Ample time given to use Section 44A tax credits

WE refer to the letter by Denis Distant 'Extend Section 44 Tax Credit Deadline', (BT, Oct 31). Mr Distant suggested that the government extend the expiry date for companies to utilise the balance of their section 44A tax credits.

We would like to highlight that companies have already been given five years' notice from Jan 1, 2003 - when the one-tier corporate tax system came into effect - to Dec 31, 2007 to allow them ample time to utilise the outstanding balance of their section 44A tax credits. A reminder of the Dec 31, 2007 deadline was given with the 2007 Budget Statement.

Many companies have actively taken steps to utilise their section 44A tax credits. These companies were able to do so within the five-year transitional period.

Further extension is unlikely to help companies that are still undecided for their own various reasons, about whether to pay dividends to utilise their section 44A balances.

It would not be fair to companies that had taken the effort to transit to the one-tier corporate tax system and it could erode our reputation of consistency and trust if we were to extend the expiry date to utilise section 44A tax credits.

CHEONG SWEE YING
CHIEF TAX POLICY OFFICER
MINISTRY OF FINANCE