Statute Details
- Title: Income Tax (Exemption from Section 19B(10A)) Order 2018
- Act Code: ITA1947-S707-2018
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Authorising Power: Section 19B(10B) of the Income Tax Act
- Enacting Formula (summary): Made by the Minister for Finance under section 19B(10B)
- Citation: No. S 707
- Legislation Number: SL 707/2018
- Deemed Commencement: 1 October 2018
- Made Date: 22 October 2018
- Status: Current version as at 27 Mar 2026
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Exemption)
- Beneficiary (named): Keysight Technologies Singapore (Sales) Pte. Ltd.
- Relevant Transaction (named): Acquisition of intellectual property rights from Keysight Technologies Singapore (Holdings) Pte. Ltd.
What Is This Legislation About?
The Income Tax (Exemption from Section 19B(10A)) Order 2018 is a targeted tax exemption order made under Singapore’s Income Tax Act. In plain language, it grants a specific company an exemption from a particular restriction or disallowance rule found in section 19B(10A) of the Income Tax Act, but only for a defined transaction and subject to specified conditions.
Section 19B of the Income Tax Act generally deals with deductions and allowances relating to certain intangible or capital expenditure items, including rules that may limit or deny deductions in particular circumstances. The 2018 Order does not rewrite the Income Tax Act. Instead, it operates as a “carve-out” for a named taxpayer, allowing it to be treated differently for a particular category of capital expenditure.
Practically, this Order is best understood as a bespoke administrative/legal instrument used to manage tax outcomes for corporate groups. It identifies (i) the taxpayer that benefits, (ii) the type of expenditure (capital expenditure on acquiring intellectual property rights), (iii) the relevant counterparty (another group entity), (iv) the timing (expenditure incurred on 1 October 2018), and (v) the conditions (set out in a letter dated 1 October 2018). For practitioners, the key is that the exemption is narrow and transaction-specific rather than a broad policy change.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal identification and effective date of the Order. The Order is cited as the “Income Tax (Exemption from Section 19B(10A)) Order 2018” and is deemed to have come into operation on 1 October 2018. The “deemed” commencement is significant: it means the exemption is intended to apply from that date even though the Order was made later (on 22 October 2018). For tax planning and compliance, this affects the relevant tax period and the timing of the expenditure.
Section 2: Exemption is the operative provision. Subsection (1) states that Keysight Technologies Singapore (Sales) Pte. Ltd. is exempt from section 19B(10A) of the Income Tax Act in respect of capital expenditure incurred by it on 1 October 2018. The exemption applies to capital expenditure incurred for acquiring, for use in its trade or business, intellectual property rights from Keysight Technologies Singapore (Holdings) Pte. Ltd.
Several elements in subsection (1) are legally important and should be read closely:
- Named taxpayer only: The exemption is not general; it applies to the specific company named.
- Specific tax rule being exempted: The exemption is from section 19B(10A)—not from all of section 19B, and not from other unrelated provisions of the Income Tax Act.
- Type of expenditure: It is limited to capital expenditure, not revenue expenditure.
- Timing: The expenditure must be incurred on 1 October 2018. If expenditure is incurred on a different date, the exemption may not apply.
- Use requirement: The intellectual property rights must be acquired for use in the taxpayer’s trade or business.
- Counterparty: The intellectual property rights must be acquired from the named holding company.
Section 2(2): Conditions adds a further layer of compliance. The exemption is subject to the terms and conditions specified in a letter dated 1 October 2018 addressed to Keysight Technologies Singapore (Sales) Pte. Ltd. This means the exemption is not unconditional. Even if the transaction matches the description in section 2(1), the taxpayer must satisfy the conditions in the referenced letter. For practitioners, this is a critical due diligence point: the letter’s terms may include reporting obligations, documentation requirements, restrictions on subsequent dealings, or other compliance conditions.
Because the Order itself does not reproduce the letter’s contents, lawyers should treat the letter as an essential part of the legal framework. In practice, the letter may be where the tax authority sets out how the exemption is to be applied, what evidence must be retained, and what happens if conditions are breached. Failure to comply with conditions could potentially jeopardise the exemption and expose the taxpayer to tax adjustments, penalties, or disallowance of deductions.
How Is This Legislation Structured?
This Order is structured in a very concise manner, reflecting its function as a targeted exemption instrument rather than a comprehensive tax code. It contains:
- Section 1 (Citation and commencement): Establishes the name of the Order and the deemed effective date (1 October 2018).
- Section 2 (Exemption): Sets out the exemption granted, including the named taxpayer, the scope of capital expenditure, the intellectual property rights acquisition, the relevant date, and the condition that the exemption is subject to a specified letter.
There are no additional Parts or schedules in the extract provided. The legal “work” is done entirely by the two sections, with the conditions being externalised to the referenced letter.
Who Does This Legislation Apply To?
The Order applies to Keysight Technologies Singapore (Sales) Pte. Ltd. It is a person-specific exemption: only the named taxpayer benefits. Other companies, even within the same corporate group, would not automatically qualify unless a separate exemption order (or a different legal basis) applies to them.
In terms of transaction scope, the exemption is limited to capital expenditure incurred by the named taxpayer on 1 October 2018 for acquiring intellectual property rights from Keysight Technologies Singapore (Holdings) Pte. Ltd. Therefore, the exemption is both taxpayer-specific and transaction-specific. If the taxpayer incurs similar expenditure on a different date, acquires different intellectual property rights, acquires from a different counterparty, or uses the rights outside the scope of its trade or business, the exemption may not apply.
Why Is This Legislation Important?
This Order is important because it demonstrates how Singapore’s tax system can accommodate specific corporate transactions through targeted exemptions under the Income Tax Act. For practitioners, the key value is not merely that an exemption exists, but that it is precisely bounded—by taxpayer, date, expenditure type, counterparty, and conditions.
From an enforcement and compliance perspective, the most practical risk is that taxpayers may assume that a general rule in section 19B(10A) is automatically relaxed. This Order shows the opposite: exemptions are granted only when the statutory requirements (including the conditions in the letter) are met. If the taxpayer fails to satisfy the conditions in the letter dated 1 October 2018, the exemption could be challenged, leading to tax reassessments or disallowance of the relevant deductions.
For tax structuring and documentation, the Order also highlights the importance of aligning transaction mechanics with the legal description. Lawyers advising on intellectual property transfers within a group should ensure that:
- the expenditure is properly characterised as capital expenditure (as opposed to revenue);
- the expenditure is incurred on the correct date (1 October 2018);
- the intellectual property rights are acquired for use in the trade or business; and
- the acquisition is from the specified counterparty (the named holdings entity).
Finally, the deemed commencement date means the exemption’s application is intended to reach back to 1 October 2018. Practitioners should consider how this interacts with tax filing positions, accounting records, and any contemporaneous documentation prepared around that date.
Related Legislation
- Income Tax Act (Chapter 134) — in particular:
- Section 19B(10A) (the provision from which exemption is granted)
- Section 19B(10B) (the authorising power to make exemption orders)
- Income Tax Act — Timeline / Legislation history (for locating the correct version as at relevant dates)
Source Documents
This article provides an overview of the Income Tax (Exemption from Section 19B(10A)) Order 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.