1. Mr Speaker, I beg to move, “That the Bill be now read a Second time.”

2. The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2020 puts into legal effect amendments arising from the regular review of our tax incentives, as well as a change introduced in Budget 2018.

3. Let me elaborate on the three key legislative changes contained in the Bill.

Clarifying the Framework for the Transfer of the Pioneer Industry Award, Pioneer Service Award, or Development and Expansion Award between Companies

4. The first change relates to the transfer of awards between companies.

5. The Pioneer Industry award and Pioneer Service award are granted to companies to encourage them to locate “pioneering” products or activities that introduce advanced technology, skills or know-how to Singapore. Meanwhile the Development and Expansion award encourages companies to grow capabilities and conduct new or expanded activities in Singapore.

6. As companies amalgamate, merge or undergo corporate restructuring, there may be a need to transfer their existing awards to the new entity. Clause 4 of this Bill introduces a new Part IV to the Act for the transfer of the Pioneer Industry award, Pioneer Service award and Development and Expansion award between companies. Under this framework, such award granted to the transferee will be treated as a continuation of the award granted to the transferor.

Extending the Investment Allowance scheme to Corporate Partnerships

7. The second change extends the Investment Allowance scheme, or IA for short, to corporate partnerships. A corporate partnership refers to a partnership, limited liability partnership or limited partnership comprising solely of partners that are companies.

8. The IA scheme encourages companies to carry out projects with economic, technical or other merits, by providing an allowance granted at a specified percentage of qualifying fixed capital expenditure incurred on an approved project. However, the IA currently can only be awarded to a company, but not a corporate partnership.

9. We know that companies increasingly co-own assets with other companies, including through corporate partnerships. There are sound business reasons for having these partnership arrangements, such as co-sharing of equipment to reduce expenses and to optimise usage.

10. To better cater to the evolving business environment, Clauses 6 and 7 of the Bill amend section 66 and introduce a new section 66A of the Act, respectively, to extend the IA scheme to include corporate partnerships. Details to enable implementation will be prescribed in subsidiary legislation.

Extending the IA Scheme to include Qualifying Investment in Submarine Cable Systems Landing in Singapore

11. Lastly, to encourage companies to invest in submarine cable systems landing in Singapore, the Minister for Finance announced in Budget 2018 that the IA for productive equipment would be extended to include capital expenditure incurred on newly-constructed submarine cable systems landing in Singapore approved by the Minister. This will help strengthen Singapore’s position as a leading digital connectivity node.

12. Clauses 6 and 8 of the Bill amend sections 66 and 67 of the Act, respectively, to give legislative effect to this inclusion.

13. Mr Speaker, I beg to move.