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Application for and issue of certificate to development and expansion company

Economic Expansion Incentives (Relief from Income Tax) Act 1967

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—(1) Any company engaged in, or which desires to engage in, any qualifying activity may apply in the prescribed form to the Minister for approval as a development and expansion company for that qualifying activity.(2) A company may make an application under subsection (1) to be approved as a development and expansion company for more than one qualifying activity which it is engaged in or desires to engage in.(3) The Minister may, if the Minister considers it expedient in the public interest to do so, approve the company as a development and expansion company for the qualifying activity and issue to that company a certificate subject to such conditions as the Minister may impose.(4) No company may be approved as a development and expansion company on or after 1 January 2024.(5) Every certificate issued to a development and expansion company must be in respect of a qualifying activity and must specify —(a)the qualifying activity;(b)a date as the commencement day of the qualifying activity; and(c)the concessionary rate of tax to be levied for that qualifying activity for the purposes of this Part.(6) Where the Minister approves a company as a development and expansion company for 2 or more qualifying activities, the Minister may issue a single certificate in respect of those qualifying activities if —(a)the tax relief periods of the development and expansion company for all the qualifying activities, as determined by the Minister under section 22, expire on the same day; and(b)the Minister is satisfied that the development and expansion company is engaged in or desires to engage in all the qualifying activities as part of the same project.(7) The Minister may, upon the application of any development and expansion company, amend a certificate issued to the company —(a)by substituting for the commencement day of a qualifying activity specified in the certificate under subsection (5)(b) such earlier or later date as the Minister thinks fit, and upon such substitution the provisions of this Act have effect as if the date so substituted were the company’s commencement day of that qualifying activity; (b)by removing any qualifying activity from the certificate with effect from a date determined by the Minister; or(c)by adding to the certificate any qualifying activity and a date as its commencement day, if —(i)the tax relief period for the qualifying activity expires on the same day as the tax relief period or periods for the other qualifying activity or activities already specified in the certificate; and(ii)the Minister is satisfied that the development and expansion company is engaged in or desires to engage in the qualifying activity and the other qualifying activity or activities already specified in the certificate as part of the same project.(8) Without affecting section 61, the Minister may, on the Minister’s own initiative, remove any qualifying activity from a certificate with effect from a date determined by the Minister, if the Minister is satisfied that the development and expansion company has contravened —(a)any provision of this Act; or(b)any condition of its approval as a development and expansion company.(9) Despite section 43 of the Income Tax Act 1947, tax at the applicable concessionary rate in subsections (10), (11), (13) and (15) (whichever is applicable) is levied and must be paid for each year of assessment —(a)upon the expansion income derived by a development and expansion company from the qualifying activity specified in its certificate during its tax relief period for that activity; or(b)if the certificate specifies 2 or more qualifying activities, upon the expansion income derived by it from all of those qualifying activities during its respective tax relief periods for those activities.(10) In subsection (9), the concessionary rate is —(a)in the case of a development and expansion company approved as such before 19 April 2016, a concessionary rate of not less than 5%, as the Minister may specify in the certificate; or(b)in any other case, either 5% or 10% as the Minister may specify in the certificate.(11) The Minister may, on the Minister’s own initiative or on the application of a development and expansion company, amend the company’s certificate by substituting the concessionary rate of tax specified in the certificate in accordance with subsection (10), with a concessionary rate of either 5% or 10%, and in that event the concessionary rate is the rate as substituted.(12) Subsection (11) applies whether the development and expansion company was approved as such before, on or after 4 May 2018.(13) Subject to subsection (14), in the case of a development and expansion company that is approved as such on or after 29 February 2012, or that has been granted on or after that date an extension of its tax relief period or periods for any qualifying activity or activities, the concessionary rate of tax applicable to the expansion income derived by it —(a)from the qualifying activity specified in the company’s certificate during any part of the company’s tax relief period for that activity mentioned in subsection (17); or(b)if the certificate specifies 2 or more qualifying activities, from all of those activities during any part of the company’s respective tax relief periods for those activities mentioned in subsection (17),at any time on or after the date of the approval or during the extension period (as the case may be), is the rate specified by the Minister to the company, which must not be less than —where Ais the concessionary rate of tax applicable to the company’s expansion income derived by it from that activity or those activities (as the case may be) immediately before the commencement of that part of the tax relief period or those tax relief periods.(14) The Minister may, on the Minister’s own initiative or on the application of a development and expansion company mentioned in subsection (13), amend the company’s certificate for any qualifying activity by substituting the rate of tax specified in the certificate in accordance with that subsection (called in this section the initial rate) for expansion income derived from that activity during a part of the tax relief period, with a rate of tax that complies with subsection (16) (called in this section the substituted rate).(15) Where subsection (14) applies, then —(a)if the date of the substitution is the first day of that part of the tax relief period, the concessionary rate of tax that applies to the expansion income derived from that activity during that part of the tax relief period is the substituted rate; and(b)if the date of the substitution is not the first day of that part of the tax relief period —(i)the concessionary rate of tax that applies to the expansion income derived from that activity during the period beginning on the first day of that part of the tax relief period and ending on the day immediately before the date of the substitution is the initial rate; and(ii)the concessionary rate of tax that applies to the expansion income derived from that activity during the balance of that part of the tax relief period is the substituted rate.(16) The substituted rate for a part of the tax relief period mentioned in subsection (14) is a rate computed by the formula A + B, where —(a)A is the difference between —(i)the sum arrived at by totalling the concessionary rate of tax that applies to the company’s expansion income from that activity on the first day of each part of the tax relief period up to and including that part of the tax relief period for that activity, or would have so applied had it not been substituted under subsection (11) or (14) (as the case may be); and(ii)the sum arrived at by totalling the concessionary rate of tax that applies to the company’s expansion income from that activity on the day immediately before the first day of each part of the tax relief period up to and including that part of the tax relief period for that activity; and(b)B is either 5% or 10%, as determined by the Minister.(17) In subsections (13), (14), (15) and (16), the parts of a tax relief period for a qualifying activity are —(a)the beginning of the 11th year of the tax relief period to the end of the 15th year of, or the end of, the tax relief period, whichever is earlier;(b)the beginning of the 16th year of the tax relief period to the end of the 20th year of, or the end of, the tax relief period, whichever is earlier;(c)the beginning of the 21st year of the tax relief period to the end of the 30th year of, or the end of, the tax relief period, whichever is earlier; and(d)the beginning of the 31st year of the tax relief period to the end of the 40th year of, or the end of, the tax relief period, whichever is earlier.(18) The expansion income is the income from such qualifying activity or activities (called in this section and section 25 the qualifying income) to which the certificate issued under this section relates that exceeds the average corresponding income.(19) The average corresponding income referred to in subsection (18) is to be determined by taking one‑third of the total of the corresponding qualifying income for the 3 years immediately preceding the commencement day specified in the certificate issued under this section from that qualifying activity or those qualifying activities.(20) Where a development and expansion company which has been approved as such at any time before 29 February 2012, and has been granted a tax relief period of at least 10 years, is granted at any time before that date an extension or a further extension of its tax relief period under section 22(1)(b) or (2), the Minister must compute the average corresponding income for each such extension or further extension in accordance with subsection (21).(21) The average corresponding income for each extension or further extension referred to in subsection (20) is to be determined by taking one-third of the total of the corresponding qualifying income for the 3 years immediately preceding the date of that extension or further extension of its tax relief period, as the case may be.(22) Despite subsections (19), (20) and (21), the Minister may, if he or she thinks fit, specify any amount to be the average corresponding income in substitution of the amount determined under those subsections.[19J

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