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As is currently the case, tax exempt dividends on a two-tier basis may be paid
out of income exempt from tax through a RA deduction from statutory income. There
are no proposed changes to existing legislation in this respect.
Where it appears to the Director General that any income of the relevant company
exempted or any dividend exempted in the hands of a shareholder ought not to have
been exempted, he may at any time within 6 years after the expiration of the year
of assessment for which the exemption was given make such assessments or additional
assessments to counteract any benefit obtained from the exemption, or direct the
relevant company to debit the exempt account maintained with such amount as the
circumstances require e.g. from 1.1.99 to clawback RA granted in respect of assets
disposed of within 2 years of acquisition date.
As is currently the case, RA is not applicable to a company :-
a. for the period during which the company :-
- has been granted pioneer status under the Promotion of Investments Act 1986 in
respect of any promoted activity or promoted product and which is applying or intends
to apply for the grant of a pioneer certificate; or
- has been granted pioneer certificate under the Promotion of Investments Act 1986
in respect of any promoted activity or promoted product and whose tax relief period
has not ended or ceased.
b. for the period prescribed for investment tax allowance for which the company
has been granted approval;
c. deleted (abatement of adjusted income incentives);
d. for the period during which that company, notwithstanding the repeal of the
Investment Incentives Act 1968 :-
- has been given approval under Section 5, 12A or 12B of that Act and whose tax
relief period has not ended; or
- has been given approval under Section 26 of that Act and incurs capital expenditure
which qualifies for investment tax credit.
e. for the period prescribed under paragraph (2)(b) of Section 31E of the Promotion
of Investments Act 1986 in respect of a manufacturing activity or manufactured product
for which the company has been granted approval under Section 31C of that Act.
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