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Income Tax (Amendment) Act 1990

SOLOMON ISLANDS

THE INCOME TAX (AMENDMENT) ACT 1990

(NO. 5 OF 1990)

Passed by the National Parliament this fifteenth day of May 1990.
Assented to in Her Majesty's name and on Her Majesty's behalf this twentieth day of June 1990.

Date of commencement: see section 1.

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AN ACT to Amend the Income Tax Act.

ENACTED by the National Parliament of Solomon Islands.

ARRANGEMENT OF SECTIONS

Section:

1. Short title and commencement.
2. Amendment of section 2 of Cap. 61.
3. Amendment of section 14.
4. Amendment of section 23.
5. Amendment of section 29.
6. Amendment of section 31.
7. Insertion of new section 32B.
8. Insertion of new section 33A.
9. Amendment of section 34.
10. Amendment of section 44.
11. Repeal of section 62.
12. Amendment of section 70.
13. Amendment of Seventh Schedule.
14. Insertion of new Eighth and Ninth Schedules.

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Short title and commencement

1. (1) This Act may be cited as the Income Tax (Amendment) Act 1990, and shall subject to subsection (2) come into operation on such date as the Minister may, by notice published in the Gazette, appoint, and apply to income derived for the year ending 31st December, 1990 and subsequent years.

(2) The provisions of sections 4 and 7 of this Act (which amends section 23 and inserts a new section 32B to the Income Tax Act) shall be applicable to any income derived from 1st January, 1991, and subsequent years.

Amendment of section 2 of Cap. 61

2. Subsection (1) of section 2 of the Income Tax Act (hereinafter referred to as the "principal Act") is hereby amended as follows -

(a) by deleting the words "Income Tax" that appear in the definition of "Commissioner" and inserting instead the words "Inland Revenue";

(b) by deleting the semi-colon that appears at the end of paragraph (b) of the definition of "resident in Solomon Islands" and inserting instead a colon; and

(c) by adding thereto next after the colon so inserted the following proviso -

"Provided that the Commissioner may, if he is satisfied taking into account the nature of the contract of employment and the method of payment for such services, treat such individual as non-resident, notwithstanding that at the relevant time such individual satisfies the requirements of this paragraph:".

Amendment of section 14

3. Section 14 of the principal Act is hereby amended by deleting paragraph (m) of subsection (2) and substituting therefor the following new paragraph -

"(m) the amount of any dividends paid in the immediate preceding year by a company resident in Solomon Islands from which tax has been deducted and remitted to the Commissioner by the due date in accordance with the provisions of section 33".

Amendment of section 23

4. Section 23 of the principal Act is hereby amended as follows -

(a) by deleting from subsection (1) the words "twelve hundred dollars" and substituting therefor the words "two thousand six hundred dollars";

(b) by deleting from subsection (2) the words "eighteen hundred and fifty dollars" and substituting therefor the words "three thousand seven hundred and fifty dollars"; and

(c) by deleting from subsection (3) the words "two thousand five hundred dollars" and substituting therefor the words "five thousand dollars".

Amendment of section 29

5. Subsection (3) of section 29 is hereby amended by deleting therefrom paragraphs (a)(i) and (ii) and substituting instead the following new paragraph as paragraph (a) thereof -

"(a) expenses incurred on medical treatment in Solomon Islands or outside Solomon Islands, to such extent and of such nature as the Minister may by Order from time to time prescribe;".

Amendment of section 31

6. Section 31 of the principal Act is hereby amended as follows -

(a) by deleting therefrom the words "the following rates" which appear immediately before paragraph (a) and substituting therefor the words "rates specified in the Eighth Schedule -";

(b) by deleting paragraphs (a) and (b); and

(c) by deleting from the proviso that appears at the end of that section the words "two dollars" and substituting therefor the words "five dollars".

Insertion of new section 32B

7. The principal Act is hereby amended by inserting therein immediately after section 32A the following new section as section 32B -

"Provisions relating to application of certain sections.

