Income Tax Treatment on Public-Private Partnership Arrangements

On 27 December 2013, IRAS issued the second edition of the E-tax Guide on “Income Tax: Tax Treatment of Public-Private Partnership Arrangements”

The main revision is made to paragraphs 7.14 and 7.15 to clarify the income tax treatment for PPP arrangements involving a composite service of design, construction, operation and maintenance, which is accounted for under the intangible asset model.  Updates have also been made to Annex B to include scenario 3B and to Annex C on the list of approved statutory boards.

Under the intangible asset model, where the PPP operator recognises an  “intangible asset” (representing the operator’s accumulated right to be paid for providing construction services during the construction phase of the PPP project) for accounting purposes, he will be allowed deduction for the expenses relating to the “amortisation”
of that intangible asset under Section 14V of the Income Tax Act. This is to ensure that the construction revenue that was brought to tax during the construction phase of the project is not taxed again during the operation phase of the project.
The tax treatment outlined from paragraphs 7.10 to 7.14 would cover most PPP projects in Singapore that fall within this category. However, in certain less typical PPP arrangements, the accounting characterisation alone may not sufficiently reflect the scope of the operator’s trade for tax purposes. It may therefore be necessary for the CIT to examine the specific terms surrounding the arrangements to determine the appropriate
tax treatment. One such situation is where the PPP operator receives grants (which can be in lieu of, or in addition to unitary payments) from the public authority for providing services. A PPP operator in such a case who wishes to confirm the applicable tax treatment for its PPP arrangement may write to request a clarification/ tax ruling from CIT.

If you have any questions regarding the above, please contact me at

Be Well!


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