|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
[Report an error]
[F.A.Q.]
Tonga Consolidated Legislation |
Commencement:
1st
January 1977
1st
July 1977
LAWS OF TONGA
[1988 Ed.]
CHAPTER 68
INCOME TAX
ARRANGEMENT OF SECTIONS
Section
1.
Short Title.
PART I - INTERPRETATION
2.
Interpretation.
PART II - INCOME TAX
3. Income Tax
imposed.
4. Items included in
assessable income.
5. No deductions
unless expressly provided.
6.
Expenditure or loss incurred in production of assessable
income.
7. Increased exports of goods
incentive.
8. Tourist promotion
incentive.
9. Export performance
incentive for qualifying tourist
services.
10. Certain deductions not
permitted.
11. Incomes wholly exempt
from tax.
12. Income credited in
account or otherwise dealt with.
13.
Adjustment for incorrect accounting practice in previous
years.
14. Appointment of income
received in anticipation.
15.
Valuation of trading stock.
16. Place
of residence, how determined.
17.
Liability for assessment of income derived from the Kingdom and
abroad.
18. Classes of income deemed
to be derived from the Kingdom.
19.
Apportionment when income derived partly in the Kingdom and partly
elsewhere.
20. Absentee
defined.
21. Liability of principal
not affected.
22. Provision applying
to agents.
23. Recovery of tax paid on
behalf of another person.
24. Agents
of absentees and non-residents.
25.
Agents of non-residents carrying on business in the
Kingdom.
26. Non-resident trader or
agent to give security.
27. Rates of
tax for individuals.
28. General
exemption. Dependent child exemption. Dependent parent
exemption.
29. Special exemption in
respect of gifts of money and payments of school
fees.
30. Retirement fund
exemption.
31. Special exemption in
respect of life insurance
premiums.
32. House
exemption.
33. Fixed assets
exemption.
34. Assessment of
non-resident insurance companies.
35.
Assessment of non-resident shipping and airline
companies.
36. Export oriented
companies.
37. Credits in respect of
foreign tax.
38. Tax avoidance
arrangements void.
PART III - RETURNS AND ASSESSMENTS
39. Annual
returns.
40. Special returns and
assessments.
41. Commissioner to make
assessments.
42. Commissioner not
bound by returns.
43. Continuing
liability.
44. Validity of
assessment.
45. Assessments deemed
correct except in proceedings on objection.
PART IV - REFUNDS AND RELIEF FROM TAX
46. Refunds of excess
tax.
47. Power of Commissioner in
respect of small amounts.
48. Relief
from tax.
PART
V - TAX DEDUCTIONS BY EMPLOYERS FROM
PAYMENT
OF SALARY
OR WAGES
49. Application of this
Part.
50. Tax deductions to be made by
employers.
51. When salary or wages
deemed to accrue and to be paid or
received.
52. Payment to be made by
employee where tax deduction exceeds payment of salary or
wages.
53. Making of tax deduction
from payments of salary and wages to
non-residents.
54. Amounts of tax
deductions.
55. Application of tax
codes.
56. Dependants for purposes of
tax codes.
57. Power of Commissioner
to grant relief from or vary amount of deductions and to specify and vary
requirements under this part.
58.
Records to be kept by employer.
59.
Payment of tax deductions to
Commissioner.
60. Requirement to
register.
61. Employee to pay
deductions to Commissioner.
62. Tax
deductions to be credited against tax
assessed.
63. Tax deduction where no
certificate available.
64. Amounts
deducted to be held in trust for
Crown.
65. Employers failing to take
tax deductions.
66. Unpaid tax
deductions etc to constitute a charge on employer's
property.
67. Agreement not to make
tax deduction to be void.
68. Amount
of tax deductions deemed to be received by
employee.
69. Application of Act to
tax deductions.
PART VI - WITHHOLDING TAX
70. Liability for tax on
withholding income.
71. Deduction of
withholding tax.
72. Payment of
deductions of withholding tax to
Commissioner.
73. Statement to be
delivered to Commissioner.
74.
Withholding tax to be final in certain
cases.
75. Annual tax on withholding
income in certain cases.
76. Remedies
of Commissioner.
PART VII - OBJECTIONS TO ASSESSMENTS
77. Objections to
assessments.
78. Court of
Review.
79. Date of sittings of Court
of Review.
80. Powers of Court of
Review.
81. Ex-parte
action.
82. Appeal to Supreme
Court.
83. Proceedings
generally.
PART VIII.-RECOVERY OF TAX
84. Taxes a debt to the
Crown.
85. Deduction of tax from
payment due to defaulters.
86.
Recovery of tax paid by one person on behalf of another.
PART IX.-PENALTIES AND OFFENCES
87. Offences under this
Act.
88. Limitation of
time.
PART X.-GENERAL
89. Power to require
information.
90. Penalty for failure
to provide information etc.
91.
Regulations.
PART XI.-ADMINISTRATION
92. Appointment of
Commissioner of Inland Revenue.
93.
Appointment of Deputy Commissioner and subordinate
staff.
94.
Secrecy.
95. Oath of
office.
96. Powers of
Commissioner.
97. Duties of
Auditor.
PART XII.-MISCELLANEOUS
98.
Transitional provisions.
99.
Application to petroleum
operations.
100. Repeals and
savings.
FIRST SCHEDULE
Part
A - Basic Rates of tax.
Part B -
Dependants Allowances.
SECOND SCHEDULE - FORMS
-----------------------------------------------------
CHAPTER 68
INCOME TAX
Acts
Nos. 17 of 1976, 28 of 1977, 4 of 1978, 9 of
1978,
16 of 1980, 4 of 1983, 3 of
1984, 4 of 1984, 9 of 1984,
5 of 1985,
4 of 1986, 3 of 1987, 3 of 1988.
AN ACT TO REPEAL THE
INCOME TAX ACT AND TO PROVIDE FOR COLLECTION OF TAX ON MOST INCOMES AT
SOURCE.
Short
Title
1.
(1) This Act may be cited as The Income Tax
Act.
(2) Except as otherwise
provided herein, this Act shall come into force -
(a) on the 1st day of January 1977 in relation to companies;
(b) on the 1st day of July 1977 in relation to all other taxpayers -
and
shall apply with respect to the tax on income derived in the fiscal year
commencing on the 1st day of July 1977 and in every subsequent
year.
PART I - INTERPRETATION
Interpretation
2.
In this Act and in any regulations made
hereunder, unless the context otherwise requires -
"agent" includes every person who in the Kingdom for and on behalf of any person or company, whether in or outside the Kingdom, holds or has the control, receipt or disposal of any money belonging to such person; and every person declared by the Commissioner to be an agent under this Act and includes sub-agents and any companies acting as agents;
"airline company" means any company which transports persons or freight or both by air for profit or gain;
"assessable income" means income of any kind which is not exempted from tax otherwise than by way of a special exemption authorised as such by this Act;
"business" includes any profession, trade, manufacture or undertaking carried on for pecuniary profit;
"calendar year" means a year commencing on the 1st day of January and ending with the 31st day of December;
"chargeable income" means the residue of assessable income after deducting the amount of all special exemptions to which the taxpayer is entitled;
"charitable purposes" includes every charitable purpose, whether it relates to relief of poverty, the advancement of education or religion, or any matter beneficial to the community; (Inserted by Act 4 of 1983.)
