Taxation of Foreign Interest Income
Updated: Dec 13, 2020
Is foreign interest income taxable? Is foreign interest income taxable in Singapore? What is foreign source income?
Foreign-sourced interest is taxable in Singapore when it is remitted or deemed to be remitted into Singapore.
Foreign income refers to income derived from outside Singapore. Generally, such income is taxable in Singapore when remitted to and received in Singapore.
Income Received from Abroad
Under Section 10(25) of the Income Tax Act, income from outside Singapore is considered received in Singapore when it is:
a. remitted to, transmitted or brought into Singapore;
b. used to satisfy any debt incurred in respect of a trade or business carried on in Singapore; or
c. used to purchase any moveable property (such as equipment, raw material etc.) brought into Singapore.
As an administrative concession, foreign income which is applied towards overseas investments without being repatriated to Singapore will not be treated as having been received in Singapore under section 10(25) at the point of reinvestment. This means that the taxing point of the foreign income is deferred till when the investment is realised and the proceeds are brought into Singapore.
If you are subject to tax on foreign-sourced income, you will continue to be entitled to claim tax reliefs or credits available under section 50, 50A or 50B of the Income Tax Act in respect of the foreign tax paid or payable on such income.
If you would like to know more, please contact Bestar.