32B. (1) Subject to the provisions of subsection (2), the tax chargeable upon the total income in any year of any person to whom the provisions of section 14A (1) apply shall be at the rate of 0.5 percent for every dollar of income up to a maximum tax of ten thousand dollars.

(2) The provisions of subsection (1) shall not apply to -

(a) a non-resident person to whom the provisions of section 3(2)(a)(ii) apply; and

(b) a person to whom the provisions of section 32(1) and (2) apply and the tax chargeable under that section exceeds the tax chargeable under subsection (1); and

(c) any person granted exemptions under the provisions of this Act.

Insertion of new section 33A

8. The principal Act is hereby amended by inserting therein immediately after section 33 the following new section as section 33A -

"Withholding tax on gross payments made to residents.

33A. (1) To the extent that the income specified in subsection (2) is not exempt from tax, every person resident in Solomon Islands who makes a gross payment to any person or group of persons resident in Solomon Islands shall deduct therefrom tax at the Ninth appropriate withholding rate specified in the Ninth Schedule:

Ninth Schedule.

Provided that where the recipient of income specified in subsection (1) is an individual in secondary employment, the tax shall be deducted from such income paid to such individual at the rate prescribed in the Tax Deduction Rules, 1981:

Provided further that, where the Commissioner agrees with such person to accept an alternative arrangement for payment of the tax which may fall due under this section, he may declare such person exempt in part or in whole from the provisions of this section.

(2) For the purpose of subsection (1), income paid to a resident person as a gross payment and subject to resident withholding tax consists of -

(a) income from contracting or subcontracting;

(b) royalties;

(c) income from fishing operations;

(d) income from lease of property;

(e) income from the sale of cocoa;

(f) income from the sale of copra;

(g) income from the sale of marine products.

(3) Upon payment of such income as specified in subsection (2), the payer shall furnish to the person to whom the gross payment is paid, a certificate in the Form prescribed by the Commissioner setting forth the following -

(a) the name of the person making such gross payment;

(b) the name of the person or group of persons receiving such gross payment;

(c) the date on which the gross payment was made;

(d) the gross amount paid;

(e) the tax deducted from the gross payment; and

(f) the net amount paid.

(4) The amount of tax deductible from the payment of income in accordance with subsection (1) shall be due and payable by the payer to the Commissioner by the 20th day of the month following the month in which the gross payment was made, and the provisions of this Act relating to the collection and recovery of tax shall apply to the collection and recovery of such amount so deductible as if it were income tax which was due for payment on the twentieth day next after the said date on which the gross payment was made.

(5) Where any person in breach of subsection (1) fails to deduct any tax, the Commissioner shall have the right to collect such tax from either such person or the person who is chargeable with such tax and the Commissioner may take such steps as he thinks fit to recover that amount from both of those persons concurrently, or for recovering that amount wholly from one of those persons, or partly from one and partly from the other of those persons.

(6) Notwithstanding anything to the contrary in this Act, the tax deduction from the gross payment in accordance with this section shall be the final tax chargeable on such gross payments in respect of any -

(i) resident body of persons other than a company; and

(ii) resident individual whose total income including such gross payments, in any year is less than ten thousand dollars.

(7) In this section and the Ninth Schedule unless the context otherwise requires -

"gross payment" means in relation to an amount, the total amount without deduction whatsoever;

"income from fishing operations" means gross payments for operations relating directly to the taking or catching of fish, turtle, dugong, crustacea, oysters or other shellfish, within Solomon Islands;

"income from lease of property" means gross payments for a sub-lease and any licence, concession, permission, easement or other right granted to any person to use or over any land, and an agreement for such a concession; whether or not such a lease of property is effected by an oral or written agreement, and in the case of a written agreement, whether or not such document is required to be registered under the Land and Titles Act;

"income from the sale of copra" means all sales of copra within Solomon Islands;

"income from the sale of cocoa" means all sales of cocoa within Solomon Islands;

"income from the sale of marine products" means gross payments from all sales of beche-de-mer, marine shells, turtle shells and shark fins within the Solomon Islands;

"income from contracting and or sub-contracting" means as gross payments made for the business of installation, maintenance, construction erection, clearing and draining;

"paid", includes distribution, crediting or dealing with gross payments in the interest of, or on behalf of a person or group of persons, and the word "payment" shall be construed accordingly;

"royalties" includes the extracting, removal or other exploitation or the right to extract, remove or otherwise exploit standing timber or any natural resource.