"Commissioner" means the Commissioner of Inland Revenue or any person authorised by His Majesty in Council to act in his stead;
"company" means any corporate body whether registered under the Companies Act or not, and any partnership consisting of more than 7 partners;
"dependent child" means in relation to a taxpayer, any child whose total income does not exceed T$100 (exclusive of any income from scholarship) per annum and who -
(a) is under the age of 18 years and is dependent upon the taxpayer for support; or
(b) is over the age of 18 years but under the age of 25 years and is receiving full time instruction at any university, college, school or other educational establishment, or is serving under articles or indentures with a view to qualifying in a trade or profession, and is dependent upon the taxpayer for support; or
(c) is over the age of 18 years and is dependent upon the taxpayer for support on account of physical or mental incapacity;
"dependent parent" means in relation to a taxpayer, a father or mother whose total income does not exceed T$200 per annum; (Inserted by Act 4 of 1986.)
"export oriented company" means any company whose total production is exported, and designated by His Majesty in Council to be an export oriented company; (Inserted by Act 5 of 1985.)
"fiscal year" means a period of 12 months ending with the 30th day of June in any year:
Provided that, in relation to every company a fiscal year means the period of 12 months ending with the date of the annual balance of its accounts;
"gross", in relation to an amount, means without any deduction whatsoever from that amount;
"income from employment" means salary or wages;
"income tax" means income tax imposed by this Act;
"Kingdom" means the Kingdom of Tonga;
"lease" means any disposition whatever by which a leasehold estate is created; and includes a sublease;
"net", in relation to an amount, means the amount resulting after all deductions whatsoever have been made from that amount;
"non-resident" means a person who is not deemed to be a resident in the Kingdom under this Act;
"non-resident agent" means an agent within the meaning of this Act who, being in the Kingdom, has no fixed and permanent place of business or abode therein;
"non-resident trader" means any person who being in the Kingdom, carries on business there without having any fixed and permanent place of business or abode therein;
"paid", in relation to source deduction payments, means source deduction payments that have been paid or accrued or received or that are receivable in cash otherwise and includes all source deduction payments not actually paid but distributed, transferred or credited to or applied on account of any person entitled thereto or dealt with in the interest of or on behalf of a person; and "pay" and "payment" have corresponding meanings;
"partnership" means an association of persons carrying on business as partners or in receipt of income jointly; but does not include a registered company;
"pay period", in relation to any employee receiving regular payments of salary or wages, means the period for which such payment is made or payable;
"person" means any individual or person, and includes any syndicate, trust, association or other body, and any body corporate, and heirs, executors, administrators or other legal representatives of such persons;
"reduced deduction" means any deduction to be made from any payment of salary or wages to an employee by an employer to whom any tax code declaration has been delivered by or on behalf of that employee;
"resident" means a person who is deemed to be a resident in the Kingdom under this Act;
"salary or wages", in relation to any person, means salary, wages, or allowances, bonuses, gratuities, extra salary, overtime pay, commission, or remuneration of any kind, whether received or receivable and whether in cash or otherwise, in respect of or in relation to the employment or past employment of that person; and includes the value (as estimated by the Commissioner) of any quarters, board, residence or benefits of any kind, in respect of or in relation to the employment or the past employment of that person;
"shipping company" means any company which transports persons or freight or both by sea for profit or gain;
"source deduction payment" means a payment by way of salary or wages or a withholding payment;
"statutory body" means a body that has been created by statute; (Inserted by Act 16 of 1980.)
"superannuation fund" means a superannuation fund or a fidelity guarantee fund approved by His Majesty's Cabinet;
"tax" means income tax imposed by this Act;
"tax deduction" means a tax deduction made or required to be made under Part V of this Act;
"taxpayer" means any person paying, liable to pay, or believed by the Commissioner to be liable to pay tax imposed by this Act;
"withholding payment" means a payment of any of the kinds specified in Section 70 of this Act.
PART II - INCOME TAX
Total Income and Deductions
Income
Tax
imposed
3.
(1) Subject to this Act, there shall be levied and paid for the fiscal year
commencing the 1st day of July in each year an income
tax.
(2) Subject to this Act, tax
shall be payable by every person on all income derived by him during the year
for which the tax is payable.
(3)
Income tax shall be assessed and levied on the chargeable income of every
taxpayer at such rate or rates as are fixed by the First
Schedule to this
Act.
Items
included in assessable
income
4.
Without in any way limiting the meaning of the term, the assessable income of
any person shall for the purposes of this Act, except
as otherwise provided
herein, be deemed to include -
(a) all profits or gains derived from any business (including any increase in the value and stock in hand at the time of the transfer or sale of the business or on the reconstruction of any company);
(b) all salary and wages;
(c) all profits or gains derived from the sale or other disposition of any real or personal property or any interest therein if the business of the taxpayer comprises dealing in such property, or if the property was acquired for the purpose or intention, or for purposes or intentions including the purpose or intention, of selling or otherwise disposing of it, and all profits or gains derived from the carrying on of any undertaking or scheme entered into or devised for the purpose of making a profit;
(d) all rents, fines, premiums, or other revenue (including payment for or in respect of the good-will of any business, or the benefit of any statutory licence or privilege) derived by the owner lessor or lessee of land from any lease, licence, or easement affecting the land, or from any grant of any right of taking the profits thereof, or from the grant or transfer of any lease;
(e) all royalties or other like payments dependent upon production from or the use of any real or personal property, whether or not they are instalments of the purchase price of any property;
(f) all payments for the supply in connection with the carrying on of a business of scientific, technical, industrial or commercial knowledge, information, or assistance, not being payments which the Commissioner is satisfied constitute wholly reimbursement of expenditure that is -
(i) of a kind that is deductible under this Act; and
(ii) is incurred, in relation to the payments, by the persons to whom the payments are made;
(g) all interest, dividends, annuities and pensions (other than pensions of any of the kinds referred to in Section 11 of this Act);
(h) income derived from any other source whatsoever.
No
deductions unless expressly
provided.
5.
Except as expressly provided in this Act no deduction shall be made in respect
of any expenditure or loss of any kind for the purpose
of calculating the total
income of any
taxpayer.
Expenditure
or loss incurred in production of assessable
income.
6.
(1) In calculating the assessable income
of any taxpayer any expenditure or loss to the extent to which it is necessarily
incurred
in carrying on a business for the purpose of gaining or producing the
assessable income for any fiscal year may, except as otherwise
provided in this
Act, be deducted from the gross assessable income derived by the taxpayer in the
fiscal year in which the expenditure
or loss is
incurred.
