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

Appendix CGains on disposal of sharesSingapore does not impose tax on capital gains. In the event that LMIR Trust disposes of its ordinaryshares or redeemable preference shares or both in the Target Singapore SPCs, gains arising from such adisposal will not be liable to Singapore income tax unless the gains are considered income of a trade orbusiness. The gains may also be liable to Singapore income tax if the shares were acquired with theintention or purpose of making a profit by sale and not for long-term investment purposes.Gains arising from the sale of the ordinary shares or redeemable preference shares or both in the TargetSingapore SPCs, if considered to be trading gains, will be taxable on the Trustee.Redemption of redeemable preference shares in the Target Singapore SPCsAny proceeds received by LMIR Trust from the redemption of its redeemable preference shares in theTarget Singapore SPCs at the original cost of the redeemable preference shares are capital receipts andhence not taxable on the Trustee.Other incomeIn the event that LMIR Trust derives other income that is liable to Singapore income tax, for exampleinterest from the deposit of surplus cash with banks, the tax on such income will be assessed on theTrustee at the prevailing corporate tax rate.Taxation of the Singapore SPCsThe Singapore SPCs are liable to Singapore income tax on:(a) income accruing in or derived from Singapore; and(b) unless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.The income of the Singapore SPCs will comprise substantially dividends derived from their holdings ofordinary shares in the relevant Indonesian SPCs or interest derived from shareholder’s loans extended tothe relevant Indonesian SPCs or both.Dividends from the Indonesian SPCsProvided that the Singapore SPCs are tax residents of Singapore for income tax purposes, any dividendsreceived in Singapore by the Singapore SPCs from the Indonesian SPCs will be exempt from Singaporeincome tax under Section 13(8) of the Income Tax Act, if the following conditions are met:(a) in the year the dividends are received in Singapore, the headline corporate tax rate in Indonesia is atleast 15.0%;(b) the dividends have been subject to tax in Indonesia; and(c) the Comptroller is satisfied that the tax exemption would be beneficial to the Singapore 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.C-3