LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Taxation• the dividends have been subject to tax in Indonesia; and• the Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to theSingapore SPCs.Based on the current tax laws in Indonesia, dividends paid by the Indonesian SPCs out of their incomefrom the letting of the Properties will meet the aforesaid conditions (see —“Indonesian Tax Implications”).Interest from the Indonesian SPCsLMIR Trust has obtained approval of the IRAS to exempt the interest received by the relevant SingaporeSPCs on the loans extended to the Indonesian SPCs from Singapore income tax under Section 13(12) ofthe Income Tax Act. This approval is subject to the relevant Singapore SPCs satisfying certain stipulatedconditions, including the condition that the full amount of the remitted interest, less attributable expenses,must be distributed to LMIR Trust.Gains on disposals of sharesSingapore does not impose tax on capital gains. In the event that the Singapore SPCs dispose of theirordinary shares in the Indonesian SPCs, gains arising from such a disposal will not be liable to Singaporeincome tax unless the gains are considered income of a trade or business. The gains may also be liable toSingapore income tax if the shares were acquired with the intention or purpose of making a profit by saleand not for long-term investment purposes.Gains arising from the sale of ordinary shares in the Indonesian SPCs, if considered to be trading gains,will be assessed to tax on the Singapore SPCs.Repayment of loans by the Indonesian SPCsAny proceeds received by the Singapore SPCs from repayment of principal on the loans by the IndonesianSPCs are capital receipts and hence not taxable on the Singapore SPCs.Taxation of UnitholdersDistributions by LMIR TrustSubject to LMIR Trust’s distribution policy (see “Distributions”), LMIR Trust’s distributions will mainly bemade out of the following receipts:• one-tier (tax-exempt) dividends received from the Target Singapore SPCs ( the “tax-exemptincome”); and• capital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.Distributions out of tax-exempt incomeUnitholders will be exempt from Singapore income tax on distributions made out of LMIR Trust’s taxexemptincome.For this purpose, the amount of tax-exempt income distributions that LMIR Trust can distribute for adistribution period will be to the extent of the amount of tax-exempt income that it has received and isentitled to receive in that distribution period.Distributions made out of any amount of Distributable Income for a distribution period which LMIR Trustreceived or is entitled to receive as its own tax-exempt income after the end of that distribution period willbe treated as capital distributions and the tax treatment set out under “Distributions out of capital receipts”will apply. The amount of such tax-exempt income may be used to frank tax-exempt income distributionsout of Distributable Income for subsequent distribution periods.Distributions out of capital receiptsUnitholders will not be subject to Singapore income tax on distributions made by LMIR Trust out of itscapital receipts, i.e. amounts received from the redemption of redeemable preference shares in the TargetSingapore SPCs. Such distributions will be treated as returns of capital for Singapore income taxpurposes. For Unitholders who hold the Units as trading or business assets and are liable toSingapore income tax on gains arising from disposal of the Units, the amount of such distributions will250