(2) Without limiting the
generality of subsection (1), the Commissioner may, in calculating the
assessable income of any taxpayer
in any fiscal year, allow a deduction in
respect of -
(a) depreciation or improvements, or both, of such amount as, subject to the general instructions of His Majesty in Council, he considers reasonable;
(b) any sum paid in that fiscal year by an employer by way of contribution to a superannuation fund:
Provided
that, where any such contribution by an employer is not an ordinary annual
contribution it shall be treated as an expense
incurred in the fiscal year in
which the sum is paid or as an expense to be spread over a number of fiscal
years as the Commissioner
may, in his discretion,
direct.
Increased
exports of goods
incentive
7.
(1) For the purpose of this section -
"base period", in relation to an income year, means the period comprising the 3 income years immediately preceding that income year;
"consideration receivable", in relation to a sale or other disposal of goods, means -
(a) In the case of a sale or disposal other than one to which paragraph (b) of this definition applies, the amount or value of the consideration for the sale or disposal;
(b) Where the sale or disposal is part of, or is connected with, a transaction in which any other assets, or any services, are sold, disposed of, or supplied, such part of the amount or value of the consideration or considerations as the Commissioner is satisfied is attributable to the sale or disposal of the goods,
reduced by any amounts paid or payable (otherwise than as an agent) by the person selling or disposing of the goods, by way of freight for carriage of the goods outside Tonga or by way of insurance or other outgoings in relation to the goods attributable to events or contingencies occurring or arising, or services performed, after the placing of the goods, upon a ship or aircraft for export from Tonga;
"export goods" means goods exported from Tonga by a taxpayer who is the manufacturer, producer, or processor of the goods or who is an export merchant, being goods -
(a) Which were sold or otherwise disposed of by the taxpayer to an overseas purchaser; or to the Commodities Board for export; and
(b) Of which the taxpayer was the owner at the time of the sale or disposal; and
(c) Which are not non-qualifying goods; and
(d) In respect of which, in the case of goods exported by an export merchant, the export merchant has entered into a contract (otherwise than through the agency of the manufacturer, producer, or processor of those goods) with an overseas purchaser for the sale or other disposal of those goods, under which contract the export merchant is required to export those goods to or to the order of that purchaser, and is responsible to that purchaser for the quantity and quality of those goods, and is entitled to receive from that purchaser the consideration for the sale or other disposal of those goods; and
(e) For which foreign currency has been remitted to the taxpayer through the Bank of Tonga in accordance with the Foreign Exchange Control Regulations;
"export merchant" means a person not being the Commodities Board who, in the opinion of the Commissioner, is -
(a) Carrying on, as a business, the activity of exporting goods (not being goods manufactured, produced, or processed by him) from Tonga; and
(b) As part of that business, actively engaged in seeking opportunities or creating or increasing a demand for the export of goods from Tonga;
"increase in export sales for the income year", in relation to a taxpayer and an income year, means any excess of the value of export sales of that taxpayer for that income year over one-third of the value of export sales for the base period of that taxpayer;
"non-qualifying goods", in relation to export goods, means -
(a) Goods exported by way of gift;
(b) Goods taken or sent out of Tonga with the intention that they will at some later time be brought or sent back to Tonga;
(c) Goods which are sold by retail to persons departing from Tonga;
(ca) Goods (being food, tobacco, cigars and cigarettes) taken on board any ship or aircraft in Tonga for the consumption or use aboard that ship or aircraft by any person or with the intention that those goods will not be unshipped in any country or territory outside Tonga;
(d) Goods imported into Tonga and subsequently exported from Tonga in the same form without processing, packing, grading, or sorting thereof in Tonga;
(e) Goods imported into Tonga and subsequently exported from Tonga after being processed, packed, graded, or sorted in Tonga or incorporated with another product in Tonga, if the consideration receivable for the sale or disposal of the goods so exported exceeds the cost of all imported goods included in the goods so exported (such cost being the landed cost of these imported goods, exclusive of Tonga customs duty, at the time when they were imported into Tonga) by less than 35 per cent;
(f) Any other goods (including qualifying scheduled goods) specified by His Majesty in Council, but nothing in the Order in Council shall apply in relation to any taxpayer until the end of the income year in which export sales are made by that taxpayer of those other goods specified in the Order in Council, being goods which have been sold or otherwise disposed of before the date the Order in Council comes into force or in respect of which firm orders, both as to price and quantity, have been placed and accepted on or before that date, -
But does not include qualifying scheduled goods, other than qualifying scheduled goods, in respect of which an Order in Council has been made under paragraph (f) of this definition;
"qualifying scheduled goods", in relation to non-qualifying goods, means -
(a) Any goods not referred to in of any of the paragraphs (a) to (f) of the definition of the term "non-qualifying goods";
(b) Any other goods which His Majesty in Council may from time to time add to and specify the extent to which those goods are excluded from the operation of the said paragraphs (a) to (f) being goods -
(i) Which he is satisfied incorporate a significant degree of local processing or manufacture; or
(ii) Which he considers desirable to add, having regard to the economics of further local processing or manufacture, the non-traditional nature of the exporting of those goods, the prospects for the steady development of an export market on a profitable basis, the efficiency of the arrangements for orderly marketing, and the effect of the exports of those goods on the supply and price of like goods in Tonga and the structure of the local industry;
"value of export sales", in relation to a period, means, in relation to a taxpayer, the amounts of consideration receivable by that taxpayer in respect of the sale or other disposal of export goods that have been sold or otherwise disposed of by him during that period.
(2)
For the purposes of this section, where a taxpayer has received or is entitled
to receive an amount under a policy of insurance
or otherwise in respect of
loss, destruction, or damage that has occurred, after their export from Tonga,
in respect of export goods
owned by him, -
(a) In the case of loss or destruction, the taxpayer shall be deemed to have sold those goods, at the time of the loss or destruction, for a consideration equal to that amount;
(b) In the case of damage -
(i) If the taxpayer has sold or disposed of the goods for a consideration shall be deemed to be increased by that amount;
(ii) If the taxpayer ceased to be the owner of the goods in any other manner, he shall be deemed to have sold the goods, at the time when he so ceased, for a consideration equal to that amount.
