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

Taxationbe applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading gainwhen the Units are disposed of. If the amount exceeds the cost or the reduced cost of the Units, as the casemay be, the excess will be subject to tax as trading income of such Unitholders.Distributions out of gains from the disposal of shares in the Target Singapore SPCsDistributions made out of gains from the disposal of shares in the Target Singapore SPCs, that is if theManager exercises its discretion to distribute such gains, will:• not be assessable to tax on the Unitholders if the gains are determined to be capital gains for Singaporeincome tax purposes, unless the distributions are considered gains or profits of a trade or businesscarried on by the Unitholder, for example, if the Units are held as trading assets; and• not be subject to further Singapore income tax in the hands of Unitholders if the gains are determined tobe trading gains for Singapore income tax purposes. Tax on such trading gains will be assessed on theTrustee.Disposal of UnitsSingapore does not impose tax on capital gains. Any gains on disposal of the Units are not liable toSingapore income tax provided the Units are held as investment assets. Where the Units are held astrading assets, any gains on disposal of the Units are liable to Singapore income tax under Section 10(1)(a)of the Income Tax Act. Where the Units are acquired with the intention or purpose of making a profit by saleand not with the intention to be held as long-term investments, any gains on disposal of the Units could beconstrued as “gains or profits of an income nature” liable to tax under Section 10(1)(g) of the Income TaxAct.Stamp dutyStamp duty will not be imposed on instruments of transfers relating to the Units. In the event of a change oftrustee of LMIR Trust, stamp duty on any document effecting the appointment of a new trustee and thetransfer of the trust assets from the incumbent trustee to the new trustee will be charged at a nominal ratenot exceeding S$10.00 as specified under Article 3(g)(ii) of the First Schedule to the Stamp Duties Act,Chapter 312 of Singapore.INDONESIA TAX IMPLICATIONSTax implications on the Retail Malls portion of the LMIR Trust Structure:On the transfer of shares in Indonesian SPCs to Singapore SPCsAny capital gain from the transfer of shares in Indonesian SPCs to Singapore SPCs is subject to taxpursuant to Article 17 of Income Tax Law No. 17/2000 with a maximum rate of 30.0% and the liability forsuch capital gains tax is the sole obligation of the Vendors.Tax implication for the TenantsOn the Rental Payments to the Indonesian SPCs• Article 4(2) Withholding Income TaxThe payment of rental on land and/or buildings leased by the Tenants to the Indonesian SPCs will besubject to a 10.0% final withholding income tax on the gross value of the land and/or buildings rental.However, if the tenants of the Retail Malls are not appointed tax withholder (i.e. individuals), then the finalincome tax must be paid directly by the Indonesian SPCs (not using the withholding system).251