioneer products specified in the pioneer certificate under subsection (2)(b), the Minister must ensure that all the tax relief periods of those pioneer products, after such extension, expire on the same day. [11/2016] |
| (5) Where a pioneer product is removed from a pioneer certificate under section 5(7)(b) or (8), its tax relief period expires on the effective date of its removal. [11/2016] |
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| Provisions governing old and new trade or business |
7. For the purposes of the Income Tax Act 1947 and this Act —| (a) | an old trade or business of a pioneer enterprise in respect of a pioneer product or products which is or are the subject of a single pioneer certificate issued to the pioneer enterprise is considered to have permanently ceased on the tax relief expiry date; | | (b) | the pioneer enterprise is considered to have set up and commenced a new trade or business in respect of the same product or products on the day immediately following the tax relief expiry date; | | (c) | the pioneer enterprise must make up accounts of each old trade or business for a period not exceeding one year, commencing on —| (i) | the production day of the pioneer product; or | | (ii) | where the pioneer certificate specifies 2 or more pioneer products, the earlier or earliest of the production days of those pioneer products, |
| for successive periods of one year thereafter and for the period not exceeding one year ending on the tax relief expiry date; |
| | (d) | in making up the first accounts of the new trade or business referred to in paragraph (b), the pioneer enterprise must take as the opening figures for those accounts the closing figures in respect of its assets and liabilities as shown in its last accounts of the corresponding old trade or business; and | | (e) | the next accounts of the new trade or business following the first accounts referred to in paragraph (d), must be made up by reference to the closing figures in the first accounts, and any subsequent accounts of the new trade or business must be similarly made up by reference to the closing figures of the preceding accounts of the new trade or business. [11/2016] |
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| Provisions governing separate trade or business |
8.—(1) Where at any time —| (a) | during the tax relief period for a pioneer product of a pioneer enterprise; or | | (b) | where the pioneer certificate issued to a pioneer enterprise specifies 2 or more pioneer products, during the longer or longest of the tax relief periods for those pioneer products, |
| the pioneer enterprise carries on any trade or business other than the old trade or business in respect of that product or those products (called in this section separate trade or business), separate accounts must be maintained for that separate trade or business and in respect of the same accounting period. |
[11/2016; 8/2018] | (2) Where the carrying on of such separate trade or business results in a loss in any accounting period, the loss must be brought into the computation of the income of the pioneer enterprise from the old trade or business for that period unless the Comptroller, having regard to all the circumstances of the case, is satisfied that the loss was not incurred for the purpose of obtaining a tax advantage. [11/2016] |
| (3) Where the carrying on of such separate trade or business results in a profit in any accounting period, and the profit, computed in accordance with the provisions of the Income Tax Act 1947 as modified by this section, amounts to less than 5% of the full sum receivable from the sale of goods or the provision of services, the statutory income from that source is deemed to be 5% (or such lower rate as the Comptroller may specify in any particular case) of the full sum so receivable and the income of the pioneer enterprise from the old trade or business is to be abated accordingly. [11/2016] |
| (4) Where, in the opinion of the Comptroller, the carrying on of such separate trade or business is subordinate and incidental to the carrying on of the old trade or business, the income or loss arising from such separate trade or business is considered to form part of the income or loss of the pioneer enterprise from that old trade or business. [11/2016] |
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9. For the purposes of the Income Tax Act 1947 and this Act, the Comptroller may direct that —| (a) | any sums payable to a pioneer enterprise for a pioneer product in any accounting period which, but for the provisions of this Act, might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period, are to be treated as not having been payable in that period but as having been payable on such date, after that period, as the Comptroller thinks fit; | | (b) | where the date referred to in paragraph (a) is after the end of the tax relief period for that pioneer product, those sums are to be treated as having been so payable on that date, in relation to the new trade or business of the pioneer enterprise in respect of that product; and | | (c) | any expense incurred by a pioneer enterprise in respect of a pioneer product within one year after the end of the tax relief period for that pioneer product which, but for the provisions of this Act, might reasonably and properly have been expected to be incurred, in the normal course of business, during the tax relief period for that pioneer product, are to be treated —| (i) | as not having been incurred within that year; but | | (ii) | as having been incurred for the purposes of its old trade or business in respect of that pioneer product and on such date, during the tax relief period for that pioneer product, as the Comptroller thinks fit. [11/2016] |
