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in life class.
(a) all sums of the gross premiums and net investment income are
added together,

(b) from the sum of (a) any premiums paid on reinsurances, net
claims, surrenders, expenses and any other deductions allowed
under the provisions of this Law are deducted, and

(c) from the sum ascertained in (b) the reserves for the liabilities
in respect of the long term business in the Republic at the end
of the year of assessment are deducted and the reserves for


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liabilities outstanding at the commencement of the year of
assessment added thereto.

(2) Where no tax is due or the tax payable on the profits or benefits
from long term insurance business, does not exceed one and a half
per cent (1.5%) of the gross premiums, excluding contributions to
any approved Pensions or Provident Funds or any other Fund which
the insurance undertaking manages for the benefit of its members,
the insurance undertaking shall pay the difference by way of income
tax prepayment.

(3) The relevant provisions of this Law shall apply in respect of
income of the insurance undertaking from other sources, including
income from the management of any Pensions or Provident Fund or
any other Fund.

(4) Where the amount of loss which, if a profit or benefit would be
chargeable to tax under this section is such that it cannot be wholly
set off against the income of the insurance undertaking from other
sources for the same year of assessment, the amount of such loss
shall, to the extent to which it is not so set off, be carried forward
and shall be set off against the income of the insurance undertaking
for subsequent years in accordance with the provisions of section 13.

(5) For the purposes of this section-

«claims» means the amount arrived at after adding or deducting
from, as the case may be, the total amount of compensations paid
under insurance policies during the year of assessment, the amount
of increase or decrease in compensation payable during the year of
assessment;

«insurance business undertaking», «actuary», and «business in
general class» and «Superintendent of Insurance» have the meaning
assigned to these terms by the Law on Insurance Services and other
35(I)/2002.
Related Issues;

«expenses» include commissions and, in the case of an insurance
undertaking whose Head Office is situated outside the Republic, a



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fair proportion of the expenses of the Head Office of the insurance
undertaking which shall not exceed two per cent (2%) of the
premium income in the Republic, less premiums paid on
reinsurances;

«net claims» means the claims reduced by the amount which was
recovered during the year of assessment in connection thereto from
reinsurance;

«net investment income» includes any profit or loss from the sale of
investments of the long term business reserve fund and any
appreciation or depreciation in the value of investments relating to
unit linked policies;

«liabilities» include benefits to the insured and shall be ascertained
by an annual actuarial valuation approved by the Superintendent of
Insurance. Liabilities and any reserves which relate to liabilities of
long term business shall be ascertained by the actuarial method
adopted by the insurance undertaking. This method, as well as the
discounting factors or other factors not related to discounting will be
applied consistently from year to year unless there is adequate
justification for any changes by the insurance undertaking and the
Commissioner is satisfied to this effect:

Provided that the Commissioner may not accept any method or a
change in a method followed by the insurance undertaking, if
evidently it does not conform with generally accepted insurance and
accounting principles. For this purpose the Director may demand
from the insurance undertaking, the submission of such evidence
which he may deem necessary.

18. (1) In the case of an owner of a ship or aircraft, the profits or
Shipping and
benefits of his business as an owner of a ship or aircraft shall, if he
aircraft
produces or causes to be produced to the Commissioner a certificate
businesses.
as is mentioned in sub-section (2), be taken to be a sum bearing the
same ratio to the sums payable in respect of fares or freight for
passengers, goods or mails shipped in the Republic as his total profits
for the relevant accounting period shown by that certificate bears to



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the gross income for that period.

(2) The certificate mentioned in sub-section (1) shall be a certificate
by the taxing authority of the country in which the principal place of
business of the owner of a ship or aircraft is situated and shall state-

(i) that the owner of a ship or aircraft has furnished, to the
satisfaction of that authority, an account of the whole of his
business; and

(ii) the ratio of the profits or benefits for the relevant accounting
period to the gross income of the owner of a ship or aircraft for
that period, as computed according to the income tax law of
that country, after deducting interest on any money borrowed
and employed in acquiring the profits or benefits.

