Statute Details
- Title: Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 2) Notification 2009
- Act Code: ITA1947-S410-2009
- Type: Subsidiary Legislation (sl)
- Authorising Act: Income Tax Act (Cap. 134), specifically section 13(4)
- Enacting formula / maker: Minister for Finance (made by notification)
- Commencement: Deemed to have come into operation on 1 January 2009
- Citation: May be cited as the “Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 2) Notification 2009”
- Key operative provision: Section 3 (Exemption)
- Definitions anchor: Section 2 (definitions, including cross-references to section 13(16) of the Income Tax Act)
- Specified period: 1 January 2009 to 31 December 2012 (both inclusive)
- Notes / issuer: Notes issued by Bridgestone Finance Europe B.V. through its Singapore branch under a specified Euro Medium Term Note Programme
- Most recent status in extract: “Current version as at 27 Mar 2026” (with amendment history including S 294/2013 effective 1 Jan 2013)
What Is This Legislation About?
This Notification is a targeted tax incentive under Singapore’s Income Tax Act framework. In plain terms, it provides a tax exemption for certain types of payments—specifically interest and other specified payments—that are made by a particular non-resident issuer, Bridgestone Finance Europe B.V., in relation to certain debt notes issued during a defined window.
The incentive is designed to support economic and technological development by encouraging the issuance and distribution of debt instruments that can facilitate funding and capital market activity. However, the exemption is not automatic. It is conditional on meeting a set of eligibility criteria and anti-abuse safeguards intended to prevent the exemption from being used to shelter Singapore-linked arrangements or related-party structures.
Practically, the Notification matters most to (i) non-resident noteholders receiving payments from the issuer, (ii) dealers and distribution participants, and (iii) advisers structuring note issuance and ensuring compliance with Singapore tax requirements and reporting obligations.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the citation and states that the Notification is deemed to have come into operation on 1 January 2009. This is important for determining whether notes fall within the “specified period” and whether payments are eligible for exemption.
2. Definitions (Section 2)
Section 2 defines the terms used in the Notification. Several definitions are cross-referenced to the Income Tax Act—particularly terms such as break cost, debt securities, financial sector incentive (bond market) company, prepayment fee, qualifying debt securities, redemption premium, and related party, which take their meanings from section 13(16) of the Income Tax Act.
Other definitions are specific to this Notification, including:
- “funds from Singapore operations”: funds and profits of a person’s operations through a permanent establishment in Singapore.
- “notes”: notes issued by Bridgestone Finance Europe B.V. through its Singapore branch under the defined programme.
- “programme”: the Euro Medium Term Note Programme first entered into on 5 November 1991, with specified increases in size (notably to US$800m on 27 June 2007 and to US$1.2b on 24 June 2009).
- “specified income”: any interest, prepayment fee, redemption premium, or break cost payable in respect of the notes.
- “specified period”: 1 January 2009 to 31 December 2012.
3. The exemption (Section 3(1))
The core incentive is in Section 3(1). Subject to conditions in Section 3(2), there is an exemption from tax for specified income payable by Bridgestone Finance Europe B.V. on or before 31 December 2012. The exemption applies to specified income payable to a noteholder who is not resident in Singapore, but only where the noteholder satisfies one of two Singapore-connection tests:
- Permanent establishment test with non-Singapore funding: the noteholder carries on any operation in Singapore through a permanent establishment in Singapore, but the funds used to acquire the notes are not obtained from that operation; or
- No permanent establishment test: the noteholder does not have any permanent establishment in Singapore.
This structure is significant: it targets non-resident investors while preventing the exemption from being used where Singapore-based operations fund the acquisition of the notes.
4. Conditions and anti-abuse safeguards (Section 3(2))
Section 3(2) is the heart of the Notification for practitioners. It sets out conditions that must be satisfied for the exemption to apply. Key conditions include:
(a) Dealer/distribution requirement (Section 3(2)(a))
For at least 70% of the total notes issued in every calendar year of the specified period, the dealers must be either: (i) a financial institution in Singapore whose employees based in Singapore have a leading and substantial role in distribution; or (ii) a financial sector incentive (bond market) company. This is a distribution-channel condition designed to ensure meaningful Singapore participation in the market activity.
(b) Primary launch and related-party holding/funding restrictions (Section 3(2)(b) and (c))
The Notification includes a nuanced set of rules depending on how many persons receive the notes at primary launch and how much of the issuance is beneficially held or funded by related parties of Bridgestone Finance Europe B.V.
