INCOME TAX ORDINANCE (Exemption)

The Minister for Finance (Mr Lim Kim San): Mr Speaker, Sir, I beg to move,

That this Assembly resolves that the resolution, passed on 20th November, 1951, by the Legislative Council of the Colony of Singapore under the provisions of the Income Tax Ordinance, 1947 (No. 39 of 1947) to exempt any person resident in Italy and carrying on the business of shipowner or charterer otherwise than through an establishment in Singapore from all the provisions of the Income Tax Ordinance, 1947, which relate to gains or profits from such business, be rescinded with effect from the 1st day of January, 1966.

Sir, until it was amended in 1964, the Singapore Income Tax Ordinance contained a provision in section 13 sub-section (1), paragraph (p) to exempt from tax the gains or profits from the business of shipowner or charterer carried on by a person not resident in Singapore subject to provisions which I will deal with later.

In February 1951, Singapore was asked by the British Colonial Office to agree that exemption be granted under that section to Italian shipowners whose vessels called regularly at the port of Singapore, provided the Italian Government, for its part, agreed to exempt any British and Singapore shipping calling at Italian ports where such shipping did not maintain an organisation in Italy. There was, however, a proviso that an equivalent exemption from tax must be granted by the country under reference to persons resident in Singapore or the United Kingdom. As exemption from Italian income tax conferred on foreign shipowners by Italian Income Tax law was limited to such shipowners as did not possess an establishment in Italy, whereas the Singapore Ordinance contained no such limitation, the proviso to section 13 (1) (p) was not fulfilled, and therefore that section should not properly be construed so as to exempt non-resident Italian shipowners. Since it was considered anomalous that British shipping benefitted from the exemption under Italian Income Tax law, while Italian shipowners were not exempt from income tax in the then Colony of Singapore, the then Legislative Council was asked to approve a resolution that any person resident in Italy and carrying on the business of a shipowner or charterer otherwise than through an establishment in Singapore shall be exempt from all the provisions of the income Tax Ordinance, 1947, in regard to the gains or profits from his business. The Income Tax Ordinance, as amended during Malaysia, now provides relief from tax on shipping only where such relief has been secured by a double taxation agreement. As the previous resolution was passed primarily to accord reciprocal income tax exemption between British and Italian shipowners during the colonial era, the resolution has become an anomaly when the law was changed during Malaysia, and therefore should be rescinded and replaced by a double taxation arrangement between the Singapore and Italian Governments, it follows that Italian non-resident shipowners are placed in an identical position with all other foreign countries which do not have a double taxation agreement with Singapore.

Sir, I beg to move.

Question put, and agreed to.

Resolved,

That this Assembly resolves that the resolution, passed on 20th November, 1951, by the Legislative Council of the Colony of Singapore under the provisions of the Income Tax Ordinance, 1947 (No.39 of 1947) to exempt any person resident in Italy and carrying on the business of shipowner or charterer otherwise than through and establishment in Singapore from all the provisions of the Income Tax Ordinance, 1947, which relate to gains or profits from such business, be rescinded with effect from the 1st day of January, 1966.