Tax Exemption for Foreign-Sourced Income
When Income is Taxable
A company is liable to pay tax in Singapore on income that is:
a. accrued in or derived from Singapore; or b. received in Singapore from outside of 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 pay off any debt incurred in respect of a trade or business carried on in Singapore; or c. used to purchase any movable property brought into Singapore (e.g. equipment or raw materials connected to your business).
Section 10(25) will be applied to tax foreign income received in Singapore only if the income belongs to an individual who is resident in Singapore or an entity which is located in 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 have any enquiries or need clarification on this Guide, please contact Bestar.