(3)
For the purposes of this section, where -
(a) During the base period a taxpayer acquired, whether by purchase or otherwise, an existing business, the value of export sales of the taxpayer for the base period shall, in relation to a claim for a deduction under this section in respect of an income year, be increased by an amount or amounts equal to so much of the value of export sales for the base period of each other person who owned the business at any time during the base period as is attributable to the business;
(b) During an income year in respect of which a deduction may be claimed under this section, a taxpayer acquired, whether by purchase or otherwise, an existing business, the value of export sales of that taxpayer for the base period shall in relation to a claim for deduction under this section by that taxpayer for respect of that income year, be increased by an amount or amounts arrived at by -
(i) Determining, in respect of each person who owned the business at any time during the base period, the part of the value of exports sales of that person for base period that is attributable to the business; and
(ii) Ascertaining, in respect of each amount determined under subparagraph (i) of this paragraph, the amount that bears the same proportion to that amount as the number of days from that date of the acquisition to the end of that income year bears to the number of days in the whole of that income year:
Provided that the Commissioner may, where he considers it appropriate in the circumstances of the particular case, make such other apportionment in respect of each amount determined under subparagraph (i) of this paragraph as he considered fair and reasonable;
(c) During the base period or during an income year in respect of which a deduction may be claimed under this section, any person (in this paragraph referred to as the vendor) has disposed of a business to another person (in this paragraph referred to as the purchaser), the value of export sales of the vendor for the base period shall, in relation to a claim for a deduction under this section by the vendor in respect of any income year, be reduced by any amount, or the sum of any amounts, that would, by reason of the disposal, be required under the preceding provisions of this subsection to be added to the value of export sales of the purchaser for the base period in relation to any claim for a deduction under this section by the purchaser in respect of that income year.
(4)
For the purposes of subsection (3) of this section -
(a) Every references in that subsection to the value of export sales of a taxpayer shall be deemed to be a reference to the value of export sales of that taxpayer apart from any reduction under subsection (12) of this section;
(b) Every reference in the said subsection (3) to a business shall be deemed to include a reference to a part of a business and to any exporting activity or part of any exporting activity of any business or part of a business;
(c) Every reference in the said subsection (3) to the acquisition, ownership, or disposition of a business shall be deemed to include a reference to, as the case may be, the taking over, carrying on, or relinquishing of, an exporting activity or part of an exporting activity;
(d) Every reference in the said subsection (3) to a vendor or purchaser in relation to a business shall be deemed to include a reference to a person who relinquished or, as the case may be, took over an exporting activity or part of an exporting activity.
(5)
Subject to this section, where, in relation to any income year (being any income
year ending on or before the termination date)
and to a taxpayer carrying on in
Tonga any business or businesses in which goods are sold or otherwise disposed
of -
(a) There is an increase in export sales for the income year, or
(b) There are export sales for the income year and an increase in export sales for the income year immediately preceding that income year, -
a
deduction shall be allowed under this section in calculating the assessable
income derived by the taxpayer in the income year from
that business or, as the
case may be those businesses, of the greater of the following amounts -
(a) An amount equal to 25 per cent of any increase in export sales for that income year;
(b) An amount calculated in accordance with the following formula:
x x z
y
Where
-
x is an amount equal to the value of the export sales during the income years; and
y is an amount equal to the value of the export sales during the income year immediately preceding that income year, and
z is an amount equal to 25 per cent of the increase in export sales for the income year immediately preceding that income year.
(6)
Subject to this section and notwithstanding anything in subsection (5) of this
section, where, in relation to an income year ending
on or before the
terminating date and to a taxpayer carrying on in Tonga any business or
businesses in which goods have been sold
or otherwise disposed of any other
goods have been added to the definition of the term "non-qualifying goods" by an
Order in Council
made under paragraph (f) of that definition and there were
export sales of those other goods before the date that the Order in Council
came
into force or of those other goods in respect of which firm orders, both as to
price and quantity, were placed and accepted
before that date, and
-
(a) There is an increase in export sales for the income year of those other goods, being an increase calculated in respect of the export sales of those goods for the base period of the taxpayer; or
(b) There is an increase in export sales for the income year of goods (excluding those other goods), being an increase calculated in respect of the export sales of those goods (excluding those other goods) for the base period of the taxpayer; or
(c) There are export sales for the income year and an increase in export sales for the income year immediately preceding that income year,
a
deduction shall be allowed under this section in calculating the assessable
income derived by the taxpayer in the income year from
that business or, as the
case may be, those businesses, of the greater of the following
amounts:
(d) An amount equal to the sum of -
(i) An amount equal to 25 per cent of any increase in export sales for that income year of those other goods; and
(ii) An amount equal to 25 per cent of any increase in export sales for that income year of goods (including those other goods);
(e) An amount calculated in accordance with the following formula:
x x z
y
Where -
x is an amount equal to the value of the export sales during the income year; and
y is an amount equal to the value of the export sales during the income year immediately preceding that income year; and z is an amount equal to 25 per cent of the increase in export sales for the income year immediately preceding that income year
z is the amount equal to 25 per cent of the increase in export sales for the income year immediately preceding that income year.
(7)
For the purposes of this section -
(a) Where during any income year any other goods become non-qualifying goods, the export sales for the base period of any taxpayer shall be adjusted to exclude those other goods for the purpose of calculating any increase in export sales for any subsequent income year;
(b) Where during any income year any other goods cease to be non-qualifying goods, the export sales for the base period of any taxpayer shall be adjusted to include those other goods for the purpose of calculating any increase in export sales for that income year and for any subsequent income year.
(8)
Where the Commissioner is satisfied that arrangements have been made between a
taxpayer and another person with a view to the
affairs of the taxpayer and of
that other person being so arranged or conducted that this section would, but
for this subsection,
have effect more favourably in relation to that taxpayer
than would otherwise have been the case, the amount of any deduction to
which
the taxpayer is entitled shall not exceed the amount of the deduction to which
the taxpayer would, in the opinion of the Commissioner,
have been entitled if
those arrangements had not been
made.
(9) Where -
(a) During an income year in respect of which a taxpayer claims a deduction under this section, the taxpayer exports goods of any class or classes; and
(b) During the base period in relation to that income year another person has exported export goods (being goods that were produced or manufactured by the taxpayer or had previously been trading stock of the taxpayer) which were of a class or classes the same as or similar to the class or classes of export goods referred to in paragraph (a) of this subsection,
the
amount of the deduction to which the taxpayer is entitled under this section in
respect of that income year shall not (except
to the extent to which, in the
opinion of the Commissioner, the taxpayer would be under an unfair disadvantage
for the purposes of
this section) exceed the amount of the deduction to which he
would, in the opinion of the Commissioner, have been entitled if the
taxpayer
himself had exported during that base period the export goods which that other
person exported during that base
period.
(10) Subject to subsection
(11) of this section, if, in relation to a claim by a taxpayer for a deduction
under this section in respect
of an income year, the Commissioner is not
satisfied, upon consideration of the information furnished or otherwise
available to him,
as to the value of export sales for the base period of that
taxpayer in relation to that claim, the Commissioner shall not be required
to
determine that value, and the taxpayer shall not be entitled to a deduction in
respect of that income year.
(11)
Where, in a case to which subsection (10) of this section would otherwise apply,
the Commissioner is satisfied that the value
of export sales of the taxpayer for
the base period does not exceed a particular amount, but is not satisfied that
value is less
than that amount, shall be taken to be the value of export sales
for the base period in relation to the claim for the deduction under
this
section.
