Pioneer Incentive – Revised e-Tax Guide on Tax Treatment of Gains and Losses from a Separate Trade


On 27 August 2014, IRAS published the second edition of the e-Tax Guide on Tax Treatment of Gains and Losses from the separate trade carried on by a pioneer enterprise or a pioneer service company.

The revision has been made to reflect the re-numbering of the sections in the Economic Expansion Incentive (Relief from Income Tax) Act.  At the same time, the following requirements have been removed:

a.    Certification from auditor or tax agent that expenses have been properly charged or allocated between the pioneer trade and separate trade; and

b.   Confirmation from auditor or tax agent that the loss from separate trade was not incurred for the purpose of obtaining a tax advantage in following  circumstances:

(a) where the loss incurred was due to depressed sale prices arising
from recession, poor market conditions, exceptionally strong
competition and substandard products;

(b) where the extent of the loss is reasonable, and :

(i) direct expenses have been properly charged to both the
pioneer and separate trades; and

(ii) appropriate and reasonable bases are used in apportioning
indirect expenses between the pioneer and separate trades;

(c) where the separate trade was already in a loss position before the
commencement of the pioneer trade.If you have any questions regarding the above, please contact us at support@whm-consulting.com.

 

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