INCOME TAX ORDINANCE (CHAPTER 166)

3.20 p.m.

The Financial Secretary (Mr T. M. Hart): Mr Speaker, Sir, I beg to move,

That this Assembly, pursuant to subsection (1) of section 106 of the Income Tax Ordinance (Chapter 166), resolves that the Government of the State of Brunei be added to the First Schedule to the said Ordinance.

Sir, the Government of Brunei has invested sums in certain Singapore Municipal stocks and has now requested that the interest on its holdings should be exempt from Singapore income tax. The general position of Governments under the Crown is that the income of one such Government arising in the territory of another is exempt from tax imposed by the second Government unless the income is expressly charged to tax in the taxation code of the second Government. For example, in the absence of any specific imposition in the United Kingdom law, funds of this Government invested in the United Kingdom are free from United Kingdom income tax. There is some doubt in the minds of the law officers whether this immunity from tax which does not appear to rest on statute extends to territories under Her Majesty's protection; for example, the protected state of Brunei. In the circumstances, it is usual to exempt such protected territories specifically from tax. This can be done by including the territory in question in the First Schedule of the Ordinance by resolution of the Assembly under section 106 of the Ordinance.

I need not stress, Sir, the material advantages of exempting investments of the Brunei Government in the Singapore Government or City Council stock from tax. Sir, I beg to move.

The Minister for Local Government, Lands and Housing (Inche Abdul Hamid Bin Haji Jumat): I second it.

Question put, and agreed to.

Resolved,

That this Assembly, pursuant to subsection (1) of section 106 of the Income Tax Ordinance (Chapter 166), resolves that the Government of the State of Brunei be added to the First Schedule to the said Ordinance.