(12) Where a taxpayer
makes application in writing to the Commissioner within the time within which he
is required to furnish a return
of his income for an income year, or within such
further time as the Commissioner, in this discretion, may allow in any case, for
a reduction of the amount or amounts that would otherwise be the value of export
sales for the base period in respect of that taxpayer
for the purposes of a
deduction under this section in respect of that income year on the ground that,
by reason of abnormal trading
conditions or other extraordinary circumstances
during the base period, the value of export sales for the base period as
ascertained
in accordance with the preceding provisions of this section is
greater than it would otherwise have been and he is, by reason of
that fact,
under an unfair disadvantage for the purposes of this section, the Commissioner
may, for the purposes of this section,
make such adjustment in respect of the
value of export sales for the base period as he thinks
fit.
(13) Every reference in this
section to an income year shall, where the taxpayer furnishes a return of income
under section 39 of
this Act for an accounting year ending with an annual
balance date other than the 30th day of June be deemed to be a reference to
the
accounting year corresponding with that income year, and in every such case,
this section shall, with any necessary modifications,
apply
accordingly.
(14) For the purposes
of this section, all amounts shall be ascertained in terms of Tonga
currency.
(15) Notwithstanding
anything in this Act, this section shall not apply with respect to export goods
manufactured, produced, or processed
by any business which involves the
chartering or use of a foreign owned fishing vessel, whether the goods are
exported by the manufacturer,
producer, or processor of those goods or by any
other
person.
(Inserted
by Act 3 of
1984.)
Tourist
promotion
incentive
8.
(1) For the purposes of this section -
"associated company", in relation to a taxpayer, means a company that is, at any time during the income year, a company -
(a) The operations of which are controlled, or are able to be controlled, either directly or indirectly, by that taxpayer; or
(b) Which controls, or is able to control, either directly or indirectly, the operations of that taxpayer; or
(c) The operations of which are controlled, or are able to be controlled, either directly or indirectly, by a person who controls or is able to control, or by persons who control or are able to control, either directly or indirectly, the operations of that taxpayer;
"permanent employee", in relation to a taxpayer, means a person who -
(a) Is a full-time employee of the taxpayer; and
(b) By reason of his experience and service with the taxpayer and any other relevant matters, is, in the opinion of the Commissioner, fit and qualified to undertake the duties in relation to tourist promotion assigned to him by the taxpayer.
"prescribed agent", in relation to a taxpayer, means -
(a) In the case of a taxpayer not being a company or an unincorporated body, the taxpayer himself;
(b) In the case of taxpayer being a company, a director thereof;
(c) In the case of a taxpayer being an unincorporated body, a member of the governing body thereof;
(d) In any case, an employee of the taxpayer;
"prescribed outgoings", means outgoings incurred by a taxpayer by way of -
(a) Expenses of fares, accommodation and sustenance (other than entertainment expenses) in respect of travel in respect of or in relation to a visit from Tonga to countries or territories outside Tonga by the taxpayer or by a person (including a director or a member of the governing body where the taxpayer is a company or an unincorporated body or a director of an associated company) who is ordinarily employed in Tonga by either the taxpayer or by an associated company; or
(b) Salary or wages or other remuneration (excluding directors fees) paid or payable, for a period of a visit from Tonga to countries or territories outside Tonga, to a person (including a director or a member of the governing body where the taxpayer is a company or an unincorporated body, or a director of an associated company) who is ordinarily employed in Tonga by either the taxpayer or an associated company; or
(c) Payments (excluding commissions on sales) to an agent who is in business in Tonga to the extent that the payments are in respect of the agent undertaking travel in respect of or in relation to a visit from Tonga to countries or territories outside Tonga; or
(d) Expenses outside Tonga (including salary or wages or other remuneration but excluding directors fees) other than entertainment expenses, of a person (excluding a director or a member of the governing body where the taxpayer is a company or an unincorporated body, or a director of an associated company) who is ordinarily employed outside Tonga by the taxpayer or an associated company; or
(e) Payments (excluding commissions on sales) for the purpose of activities carried on outside Tonga by an agent who is in business outside Tonga; or
(f) Expenses (including those incurred in Tonga) of advertising outside Tonga; or
(g) Expenses incurred as an exhibitor within Tonga or elsewhere at such travel marts held wholly or principally for the purpose of attracting tourists to Tonga from countries or territories outside Tonga;
"relative", in relation to any person, means any of the following:
(a) Any parent, grandparent, brother, sister, uncle, aunt, nephew, niece, or lineal descendant of that person or of his or her spouse;
(b) The spouse of that person or of any other person specified in paragraph (a) of this definition;
"tourist-promotion expenditure", means prescribed outgoings incurred primarily and principally for the purpose of attracting tourists to Tonga from countries or territories outside Tonga but does not include so much of any outgoings incurred by a person as -
(i) Has been, or is to be, paid or reimbursed to him by another person; or
(ii) Is incurred in or in connection with services or doing any thing for which he has been, or is to be, paid (otherwise than by way of commission) by another person.
(2)
Subject to this section, where a taxpayer has in relation to any income year
incurred any tourist promotion expenditure that,
if it were not for subsection
(6) of this section, would be allowable as a deduction in calculating the
assessable income derived
by that taxpayer in that income year, there shall be
allowed to that taxpayer a credit of tax equal to 50 per cent, of the amount
of
that expenditure.
(3) Where, in
any income year, a business which incurs tourist promotion expenditure is
carried on in Tonga by 2 or more persons jointly,
whether in partnership or
otherwise, any credit of tax allowable under this section in respect of that
tourist promotion expenditure
shall be apportioned between those persons in the
same proportion that the income from that business is apportioned between those
persons in that income year.
(4) (a) Every credit of tax under this section in relation to any taxpayer other than a taxpayer holding a development licence and an income year, shall be deducted from or set off against any tax payable by that taxpayer in respect of that income year and any excess of that credit of tax shall be refundable to the taxpayer pursuant to Part IV of this Act as if it were tax paid in excess;
(b) Where the taxpayer is holding a development licence, every credit under this section shall be deducted from the tax that would have been payable, if no development licence was held and any excess of that credit of tax shall be refundable to the taxpayer pursuant to Part IV of this Act as if it were paid in excess.
(5)
Where the Commissioner is satisfied, in relation to any income to any income
year, that the amount of any credit of tax deducted,
set off, or refunded to the
taxpayer under subsection (4) of this section is in excess of the proper amount,
the Commissioner may
recover the amount of the excess in the same manner, with
any necessary modifications, as if it were tax payable on income derived
by the
taxpayer in that income year.
(6)
Any tourist promotion expenditure in respect of which a credit of tax has been
or is to be allowed in any income year under subsection
(2) of this section,
shall, notwithstanding any other provision in this Act, not be allowable as a
deduction in calculating the assessable
income derived by the taxpayer in any
income year.
