REASONS FOR SERVING INCOME TAX NOTICES ON BUSINESS VISITORS, AND GOVERNMENT'S POLICY

Mr John Ede asked the Financial Secretary the reasons why business visitors to Singapore are served with income tax assessment notices under section 12 (4) of the Income Tax Ordinance (Cap. 166), instead of being exempted under section 13 (3) ; whether such notices are served on members of official trade missions to this country; and whether he will state the Government policy on this whole matter.

Mr Hart: Sir, business visitors to Singapore who exercise their employment in the colony are served with income tax assessment notices because the law prescribes that this shall be done. Section 10 (1) of the Ordinance prescribes that tax shall be payable on income derived from the colony in respect of gains or profits from any employment. Section 10 (2) defines gains or profits from any employment. Section 12 (4) prescribes that gains or profits from any employment exercised in the colony shall be deemed to be derived from the colony whether the gains or profits from such employment are received in the colony or not. They cannot be exempted under section 13 (3) for the simple reason that this particular section refers to income arising from sources outside the colony and received in the colony by temporary visitors, and not to the exemption of these visitors from tax.

Members of official trade missions a reserved with notices if the Comptroller is satisfied on enquiry that they are exercising their employment during their visit to Singapore.

The policy in this matter has recently been under review. It has been noted that other countries with which Singapore has trade relations are perhaps more liberal in their treatment of visiting businessmen. Some countries allow a period which may in some cases amount to a month or two to lapse before such persons become liable to tax on the gains or profits of employment exercised in these countries. It is generally agreed that, in the particular circumstances of Singapore as a centre of communications and trade, it would be desirable to liberalise existing policy to a certain extent. It has therefore been decided to submit the matter to the Malayan Board of Income Tax for consideration under section 3 (5) of the Ordinance. In the meantime, as a temporary measure which will, I hope, have the approval of hon. Members, administrative instructions have been given with effect from 1st August that visiting businessmen who exercise their employment in Singapore will not be served with notices of assessment until they stay in the colony for more than one month.