(3) If the profits or benefits of an owner of a ship or aircraft have
been computed on any basis other than the ratio of the profits or
benefits, shown by a certificate as provided in sub-section (2), at any
time within two years from the end of the year of assessment the
owner of a ship or aircraft shall be entitled to such revision as may
be necessary to give effect to the said certificate and to have any tax
paid in excess refunded:

Provided that, subject to the provisions of section 4 of the Merchant
Shipping (Fees and Taxing Provisions) Laws, profits or benefits
38(I) of 1992
arising from the business of operating ships or aircraft carried on by
29(I) of 1995
a person who is not resident in the Republic, shall be exempted from
63(I) of 1999
tax, provided that the Minister of Finance is satisfied that an
73(I) of 1999
equivalent exemption from income tax is granted by the country in
which such person is resident to persons resident in the Republic.

(4) In this section-

(a) the expression «owner of a ship or aircraft»™ means any owner
or charterer of ships or aircraft who is not resident in the
Republic; and

(b) the expression «business of operating ships or aircraft» means
the business carried on by an owner or charterer of ships or


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aircraft.

19. The income of any person which is derived from the rendering
Taxation of
of ship management services, as this term is defined in the Merchant
income of a person
Shipping (Fees and Taxing Provisions) Laws, shall be subject to tax
from the rendering
at the rate of 4,25 per cent (4,25%):
of ship
management Provided that, in the case of an individual falling within the provision
services. of this section, no tax allowances, credits or exemptions shall be
allowed:

Provided further that such income shall not be added to any other
income, and in the case of a loss, such loss cannot be carried forward,
notwithstanding the provisions of section 13 of this Law.

20. The income of any individual, who is resident in the Republic,
Pensions from
from pension for services rendered outside the Republic, which
services rendered
exceeds the amount of two thousand pounds, shall be charged to tax
outside the
at the rate of five cent in the pound:
Republic.

Provided that this income shall not be added to any other income:

Provided further that an individual who falls within the provisions
of this section may elect to be assessed in respect of each year of
assessment either in accordance with the provisions of this section
or in accordance with the provisions of Parts III and V of this Law.
Tax on the gross 21. The gross amount of any royalty, premium, compensation or
amount of other income derived from sources within the Republic by any
royalties,
person not being resident in the Republic, who is not engaged in any
premiums,
business in the Republic, in consideration for the use of, or for the
compensation,
privilege of using, any copyright, patent, design, secret process or
etc.
formula, trade mark, know-how or any other like property or in
consideration of technical assistance, shall be charged to tax at the
rate of ten cent in the pound:

Provided that in case the right is granted for use outside the
Republic, this amount shall not be deemed as income derived from
sources within the Republic.




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22. The gross amount of any rental in respect of the show in the
Film rentals, etc.
Republic of cinematograph films (whether such rental is fixed or
constitutes a percentage of the gross receipts) derived by any person
who is not resident in the Republic shall be charged to tax at the rate
of five cent in the pound.

23. The gross income derived by an individual not resident in the
Profits of
Republic from the exercise in the Republic of any profession or
professional
vocation, the remuneration of public entertainers not resident in the
men, artists, etc.
Republic, and the gross receipts of any theatrical or musical or other
group of public entertainers, including football clubs and other
athletic missions from abroad, derived from performances in the
Republic, shall be charged to tax at the rate of ten cent in the pound:

Provided that where tax is imposed under this section on any group,
its individual members shall not be liable to tax.

24. (1) Any person entering into any contract with any individual
Deduction of tax
not resident in the Republic or with any company not engaged in
before payment
the Republic in any business, in connection with transactions of the
is effected and
kind set out in sections 21, 22 and 23, shall deduct tax at the rate
remittance of
prescribed in the said sections from any receipts made on or on
the tax
behalf of, or from any payments made or to be made to, such
made to to the
individual or company and remit the same forthwith to the
Commissioner.
Commissioner, together with a statement showing full details of the
circumstances which gave rise to the deduction and showing how the
tax deducted was computed.