(7) Where 2 or more
persons who are prescribed agents of the taxpayer and are relatives of each
other travel outside Tonga at the
same time, with respect to the entitlement of
taxpayer to a credit of tax under this section in respect of salaries or wages
or other
remuneration paid or payable in relation to the period of that travel
or of fares and expenses in respect of accommodation and sustenance
in relation
to that travel -
(a) If the taxpayer himself is one of those persons, such a credit of tax shall not be allowed in respect of the expenditure of any other of those persons who is not a permanent employee of the taxpayer:
(b) If the taxpayer himself is not one of those persons, but any of those persons is a permanent employee of the taxpayer, such a credit of tax shall not be allowed in respect of the expenditure of any of those persons who is not a permanent employee of the taxpayer:
(c) If none of those persons is either the taxpayer himself or a person who is a permanent employee of the taxpayer, such a credit of tax shall not be allowed in respect of the expenditure of any of those persons other than such one of them as the taxpayer, by notice in writing to the Commissioner, nominates.
(8)
Subsection (7) of this section shall not operate to exclude a credit of tax in
respect of the expenditure of a person if the Commissioner
is satisfied that
there are special circumstances by reason of which the credit of tax should be
allowed.
(9) Where the amount of
any outgoing constituting or forming part of any tourist promotion expenditure
exceeds the amount that, in
the opinion of the Commissioner, would reasonably be
expected to be payable, in the ordinary course of business for the
tourist-promotion
in respect of which the outgoing was incurred, the
Commissioner may, for the purposes of this section, treat the outgoing as being
reduced by the amount of the
excess.
(10) Every reference in
this section to an income year shall, where the taxpayer or, as the case may be,
the partnership of which
he is a member furnishes a return of income under
section 39 of this Act for an accounting year ending with an annual balance date
other than the 30th day of June be deemed to be a reference to the accounting
year corresponding with that income year, and, in every
such case, this section
shall, with any necessary modifications, apply accordingly.
(Inserted by Act 3 of
1984.)
Export
Performance Incentive for Qualifying Tourist
Services
9.
(1) For the purposes of this section -
"net foreign currency earnings", in relation to a taxpayer and qualifying tourist services means the gross amount of foreign currency earnings received by the taxpayer from the sale of those services, reduced by an expenditure incurred by the taxpayer outside Tonga in connection with or in relation to the sale of those services;
"prescribed period", in relation to any income year, means the period commencing on the day immediately following the end of that income year and ending with the date on or before which the taxpayer is required in accordance with section 39 of this Act to furnish his return of income for that income year;
"qualifying tourist services", in relation to any taxpayer carrying on a business as a tourist wholesaler or retailer, means the supply within Tonga whether on a wholesale or retail basis, of accommodation, sustenance, internal transport, and admission to or the use of visitor facilities, to tourists from countries or territories outside Tonga where those services -
(a) Are sold outside Tonga by the taxpayer; and
(b) Are paid for in foreign currency prior to the arrival in Tonga of the tourists;
"tourist wholesaler or retailer" means any person who in the opinion of the Commissioner, -
(a) Is carrying on, as a business, or part of a business, of a continuing nature, the activity of selling qualifying tourist services, and
(b) As part of that business, is actively engaged in attracting tourists to Tonga from countries or territories outside Tonga.
(2)
Subject to this section, where in any income year (being an income year ending
on or before the terminating date) any taxpayer
carrying on a business in Tonga
as a tourist wholesaler or retailer has derived assessable income from the sale
of qualifying tourist
services and the Commissioner is satisfied that an amount
of net foreign currency earnings in respect of that income has been transferred
to the credit of the taxpayer -
(a) By the transfer of foreign currency to Tonga through the Tonga banking system; or
(b) By payment in Tonga, in Tonga currency from funds held in Tonga which would otherwise be remittable from Tonga, prior to or within that income year or within the prescribed period in relation to that income year or within such later time as the Commissioner in his discretion may allow,
there
shall be allowed to that taxpayer a credit of tax equal to 10 per cent of the
amount of such net foreign currency
earnings.
(3) Where, in any income
year, a business in which qualifying tourist services are sold is carried on in
Tonga by 2 or more persons
jointly, whether in partnership or otherwise, any
credit of tax allowable under this section in respect of the sale of those
qualifying
tourist services shall be apportioned between those persons in the
same proportion that the income from that business is apportioned
between those
persons in that income year.
(4) (a) Every credit of tax under this section in relation to any taxpayer other than a taxpayer holding a development licence in an income year, shall be deducted from or set off against any tax payable by that taxpayer in respect of that income year and any excess of that credit of tax shall be refundable to the taxpayer pursuant to Part IV of this Act as if it were tax paid in excess.
(b) Where the taxpayer is holding a development licence, every credit under this section shall be deducted from the tax that would have been payable if no development licence was held and any excess of that credit shall be refundable to the taxpayer pursuant to Part IV of this Act as if it were paid in excess.
(5)
Where the Commissioner is satisfied, in relation to any income year, that the
amount of any credit of tax deducted, set off or
refunded to the taxpayer under
subsection (4) of this section is in excess of the proper amount, the
Commissioner may recover the
amount of the excess in the same manner, with any
necessary modifications, as if it were tax payable on income derived by the
taxpayer
in that income year.
(6)
No credit of tax shall be allowed under this section unless the taxpayer has
provided the Commissioner with a certificate of the
net foreign currency
earnings in such form as the Commissioner may from time to time
require.
(7) Where the
Commissioner is satisfied that arrangements have been made between a taxpayer
and another person with a view to the
affairs of the taxpayer and of that other
person being so arranged or conducted that this section would, but for this
subsection,
have effect more favourably in relation to that taxpayer than would
otherwise have been the case, the amount of any credit of tax
to which the
taxpayer is entitled shall not exceed the amount of the credit of tax to which
that taxpayer would in the opinion of
the Commissioner, have been entitled if
those arrangements had not been
made.
(8) Every reference in this
section to an income year shall, where the company furnishes a return of income
under section
39
of this Act for an accounting year ending with an annual balance date other than
the 30th day of June, be deemed to be a reference
to the accounting year
corresponding with that income year, and in every such case, this section shall
with any necessary modifications,
apply
accordingly.
(Inserted
by Act 3 of
1984.)
Certain
deductions not
permitted
10.