(8) The Minister may by Order alter the rates specified in the Ninth Schedule to such extent as he deems fit.".

Amendment of section 34

9. Section 34 of the principal Act is hereby amended as follows -

(a) in subsection (2) -

(i) by deleting the definition of "income from contracting" and substituting therefor the following new definition -

""income from contracting" means the gross payments received from business of installation, maintenance, construction, erection, clearing and draining,";

(ii) by deleting from the definition of "income from ships or aircraft" the words "gains or profits from" wherever those words occur in that definition and substituting therefor in each case the words "the gross payments from";

(iii) by deleting the definition of "know how payments"; and

(iv) by inserting in proper alphabetical sequence the following new definitions -

""interest" in relation to the deriving of income by a non-resident person shall mean income on any amount for or a sum in the nature of interest where a person agrees or promises to pay a non-resident person a sum greater than the amount borrowed, the excess shall be deemed to be interest;

"person" includes the Solomon Islands Government and any Provincial Government or public authority;

"professional services" means any payment for professional or technical services or services of an adviser or consultant where the services are rendered wholly or partly in Solomon Islands to the extent that such payments do not constitute -

(i) emoluments which are liable to the deduction of tax within the Tax Deduction Rules 1981; or

(ii) reimbursement of travelling or accommodation expenses which are wholly and exclusively incurred in relation to such payment; and

"royalties" mean payments of any kind to the extent of which it is derived as consideration for -

(i) the use of or right to use any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right;

(ii) the supply of scientific, technical, industrial or commercial knowledge, information or assistance;

(iii) the supply or assistance ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any such property or right or any such knowledge or information or assistance as is mentioned in paragraphs (i) and (ii) of this definition.";

(b) by deleting paragraph (b) of subsection (3) and substituting therefor the following new paragraph -

"(b) professional services;"; and

(c) by inserting in subsection (4) the words “by the 20th day of the month following date of payment of such income” next after the word "certificate" that appears at the end thereof.

Amendment of section 44

10. Section 44 of the principal Act is hereby amended by deleting Amendment of section subsection (2).

Repeal of section 62

11. Section 62 of the principal Act is hereby repealed.

Amendment of section 70

12. Subsection (1) of section 70 of the principal Act is hereby amended by deleting the figure "30" and substituting therefor the figure "20".

Amendment of Seventh Schedule

13. The Seventh Schedule to the principal Act is hereby amended as follows -

(a) by deleting the words "Rates of Withholding Tax" and substituting therefor the words "Rates of Non-Resident Withholding Tax";

(b) by deleting paragraph (ii) and substituting therefor the following -

"(ii) Professional Services 7½¢ in the dollar";

(c) by deleting from paragraph (iv) the words "6¢ in the dollar" and substituting therefor the words "7½¢ in the dollar"; and

(d) by adding next after paragraph "(vii)" the following new paragraph as paragraphs (viii) and (ix) respectively -

"(viii) the remuneration of foreign fishermen who are Pole and Line fishermen deemed to be non-resident for purposes of income tax as provided under section 2 of the Act - 10 cents in the dollar;

(ix) the remuneration of foreign fishermen who are Purse Seiners and deemed to be non-resident for purposes of income tax as provided under section 2 of the Act – 15¢ in the dollar".

Insertion of new Eighth and Ninth Schedules

14. The principal Act is hereby amended by inserting therein next after the Seventh Schedule the following new Schedules as the Eighth and Ninth Schedules respectively -

“EIGHTH SCHEDULE
(section 31)

Rates of Individual Income Tax

MARRIED TAXPAYERS

SINGLE TAXPAYERS

NINTH SCHEDULE
(section 33A)

Rates of Resident Withholding Tax

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