(2) Any tax required to be deducted under the provisions of sub-
section (1), shall be deemed to be a tax assessed on the person who
is required to deduct that tax and shall be recoverable from such
person in any manner provided in any law concerning the collection
of taxes:

Provided that nothing in this section contained shall be construed as
preventing the Commissioner from recovering such tax from the
person who has earned the income on which the tax was charged,
notwithstanding the fact that no assessment has been raised on such


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person:

Provided further that where no statement or other particulars have
been furnished, the Commissioner may, to the best of his judgment,
determine the amount of the tax that ought to have been deducted.

(3) If any such tax is not deducted or, if deducted, is not remitted to
the Commissioner in the month following that in which the
deduction was made, a sum equal to the sum payable in case of an
arrear of payment of tax shall be added thereto, by way of interest,
and the provisions of any law relating to the collection and recovery
of taxes shall apply to the collection and recovery of such interest.

(4) The provisions of any law relating to objections and recourses
shall apply to any decision of the Commissioner under this section,
but payment of the tax demanded shall not be postponed pending the
result of such objection or recourse.


PART V
RATES OF TAX

Rates as per the 25. There shall be charged and levied upon the chargeable income
Second Schedule. tax at the rates and in accordance with the provisions set forth in the
Second Schedule.
PART VI
COMPANY REORGANIZATIONS
Carry over of 26. (1) Assets and liabilities, including provisions and reserves,
balance sheet which are transferred under a reorganization, shall not give rise to
profits liable to tax for the transferring company.
values in case of
reorganization. (2) The receiving company shall compute any new depreciation and
any profits or losses in respect of the assets, liabilities, provisions
and reserves transferred according to the conditions that would have
applied to the transferring company or companies if the
reorganization had not taken place.
Carry over of 27. In the case of a reorganization involving companies which are
losses. resident in the Republic and or companies not being resident in the



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Republic, any accumulated losses of the transferring company which
is resident in the Republic or has a permanent establishment in the
Republic shall be transferred to the receiving company resident in
the Republic or to the receiving company not resident in the
Republic and having a permanent establishment in the Republic and
the provisions of section 13 of this Law regarding set-off or carry
forward of losses shall apply accordingly.
Existing holding in 28. Where the receiving company, resident in the Republic or, if not
resident in the Republic having a permanent establishment in the
transferring
Republic, has a holding in the capital of the transferring company,
company.
any profits accruing to the receiving company on the cancellation of
the holding shall not be liable to tax.

29. (1) The allotment of shares representing the capital of the
No taxation of
receiving or acquiring company to a shareholder of the transferring
shareholder in case
or acquired company in exchange for shares representing the capital
of exchange of
of the latter company shall not, of itself, give rise to any profits or
shares.
benefits liable to tax in respect of that shareholder.

(2) The shares received shall have the same value for tax purposes
as the shares exchanged had immediately before the reorganization.

(3) The application of sub-section (1) shall not prevent the taxing
of the profit arising out of the subsequent transfer of shares received.

30. For the purposes of this Part, "reorganization" means a merger,
Meaning of the
division, transfer of assets and exchange of shares, involving
term
companies resident in the Republic and or companies not resident
˜reorganization™
in the Republic and -

(a) «merger» shall mean an operation whereby:

(i) one or more companies, on being dissolved without going
into liquidation, transfer all their assets and liabilities to
another existing company in exchange for the issue to
their shareholders, of shares representing the capital of
that other company, and, if applicable, in exchange for a
cash payment not exceeding ten per cent (10 %) of the
nominal value of the shares, or, in the absence of a


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nominal value, of the accounting par value of those shares,

(ii) two or more companies, on being dissolved without going
into liquidation, transfer all their assets and liabilities to a
new company that they form, in exchange for the issue to
their shareholders, of shares representing the capital of
that new company, and, if applicable, in exchange for a
cash payment not exceeding ten per cent (10 %) of the
nominal value, or in the absence of a nominal value, of the
accounting par value of those shares,

(iii) a company, on being dissolved without going into
liquidation, transfers all its assets and liabilities to the
company holding all the shares representing its capital;

(b) «division» shall mean an operation whereby a company, on
being dissolved without going into liquidation, transfers all its
assets and liabilities, to two or more existing or new
companies, in exchange for the pro rata issue to its
shareholders, of shares representing the capital of the
companies receiving the assets and liabilities, and, if applicable,

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