- General restriction (3(2)(b)): unless otherwise approved by the Minister (or appointed person), the exemption does not apply if, during the primary launch of notes issued during the specified period, the notes are issued to fewer than 4 persons and 50% or more are beneficially held or funded (directly or indirectly) by related parties.
- Conditional exemption (3(2)(c)): where either (i) notes are issued to 4+ persons but 50%+ are related-party held/funded, or (ii) notes are issued to fewer than 4 persons but later conditions apply, then the exemption applies only if:
- the noteholder is not a related party; and
- the funds used by the noteholder to acquire the notes are not obtained directly or indirectly from any related party.
These provisions are designed to prevent the exemption being used for closely held related-party funding structures that could otherwise replicate Singapore tax outcomes.
(c) Mandatory offering document statement (Section 3(2)(d))
Bridgestone Finance Europe B.V. must include in all offering documents a statement that, where specified income is derived from notes issued during the specified period by a person who is not resident in Singapore and carries on operations in Singapore through a permanent establishment, the exemption shall not apply if such person acquires the notes using funds from Singapore operations.
This is a compliance and disclosure requirement. It also supports enforceability by ensuring investors are informed of the conditions.
(d) “Qualifying debt securities” and investor restriction requirements (Section 3(2)(e))
Where notes are issued during the specified period to a non-resident person for the purpose of enabling that non-resident person to issue debt securities to investors, the exemption applies only if the relevant securities: (i) are qualifying debt securities; (ii) contain restrictions against acquisition by any investor who is a resident of, or has a permanent establishment in, Singapore; and (iii) are not acquired by any investor using funds from the Singapore operations of the investor.
This is particularly relevant for structured issuance or intermediary arrangements. It ensures that the exemption does not effectively benefit Singapore investors through back-to-back or conduit structures.
(e) Reporting to the Comptroller (Section 3(2)(f))
Finally, Bridgestone Finance Europe B.V. (or another person as the Comptroller may direct) must furnish to the Comptroller a return on the notes within the period specified by the Comptroller, including such particulars as required. This reporting obligation is essential for tax administration and verification of eligibility.
How Is This Legislation Structured?
The Notification is structured in a straightforward manner:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions, including cross-references to the Income Tax Act and bespoke definitions for the programme, notes, specified income, and the specified period.
- Section 3 contains the substantive exemption and the conditions governing when the exemption applies, including eligibility of noteholders, distribution requirements, related-party restrictions, offering document statements, qualifying debt securities conditions, and reporting obligations.
There are no “Parts” indicated in the extract, and the operative content is concentrated in Section 3.
Who Does This Legislation Apply To?
The exemption applies to specified income payable by Bridgestone Finance Europe B.V. on or before 31 December 2012 in respect of notes issued during the specified period (1 January 2009 to 31 December 2012). The recipient must be a noteholder who is not resident in Singapore.
In addition, the exemption is conditional on how the notes are distributed and held. It therefore affects:
- Non-resident noteholders (including those with a Singapore permanent establishment, subject to the “funds from Singapore operations” restriction);
- Dealers and distributors (because of the 70% dealer eligibility requirement);
- Bridgestone Finance Europe B.V. and any person directed by the Comptroller (because of offering document and reporting obligations); and
- Intermediaries in arrangements where non-resident persons issue further debt securities to investors (because of the qualifying debt securities and investor restriction conditions).
Why Is This Legislation Important?
This Notification is important because it provides a specific, time-bound tax exemption for non-resident investors receiving interest and certain other payments from a defined issuer and programme. For practitioners, it is a useful example of how Singapore structures tax incentives: the exemption is available, but only where the transaction meets both economic policy objectives and anti-avoidance controls.
From a compliance perspective, the conditions in Section 3(2) create practical workstreams for legal and tax teams. Advisers must assess:
- whether the noteholder is non-resident and whether it has a Singapore permanent establishment;
- whether the noteholder’s acquisition funds are “funds from Singapore operations”;
- whether dealer participation meets the 70% threshold each calendar year;
- whether related-party holding/funding thresholds trigger the more restrictive conditions; and
- whether offering documents and any downstream securities contain the required statements and restrictions.
Enforcement is supported by the reporting obligation to the Comptroller. In practice, failure to meet conditions (or to document compliance through offering materials and returns) can jeopardise the exemption and lead to tax exposure.
Related Legislation
- Income Tax Act (Cap. 134) — in particular section 13(4) (authorising power for the Minister to grant exemptions) and section 13(16) (definitions cross-referenced by this Notification)
- Income Tax Act — “Timeline” (as referenced in the extract for version control and amendments)
Source Documents
This article provides an overview of the Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 2) Notification 2009 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.