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| Ascertainment of income in respect of old trade or business |
| 10.—(1) The income of a pioneer enterprise from each of its old trades or businesses is to be ascertained in accordance with the provisions of the Income Tax Act 1947 after making such adjustments as may be necessary in consequence of any direction given under section 9. [11/2016] | (2) In determining the income of a pioneer enterprise referred to in subsection (1), the allowances provided for in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 for capital expenditure incurred for the purposes of each old trade or business must be taken into account even though no claim for such allowances has been made. [29/2010; 11/2016] |
(3) Where the tax relief expiry date of an old trade or business of a pioneer enterprise is before the last day of the basis period for any year of assessment, then, for the purpose of determining the income in respect of —| (a) | that old trade or business for that year of assessment; and | | (b) | the corresponding new trade or business for the same year of assessment, |
| allowances provided for in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 for capital expenditure incurred for the purposes of that old trade or business must be deducted even though no claim for such allowances has been made. |
[11/2016] |
(4) For the purpose of computing the allowances under subsection (3) —| (a) | the allowances for that year of assessment must be computed as if the old trade or business of the pioneer enterprise had not been considered to have permanently ceased on the tax relief expiry date in accordance with section 7(a); and | | (b) | the allowances computed in accordance with paragraph (a) must be apportioned between that old trade or business and that new trade or business in such manner as appears to the Comptroller to be reasonable in the circumstances. [11/2016] |
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| (5) Where in any year of assessment full effect cannot, by reason of an insufficiency of profits for that year of assessment, be given to the allowances mentioned in subsection (2), then the balance of the allowances must be added to, and is deemed to form part of, the corresponding allowances (if any) for the next succeeding year of assessment and, if no such corresponding allowances fall to be made for that year, is deemed to constitute the corresponding allowances for that year, and so on for subsequent years of assessment. |
(6) Despite subsections (1) and (2), where a pioneer enterprise has incurred or has given a written undertaking to the Minister to incur a capital expenditure of not less than $150 million and —| (a) | more than 50%, or such other percentage as the Minister may determine, of the paid‑up capital of the pioneer enterprise is held by persons permanently resident in Singapore; and | | (b) | such capital expenditure has been approved by the Minister as promoting or enhancing the economic or technological development of Singapore, |
| the capital expenditure so incurred by the pioneer enterprise whilst it is carrying on an old trade or business in respect of any asset used for the purposes of its corresponding new trade or business are (subject to such conditions as the Minister may impose) considered for the purposes of sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947, to have been incurred on the day immediately following the tax relief expiry date of the old trade or business. |
[29/2010; 11/2016] |
| (7) Where a pioneer enterprise referred to in subsection (6) carries on a separate trade or business, and any building, plant or machinery is used both for the purposes of that trade or business and the trade or business relating to the relevant pioneer product, subsection (6) applies to that building, plant or machinery. [29/2010] |
| (8) Where a pioneer enterprise has, before 16 August 1991, incurred a capital expenditure of not less than $1,000 million, subsection (6) applies to that enterprise in respect of that expenditure even though the enterprise has not complied with paragraphs (a) and (b) of that subsection. |
(9) Where —| (a) | a pioneer enterprise mentioned in subsection (6) or (8) is the holder of 2 or more pioneer certificates; | | (b) | the tax relief expiry dates of the old trades or businesses relating to those pioneer certificates are different; and | | (c) | capital expenditure has been incurred in respect of any building, plant or machinery which is jointly used in carrying on those old trades or businesses, |
| then a deduction must not be made in respect of such expenditure under any of the provisions contained in sections 16, 17, 18, 18B, 18C, 19, 19A, 19B, 20, 21 and 22 of the Income Tax Act 1947 until after the tax relief expiry date that is later or latest in time. |
[11/2016] |
