Topics: Tax exemption, Tax, Taxation in the United States Pages: 5 (1596 words) Published: April 7, 2013
Tax Incentives Of Today
The tax incentives are currently contained mainly in two statutory codes of Singapore; the Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86 ("EEIA") and the Income Tax Act, chapter 134 ("ITA"). * EEIA

The EEIA was promulgated in 1967 to answer the need to provide the necessary impetus for economic growth and development. Throughout the years since its birth, the EEIA has gone through several transformations and additions. Presently, the incentives provided for in the EEIA are incentives in relation to: * pioneer industries

* pioneer service companies
* post-pioneer companies
* expansion of established enterprises
* production for export
* export of services
* international trade
* foreign loans for productive equipment
* royalties, fees and development contributions
* investment allowances
* warehousing & servicing industries
* international consultancy services
* investments in new technology companies
* overseas investment and venture capital incentive
* overseas enterprises
The list above illustrates the expansion of the tax incentive schemes in Singapore, capturing the movement away from manufacturing and industrial activities towards the provision of higher value-added services and development of technology in Singapore. One of the incentives which we will highlight here will hopefully throw some light on the general nature of these incentives. International Consultancy Services

Companies and businesses (sole-proprietorship or partnership) eligible for this incentive would be those engaged in the provision of technical and consultancy services overseas. The incentive will be given in respect of approved overseas projects, and the types of consultancy services to be provided in relation to such projects should be in the nature of: * advisory services on technical, construction or engineering matters; * design and engineering;

* fabrication of machinery and equipment;
* procurement of materials and equipment;
* management and supervision of the installation or construction of any project; * data processing, programming and other computer services. As a prerequisite to qualify for this incentive, the gross income from such consultancy services should exceed or is expected to exceed $1 million per annum. Applications for such incentives should be made to the Economic Development Board of Singapore ("EDB"). Successful applicants will enjoy tax exemption on one-half of the income which qualifies for the incentive for a period of five years. Where during the tax relief period such companies or businesses carry on a trade or business which is separate and distinct from the consultancy services, separate accounts must be maintained and the resulting income separately assessed. Generally, in computing the income arising from the consultancy services of such companies or businesses, deduction of capital allowances is mandatory. Unabsorbed capital allowances and losses incurred prior to the tax relief period should be taken into account (subject to the relevant provisions of the ITA). Unabsorbed capital allowances and losses incurred in respect of any distinct trade should be set-off against the profits of that distinct trade and the balance should be brought into the computation of the income from the consultancy services. As regards the unabsorbed capital allowances and losses arising from the consultancy services, these shall, during the tax relief period, be deducted against the income derived from the consultancy services only. Any unabsorbed capital allowances and losses at the end of the tax relief period shall be available for deduction in the post tax relief period, subject to the provisions of the ITA. Dividends declared from the exempt profits of the pioneer trade are also tax exempt in the hand of the shareholders, except for dividends declared on any preferential shares. Where the...
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