Income Tax (Concessionary Rate of Tax for Provision of Processing Services to Financial Institutions) Regulations 2005

No. S 348

Income Tax Act

(Chapter 134)

Income Tax (Concessionary Rate of Tax for Provision of Processing Services to Financial Institutions) Regulations 2005

In exercise of the powers conferred by section 43R of the Income Tax Act, the Minister for Finance hereby makes the following Regulations:

Citation and commencement

1.  These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Provision of Processing Services to Financial Institutions) Regulations 2005 and shall be deemed to have come into operation on 30th November 2004.

Definitions

2.  In these Regulations —

“approved company” means a company in Singapore which is approved under section 43R of the Act;

“prescribed processing services” means any of the services specified in the Schedule provided in Singapore by an approved company.

Period of concession

3.  The Minister, or such person as he may appoint, may approve any company for the purposes of section 43R of the Act for such period not exceeding 10 years as he may specify.

Concessionary rate of tax

4.  Tax shall be payable at the rate of 5% on the income derived by an approved company on or after 27th February 2004 in respect of the provision of any prescribed processing services to —

(a) any financial institution; or

(b) another approved company.

Determination of income chargeable to tax

5.  For the purposes of regulation 4, the Comptroller shall determine —

(a) the income chargeable to tax of an approved company having regard to such expenses, capital allowances and donations allowable under the Act as are, in his opinion, to be deducted in ascertaining such income; and

(b) the manner and extent to which any losses arising from any prescribed processing services may be deducted under section 37(3) of the Act in ascertaining the chargeable income of the approved company.

THE SCHEDULE

Regulation 2

Prescribed Processing Services

1.  In connection with financial activities relating to treasury and securities —

(a) account opening documentation services;

(b) agreements maintenance and support services;

(c) cash management services;

(d) corporate action processing services;

(e) counterparties limits monitoring services;

(f) funds and net asset value accounting services;

(g) portfolio valuation services;

(h) pre-settlement confirmation and matching services;

(i) securities borrowing and lending processing services;

(j) settlement and reconciliation services.

2.  In connection with financial activities relating to asset management —

(a) benchmark tracking and monitoring services;

(b) central dealing services;

(c) credit administration services;

(d) funds and net asset value accounting services;

(e) monitoring of counterparty limits services;

(f) monitoring of investment restrictions services;

(g) portfolio performance monitoring and measurement services;

(h) portfolio valuation services;

(i) registrar, listing agent, paying agent services;

(j) settlement and reconciliation services;

(k) transfer agency services.

3.  In connection with financial activities relating to private banking —

(a) administration and monitoring of credit facilities services;

(b) foreign exchange settlement services;

(c) funds and net asset value accounting services;

(d) monitoring of investment limits and restrictions services;

(e) personal and corporate trust servicing services;

(f) settlement and reconciliation services.

4.  In connection with financial activities relating to wholesale banking —

(a) cash management services;

(b) collateral management services;

(c) loan administration and monitoring of credit facilities services;

(d) product control services;

(e) securities borrowing and lending processing services;

(f) trade finance and clearing operation services;

(g) trade settlement and reconciliation services;

(h) trade support services.

5.  In connection with financial activities relating to retail banking —

(a) credit control services;

(b) evaluation services of applications for financial products including credit cards, loans and bancassurance;

(c) fraud control services;

(d) monitoring services of investment and insurance activities;

(e) settlement and reconciliation services.

5A.  In connection with financial activities relating to insurance —

(a) claims management and processing services;

(b) loss adjusting services;

(c) policy issuance, processing, administration, renewal and collection services;

(d) risk modeling and related services;

(e) run-off management and related services.

[S 100/2007 wef 01/11/2006]

6.  In connection with and incidental to the provision of any of the services referred to in paragraphs 1 to 5A —

(a) compliance and legal support services;

(b) financial control and accounting services;

(c) information technology development, application and data support services;

(d) management information and reporting services;

(e) risk management services.

[S 100/2007 wef 01/11/2006]

Made this 31st day of May 2005.

LIM SIONG GUAN

Permanent Secretary,
Ministry of Finance,
Singapore.

[MF (R) 32.19.2873 V1; AG/LEG/SL/134/2005/3 Vol. 1]