| (10) In subsections (6) and (8), “capital expenditure” means capital expenditure in connection with a pioneer product, on factory building (excluding land) in Singapore, on any new plant or new machinery used in Singapore and on intellectual property rights for use in Singapore and, subject to the Minister’s approval, on any secondhand plant or secondhand machinery used in Singapore. |
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| Application of Part 16 of Income Tax Act 1947 |
| 11. Part 16 of the Income Tax Act 1947 (relating to returns of income) applies in all respects as if the income of a pioneer enterprise in respect of each of its old trades or businesses were chargeable to tax. [11/2016] |
| Comptroller to issue statement of income |
| 12. For each year of assessment, the Comptroller must issue to the pioneer enterprise a statement (to be included in a notice of any assessment served on the pioneer enterprise under section 76 of the Income Tax Act 1947) showing the amount of income in respect of each of its old trades or businesses for that year of assessment, and Parts 17 and 18 of the Income Tax Act 1947 (relating to assessments, objections and appeals) apply, with the necessary modifications, as if that statement were a notice of assessment given under those provisions. [34/2008; 11/2016] |
| Exemption from income tax |
| 13.—(1) Where any statement issued under section 12 has become final and conclusive, the amount of the income shown by the statement does not form part of the statutory income of the pioneer enterprise for any year of assessment and is exempt from tax. [11/2016] | (2) The Comptroller may, in his or her discretion and before the statement mentioned in subsection (1) has become final and conclusive, declare that a specified part of the amount of such income is not in dispute and such an undisputed amount of income is exempt from tax, pending such a statement becoming final and conclusive. |
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14.—(1) Despite section 13, the Comptroller may, subject to section 74 of the Income Tax Act 1947, make an assessment or additional assessment as described in subsection (2) upon a pioneer enterprise if it appears to the Comptroller that any amount of income of the pioneer enterprise exempted from tax ought not to have been exempted by reason of any direction made under section 9.| (a) | [Deleted by Act 39 of 2023 wef 29/12/2023] | | (b) | [Deleted by Act 39 of 2023 wef 29/12/2023] [11/2016] [Act 39 of 2023 wef 29/12/2023] |
| (2) The assessment or additional assessment under subsection (1) is at an amount that appears to the Comptroller to be necessary to counteract any profit obtained by the pioneer enterprise from the exempted income. [11/2016] |
| (3) Parts 17 and 18 of the Income Tax Act 1947 (relating to assessments, objections and appeals) and any rules made under that Act apply, with the necessary modifications, to an assessment or additional assessment under subsection (1) as if it were a notice of assessment under those Parts. [11/2016] |
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| Carry forward of loss and allowance |
15.—(1) Where a pioneer enterprise has at any time —| (a) | during its tax relief period for a pioneer product; or | | (b) | where the pioneer certificate issued to the pioneer enterprise specifies 2 or more pioneer products, during the longer or longest of the tax relief periods for those pioneer products, |
| incurred a loss in the old trade or business in respect of that product or any of those products for any year, that loss must be deducted in accordance with section 37 of the Income Tax Act 1947 (as applied with the necessary modifications), but only against the income of the pioneer enterprise from that old trade or business as ascertained under section 10. |
[11/2016] (2) The balance of any such loss which remains unabsorbed on the tax relief expiry date of the old trade or business is available as a deduction for the year of assessment which relates to the basis period in which the new trade or business commences and for any subsequent year of assessment in accordance with section 37 of the Income Tax Act 1947, in the following descending order of priority:| (a) | against the statutory income of the pioneer enterprise from the corresponding new trade or business; | | (b) | against the statutory income of the pioneer enterprise from any other trade or business; | | (c) | against the statutory income of the pioneer enterprise from any other source. [11/2016; 8/2018] |
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(3) Despite section 7(a), the balance of any allowance as provided for in section 10 which remains unabsorbed on the tax relief expiry date of the old trade or business is available as a deduction for the year of assessment which relates to the basis period in which the new trade or business commences and for any subsequent year of assessment in accordance with section 23 of the Income Tax Act 1947, in the following descending order of priority:| (a) | against the statutory income of the pioneer enterprise from the corresponding new trade or business; | | (b) | against the statutory income of the pioneer enterprise from any other trade or business; | | (c) | against the statutory income of the pioneer enterprise from any other source. [11/2016; 8/2018] |
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