(1) Notwithstanding anything in section
6
of this Act, in calculating the assessable income derived by any person from any
source, no deduction shall, except as expressly
provided in this Act, be made in
respect of any of the following sums or matters:
(a) any expenditure or loss to the extent to which it is incurred in any transaction not connected with the business of the taxpayer (whether or not connected with, or sustained in, any transaction entered into for the purpose, or with the intention, of making a profit);
(b) investment, expenditure, loss, or withdrawal of capital; money used or intended to be used as capital; money used in the improvement of premises occupied; interest which might have been made on any such capital or money if laid out at interest;
(c) bad debts, except debts which are proved to the satisfaction of the Commissioner to have been actually written off as bad debts by the taxpayer in the fiscal year:
Provided that all amounts at any time received on account of any such bad debts shall be credited as income in the fiscal year in which they are received, and shall be subject to tax accordingly;
(d) Any expenditure or loss recoverable under any insurance or right of indemnity;
(e) payment of any kind made by a husband to his wife or by a wife to her husband:
Provided that, with the consent of the Commissioner granted before the deduction is claimed by the taxpayer, a deduction is claimed by the taxpayer, a deduction may be made in respect of any payment made by a husband to his wife or by a wife to her husband where the Commissioner is satisfied that the payment is for services rendered (not being domestic services or services performed at or in connection with the home or services performed at the home in connection with any business carried on wholly or partly at the home) or is otherwise a bona fide payment, and that the payment was exclusively incurred in the production of the assessable income of the husband or wife, as the case may be, for the fiscal year;
(f) rent of any dwelling house or domestic offices, save that, so far as any such dwelling house or offices are used in the production of the assessable income, the Commissioner may allow a deduction of such proportion of the rent as he may think just and reasonable;
(g) income tax;
(h) interest, except so far as the Commissioner is satisfied that it is payable on capital employed in the production of the assessable income;
(i) any expenditure or loss to the extent to which it is of a private or domestic nature;
(j) any expenditure or loss to the extent to which it is incurred in gaining or producing income which is exempt from income tax.
(2)
For the purposes of subsection (1) (a) of this section the Commissioner shall
determine the extent to which any expenditure or
losses sustained in any
transactions are connected with the business of the
taxpayer.
(3) For the purposes of
subsection (1) (g) of this section -
"Income Tax" means -
(a) tax imposed under this Act; and includes additional tax for late payment of such tax and any penalty imposed under this Act;
(b) any tax imposed in any country or territory outside the Kingdom, being a tax which, in the opinion of the Commission, is substantially of the same nature as income tax imposed under this Act; and includes any additional tax for late payment of tax, any interest, any penalty, and any additional tax imposed under the penal provisions of the laws of that country or territory.
Incomes
wholly exempt from
tax
11.
The following incomes shall be exempt from tax -
(a) the whole of the income of His Majesty the King;
(b) the income derived by any charitable institution or by any body or trust established exclusively for charitable purposes, other than income derived by such institution, body or trust either directly or indirectly from the carrying on of any business; (Substituted by Act 28 of 1977.)
(c) income derived by any person from any pension granted to any member of Her Britannic Majesty's naval, military, or air forces or the Tonga Defence Force in respect of any disability suffered by the pensioner while serving in any of Her Britannic Majesty's forces or the Tonga Defence Force during any war; and the income derived by any person from any pension granted to any dependent relative of any person who was killed or suffered any disability while serving in the said forces in any such war;
(d) the income derived by any life insurance company in so far as that income is derived from life insurance premiums;
(e) income derived by any person from the payment of any pension or gratuity under the provisions of the Pensions Act and the Legislative Assembly Act or any other pension scheme approved by His Majesty in Council; (Amended by Act 4 of 1986.) Cap 8; Cap 4
(f) income derived by any fund, society, association or organisation or company whether incorporated or not, which may be specifically exempted by His Majesty in Council by Order-in-Council;
(g) any sum received by any person, by way of retiring or death gratuity or consolidated compensation for death or injuries;
(h) travelling, subsistence, or meeting allowances paid out from the revenue provided under the Annual Estimates of both the Government and Boards or by Special Order-in-Council by His Majesty in Council; (Inserted by Act 4 of 1983.)
(i) interest derived by any person from deposits in the Savings Bank of Tonga:
Provided that the amount of the exemption under this paragraph in any fiscal year shall not exceed T$900; (Amended by Act 4 of 1986.)
(j) any sums, as approved by His Majesty in Council, paid by the Government of another country to any person or persons employed by or on behalf of the Government of Tonga in accordance with any agreement between the Government of Tonga and the Government of the other country relating to the employment of that person or persons;
(k) (i) income of an approved Industrial Enterprise as defined in the Industrial Development Incentives Act 1978 and; (Cap 114)
(ii) dividends of a shareholder in such approved Industrial Enterprise derived during the tax holiday period set out in that Act; (Inserted by Act 4 of 1978.)
(l) income or part of the income of any company or organisation whether incorporated or not which may be, upon the recommendation of the Minister of Finance, specifically exempted by Order-in-Council for reason of being an industry new to Tonga and considered by His Majesty in Council to be of such considerable national interest to warrant such an exemption. (Inserted by Act 4 of 1983.)
Income
credited in account or otherwise dealt
with.
12.
For the purposes of this Act every person shall be deemed to have derived income
although it has not been actually paid to or received
by him, or already become
due or receivable, but has been credited in account, or reinvested, or
accumulated, or capitalised, or
carried to any reserve, sinking or insurance
fund, or otherwise dealt with in his interest or on his
behalf.
Adjustment
for incorrect accounting practice in previous
years.
13.
Where the Commissioner in calculating the assessable income of any taxpayer
derived from any business in any fiscal year is satisfied
that the assessable
income of that taxpayer in any preceding fiscal year or years has been
understated or overstated by reason of
any incorrect accounting practice adopted
in any such year or years, the Commissioner may make such adjustments to the
amount owing
by the taxpayer in relation to any fiscal year, as he considers
reasonable, and the adjusted amount shall be deemed to be the amount
of the
assessable income from the business in any such year of
adjustment.
Appointment
of income received in
anticipation.
14.
(1) When income is derived by any person in any fiscal year by way of fines,
premiums, or in any other like manner by way of anticipation,
the Commissioner
may, if he thinks fit in his discretion, at the request of the person, apportion
that income between the fiscal
year and any number of succeeding fiscal years
not exceeding 5, and the part so apportioned to each shall be deemed to have
been
derived in that year, and shall be assessable and liable for tax
accordingly.
(2) Where any such
apportionment is made the Commissioner may, to the extent he thinks fit, in his
discretion, apportion any payment
of withholding tax made in respect of any such
income, to any fiscal year to which such income is
apportioned.
(3) Any such
apportionment may be at any time cancelled by the Commissioner and thereupon the
income or, as the case may be, the withholding
tax, so apportioned, or any part
thereof on which income tax has not been paid or, as the case may be, any part
thereof which has
not been credited against tax shall become assessable for tax
or, as the case may be, shall be credited against tax, as if derived
or paid
during the fiscal year preceding the year in which the apportionment was so
cancelled.
Valuation
and trading
stock.
15.
(1) For the purpose of this section the term "trading stock" includes anything
produced or manufactured, and anything acquired or
purchased for purposes of
manufacture, sale or exchange; and also includes
livestock.
