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    Income Tax (Amendment) Act 2014

    Uploaded by

    Emjes Giano
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    © All Rights Reserved
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    INCOME TAX (AMENDMENT) ACT 2014 (NO. 7 OF 2014) INCOME TAX (AMENDMENT) ACT 2014 (NO. 7 OF 2014) PASSED by the National Parliament this twenty-eighth day of April 2014 (This printed impression has been carefully compared by me withthe Bill passed by Parliament and found by me tobe a true copy ofthe Bil) Dore aeasi Sang (tts) ‘lerk to National Parliament [ASSENTED 10 Her Majesty's name and on Her Majesty's Behalf hs 18 cay of May 2004 FO. Kate Sir Frank Ut Otagioro Kabui Governor-General Date of Commencement: see section 1 AN ACT TO AMEND THE INCOME TAX ACT (CAP. 123) IN ORDER TO INTRODUCE A NEW MINING TAX REGIME AND FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL THERETO. | ENACTED by the National Parliament of Solomon Islands ARRANGEMENT OF SECTIONS Short Title and Commencement ‘Amendment of Section 2 ‘Amendment of Section 3 ‘Amendment of Section 15, ‘Amendment of Setion 18 ‘Amendment of Setion 19 ‘Amendment of Section 20 ‘Amendment of Section 21 Insertion of new section 214, Insertion of ne section 107A, ‘Amendment of Section 109 Amendment of Third Schedule ‘Amendment of Fourth Schedule ‘Amendment of Sixth Schedule ‘Amendment of Nth Schedule INCOME TAX (AMENDMENT) ACT 2014 1. This Act may be cited asthe Income Tax (Amendment) Act 2014, and commences onthe 1* day of July 2014 2, The Income Tax Act (hereinafter referred to asthe ‘Act is amended in section 2 ~ rineip) patent (2) by inserting the following definitions in their proper alphabetical sequence ~ oon “approved infrastructure” has the meaning in section 36A ofthe Mines and Minerals Ack; “mineral licence” means a prospecting licence of ‘a mining lease or both issued pursuant to the Mines and Minerals Acts"; (©) by inserting after subsection (4) the following new subsection — “(5) Inthe event of any general provision in the Act being inconsistent orn confit. with a specific provision in the Fourth Schedule, the speific provision shall prevail” 3. Theprincipal Act is amended in section 3 — (2) by deleting paragraph (a) of subsection (1) and substituting the following — (a) gains or profits from — (any business, for whatever period lof time carried om ii) employment o © ii) any right granted to any other person for he use oF possession ‘of any property oF Gy) the transfer of any rights eating toa mining lease orto land t0 ‘hich a mining lease applies” in subsection (2) by deleting the word “oe” that appears after the semi-colon in paragraph (a) and inserting the word “and” by inserting aftr subsection (2) the folowing ew subsection ~ %() Income that is gain or profit feom the transfer oF any rigs desribed in subparagraph 3(1}ayy) is derived rom Solomon Islands where the lease applies to land located in Solomon Islands.” 4. The principal Act is amended by repealing section 15 and substituting the following section ~ Is, (1) Amapproved mining company that has incurred expenditure in thecourse of constructing approved inftstructure is entitled to wereit agains the income tax payable ina year equal (the expenditure incurred in that {year forthe constuction. 2) the credit available under subsection (1) exceeds the income tax payable inthe yea in which the expenses have been ineured, the ower ofthe excess andthe income tax payable Jn the following year is allowed as a credit ‘against the income tax payable in the following year. This credit can be eared forward indefinitely.” 5. The principal Act is amended in setion 182) as follows — ¢ @ 6 ¢ (2) by inserting in paragraph (mi after the words “section 36° the words “and ata rate oF not less than twenty percent"; a () by deleting paragraph (0) and substitating the following paragraph — 3) the amounts allocated in the year Aare authorised or required by the Mines And Minerals Act, The Environment Act 1998, ora relevant agreement; and Gi) irrevocable a place to ensure the funds will be | Available tothe Government of Solomon Islands to carryout the environmental rehabilitation, restoration or reclamation inthe event the approved mining ‘company does not apply the amounts as I require.”, and (©) inparagraph (p) by inserting before the word “operating” the following words “Subject Par I of the Fourth Schedule,”, 6. The prneipal Act is amended in section 19 as follows ~ sre (2) by repealing subsections (1) and (2) and substituting the following - Z ) “(1)lnthis setion, a “deductible toss" fora ‘year means the amount by whe deduetions allowod in the calculation of chargeable income subject to tax exceed amounts included in chargeable income under seetion 3 forthe year. (2) A person who has a dedutibe loss in respect ofa year may reduce chargeable income subject to tax by he amount of| the deductible loss inthe following year and for each ofthe subsequent four