NON-PROFIT TRADE ASSOCIATIONS

Mr Tay Beng Chuan asked the Minister for Finance whether, in the interest of inculcating a civic society in Singapore, his Ministry will consider exempting non-profit trade associations and other community organisations from corporate income tax, since any surplus accrued from the activities of these organisations is ploughed back into the development of long-term projects for the benefit of the community at large.

Dr Richard Hu Tsu Tau: Currently, non-profit organisations which engage in charitable activities can already be exempt from tax. Such charitable activities include the advancement of education, relief from poverty and distress, and relief from sickness.

Trade associations are traditionally set up to promote or safeguard the business of its members and benefit only a defined group of persons and not the community at large. Nevertheless, a trade association can be exempted from tax if more than 50% of its receipts are received from its members in the form of entrance fees and subscriptions. Tax is only imposed on those trade associations which receive income primarily from non-members.

If a trade association wishes to undertake projects specifically for the benefit of the community as a whole, it would be best for the association to set up a separate non-profit organisation for the charitable activity.