(2) Where any taxpayer
owns or carries on any business, the value of his trading stock at the beginning
and at the end of every fiscal
year shall be taken into account in ascertaining
whether or not he has derived assessable income during that
year.
(3) The value of the trading
stock of any taxpayer to be taken into account at the beginning of any fiscal
year shall be its value
as at the end of the last preceding fiscal
year:
Provided that where the
taxpayer's business is commenced and his trading stock is acquired during the
fiscal year the value of the
trading stock at the beginning of the fiscal year
shall be deemed to be an amount equal to its cost
price.
(4) The value of the
trading stock of any taxpayer to be taken into account at the end of any income
year shall be its cost price.
(5)
Notwithstanding anything in subsection (4) of this section the Commissioner may
in his discretion, on the application of the taxpayer,
in relation to any
trading stock, determine that the value of that trading stock shall be a value
higher or lower than its cost
price.
(6) Where the value of the
trading stock of any taxpayer at the end of the fiscal year exceeds the value of
his trading stock at the
beginning of that year, the amount of the excess shall
be included in his assessable income for that
year.
(7) Where the value of the
trading stock of any taxpayer at the beginning of any fiscal year exceeds the
value of his trading stock
at the end of that year the amount of the excess
shall be allowed as a deduction in calculating the assessable income of the
taxpayer
for that year.
COUNTRY OF DERIVATION OF INCOME
Place
of residence, how
determined.
16.
(1) A person, other than a company, shall be deemed to be resident in the
Kingdom if his home is in the
Kingdom.
(2) A company shall be
deemed to be resident in the Kingdom if it is incorporated in the Kingdom or has
the centre of its administrative
management in the
Kingdom.
Liability
for assessment of income derived from the Kingdom and
abroad.
17.
(1) Subject to this Act, all income derived by any person who is resident in the
Kingdom at the time when he derives that income
shall be assessable for income
tax, whether it is derived from the Kingdom or from
elsewhere.
(2) Subject to this
Act, all income derived from the Kingdom shall be assessable for income tax,
whether the person deriving that
income is resident in the Kingdom or
elsewhere.
(3) Subject to this
Act, no income which is neither derived from the Kingdom nor derived by a person
then resident in the Kingdom
shall be assessable for income
tax.
Classes of
income deemed to be derived from the
Kingdom.
18.
(1) The following classes of income shall be deemed to be derived from the
Kingdom -
(a) income derived from any business wholly or partly carried on in the Kingdom;
(b) all salaries or wages earned in the Kingdom in the service of any principal or employer, whether resident in the Kingdom or elsewhere;
(c) income derived from shares in or membership of a resident company, or from debentures issued by a resident company;
(d) income derived from the sale or other disposition of any property, corporeal or incorporeal, situated in the Kingdom;
(e) income derived by any person from money lent or used in the Kingdom (whether on security or otherwise);
(f) income derived from contracts made or wholly or partly performed in the Kingdom;
(g) income derived from the carriage by sea or by air of merchandise, goods, livestock, mails, or passengers shipped or embarked in the Kingdom;
(h) royalties and other payments of any of the kinds referred to in paragraph (e) or paragraph (f) of section 4 of this Act, being royalties or payments -
(i) that are paid by a person who is resident in the Kingdom and are not paid in respect of a business carried on by him outside the Kingdom through a fixed establishment outside the Kingdom; or
(ii) that are paid by a person who is not resident in the Kingdom and are deductible by him in calculating his assessable income for the purposes of tax in the Kingdom;
(i) income derived directly or indirectly from any other source in the Kingdom.
(2)
For the purposes of subsection
(1)(e)
of this section the term "money lent" includes -
(a) money advanced, deposited, or otherwise let out, whether on current account or otherwise;
(b) any credit given (including the forbearance of any debt), whether on current account or otherwise.
Apportionment
when income derived partly in the Kingdom and partly
elsewhere.
19.
(1) Whenever by reason of the manufacture, production or purchase of goods in
one country and their sale in another, or by reason
of the making of contracts
in one country and their performance in another, or for any other reason
whatsoever, the source of the
income is not exclusively in the Kingdom, that
income shall be apportioned between its source in the Kingdom and its source
elsewhere,
or attributed to one of such sources to the exclusion of the other,
in such manner as the Commissioner considers just and reasonable
having regard
to the nature and the relative importance of the sources of that income; and the
income, so far as so apportioned or
attributed to a source in the Kingdom, shall
be deemed to be derived from the Kingdom, and shall be assessable for tax
accordingly.
(2) This section
shall not be construed as applying to -
(a) income of any of the classes referred to in subsection (1) (except paragraphs (a) and (f) of section 18 of this Act);
(b) income of any of the classes referred to in the said paragraph (a) or paragraph (f) of section 18(1) of this Act to the extent that that income consists of income of any of the classes referred to in any of the other provisions of that subsection.
"Absentee"
defined.
20.
In this part of the Act the term "absentee" means -
(a) any person (other than a company) who is for the time being out of the Kingdom;
(b) any non-resident company, unless it has a fixed and permanent place of business in the Kingdom at which it carries on business in its own name;
(c) any non-resident company which is declared by the Commissioner to be an absentee by notice given to the company or to its agent in the Kingdom so long as that declaration remains unrevoked.
Liability
of principal not
affected.
21.
(1) Nothing in this Act relating to an agent shall be so construed as to release
the principal from liability to make returns and
pay tax and the principal and
agent shall be jointly and severally liable for the
tax.
(2) When two or more persons
are liable as agents in respect of the same tax they shall be jointly and
severally liable
therefor.
Provision
applying to
agents.
22.
Subject to this Act, the following provisions shall apply with respect to every
agent:
(a) he shall be answerable for the doing of all such things as are required to be done pursuant to this Act in respect of the income derived by him in his representative capacity, or derived by the principal by virtue of his agency, and for the payment of tax thereon;
(b) he shall in respect of that income make returns and be assessable thereon but in his representative capacity only, and each return and assessment shall be separate and distinct from any other;
(c) he is hereby authorised and required to retain from time to time out of any money which comes to him in his representative capacity so much as is sufficient to pay the tax which is or will become payable in respect of that income;
(d) he shall not make any payment of income to any non-resident or absentee or transfer out of the Kingdom any sum for the purpose of making any such payment, unless and until arrangements have been made to the satisfaction of the Commissioner for the payment of any tax which is or will become payable in respect of that income;
(e) he is hereby made personally liable for the tax payable in respect of the income to the extent of any amount that he has retained, or should have retained under paragraphs (c) and (d);
(f) he is hereby indemnified for all payments which he makes in pursuance of this Act or of any requirement of the Commissioner;
(g) where as one of two or more agents he pays an amount for which they are jointly liable, the other or others shall each be liable to pay him each his equal share of the amount so paid;
(h) for the purpose of ensuring the payment of tax the Commissioner shall have t