years to the extent the loss isnot used 10 reduce ‘chargeable income subjestto taxation in ‘por year by inserting after subsection (2) < new subsection (QA) and renumbering the existing subsection QAjas subsection “2B) (2A) Notwithstanding subsection (2), an approved ining company that has a deductible less in respect of 1 year may reduce chargeable income subject to tax by the amount of the deductible loss in the ollowing year and foreach ofthe subsequent six yearst the extent the loss is not used to reduce chargeable income subject to taxation in a prioe year” “The principal Act is amended in section 20 — c) by inserting alter paragraph (iin subseetion (2) the following new paragraphs = “G) expenditures that would otherwise be eductble under section 18, apat from interest ‘expenses allowed under parageagh 12A of the Fourth Schedule and managemert expenses subject to withbolding tax atthe evel se in paragraph (xiv) of the Sixth Schedule o the ‘extent thatthe otherwise deductible expenditures: ° 6 (are pad 10 related person not resident inthe Solomon Islands; and i) exceed five perent of the total of deductions allowed under this Act in the _year apart from operation ofthis Paragraph, (expenditure for rehabilitation, restoration ‘or reclamation a5 required by a mining licens the Mines and Minerals Act, te Environment ‘Act 1998, or relevant agreement, apart fom expenditure for which a dedoction i allowed ‘under paragraph 18(2Xo), or subparagraph 5(S) of the Pourth Schedule. () expenditure incured by an approved rining company on the construction of approved infrastructure wo the extent a eredit is allowable to the company under seetion 15; (©) by inserting @ new subsection as subsection (2A) ‘and renumbering the existing subsection (2A) as eB) “(2A) For the purpose of paragraph 2002), 8 related person is (2) person witha direct or indirect interest. in the approved mining company; or (©) any person in which a person deseribed Jn (a) has.a direct or indirect interest.” 8. The principal Act is amended in seetion 21 ~ (2) by deleting the figure "(1)" that appears in subsection (1) (©) by deleting subsection (2), (©) by deleting the marginal note of the section and inserting instead the following “Source of gains 10 ‘or profits from sales of produc's and produce feom Solomon Islands”, 9, Theprincipa Acts amended by inserting after section 21 a new section a follows ~ 40. The principal Act is amended by i 2IA. (1). This seetion applies where a person derives an amount or incurs ability for an mount in the course ofa transaction o arrangement this for any eeason not at arm's length, (2) Where an amount described in subsection {1 differs fom the amount tht would have been derived of incurred had the rangement or teansaotion been at arm's length, the Commissioner may deem the umount to be the amount that would have been derived or ineutred had the arrangement or transaction been at arm's length.” ting after section 107 new aseation 1O7A as follows ~ 107A. (1) The Commissioner may, by way of a Public ruling explain the Commissioner's interpretation of any provision ofthis Act @) The Commissioner may not collect from 8 person tax greater than that due under the provisions ofthis Actas interpreted by the Commissioner in a public ruling authorised by this section. () The Commissioner may not seek t0 impose any penalty on a perso for failure to pay tax exceeding that due under te provisions of this Actas interpreted by the Commissioner ina public ruling authorised by this section.” 4 Pai 11. Section 109 ofthe principal Act is amended by inserting afer svn, subsection (5) te following new svbseetions (6) Nothing in subsection (1) or subsection (3) shall prevent any officer employed in carrying out the provisions ofthis Aet from communieating to any office, being an employee ofthe Department of Prime “Minister and Cabinet or other Ministry forthe time being responsibie forthe reporting requirements under the EIT Standard Reguizemeots for E171 implementing counties, any information, being aggregate tax Information that does not directly reveal the identity of any taxpayer ad that — (the officers authorised by the Ministry to receive; and (ii) the Commissioner considers is not undesirable to disclose and is essential t0 enable the officer to cary out the duties conferred on the offer inorder to comply with the requirements for reporting and disclosure under EIT (1) Inthis section “EITY" means Extractive Industries ‘Transparency Initiative 12, The Third Schedule tothe principal Act is amended by deleting paragraph 36 13. The Founh Schedule to he principal Act is amended ~ (2) by deleting subparagraph 1(2) and inserting the following subparagraph — “(1) Subject otis Pat, there shall be made in computing 8 person's pains oF profits from a business fora year, the following dedvetions:- 2 © © (@) a wearand tar deduction as set ‘ut in subparagraph (2); (&)—_amining rights emorsation

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