Tax Exemption for Foreign Income Not Remitted to and Received in Singapore

Tax Exemption for Foreign Income Not Remitted to and Received in Singapore | Bestar

Singapore Tax on Foreign Income

Tax Exemption for Foreign Income Not Remitted to and Received in Singapore

Foreign income refers to income derived from outside Singapore. Generally, such income is taxable in Singapore when remitted to and received in Singapore. Where the foreign income arises from a trade or business carried on in Singapore, it is taxable in Singapore upon accrual, regardless of whether it is received in Singapore.

Singapore does not impose a tax on foreign income that is received by a Singapore resident company from outside Singapore. This means that if the foreign income is not "received" in Singapore, i.e., it is left in the foreign country, then it is not subject to tax by Singapore.   

Under Section 10(25) of the ITA, income from outside Singapore is considered received in Singapore when it is:

o Remitted to, transmitted or brought into Singapore;

o Used to satisfy any debt incurred in respect of a trade or business carried on in Singapore; or

o Used to purchase any movable property (such as equipment, raw material, etc.) brought into Singapore.

However, there are some exceptions to this rule. For example, certain foreign-sourced incomes that are received or remitted in Singapore by a Singapore tax company may be exempt if they meet certain criteria. Additionally, some foreign-sourced incomes received in Singapore by resident individuals may be exempt from tax under certain conditions.   

The tax exemption applies to specified foreign income that does not arise from a trade or business carried on in Singapore. Where the foreign income arises from a trade or business carried on in Singapore, it remains taxable in Singapore upon accrual regardless of whether it is received in Singapore.

Tax Computations - List of Key Information

• Essential information

Unremitted foreign income earned in different years are tracked and maintained until the particular income is entirely remitted or used in a manner that is not considered as received in Singapore under Section 10(25) of the Income Tax Act 1947 (“ITA”), such that the income becomes permanently unavailable for subsequent remittance.

• Income used during the year and not received in Singapore

This refers to foreign income that is used by the company in a manner that is considered not received in Singapore under Section 10(25) of the ITA, such that the income becomes permanently unavailable for subsequent remittance. One example of such use is when the foreign income is kept offshore and used for payment of one-tier tax exempt dividends directly to the shareholder’s bank account.

Please provide additional details in the tax computation (e.g. describe the usage of the income, and the basis for claiming that the income was considered not received in Singapore and can no longer be remitted even in the future).

• Unremitted income– balance c/f

This includes:-

o Foreign income which is not remitted and not used in any manner.

o Foreign income that is used in any manner that may subsequently be received in Singapore under Section 10(25) of the ITA. One such example is foreign income that is reinvested overseas without being repatriated to Singapore. As an administrative concession, the foreign income is not considered received in Singapore at the point of reinvestment and the taxation of such income is deferred until the investment is sold and the proceeds are brought into Singapore.

Companies must maintain source documents and records in relation to the following and be ready to submit them upon IRAS’ request.

o Details of how the unremitted income is kept/ used overseas.

o Why the foreign income is not considered received in Singapore during the relevant year under section 10(25) of the ITA.

• Share of allowable expenses attributable

This refers to the amount of expenses attributable to foreign income used by the company in a manner that is considered not received in Singapore under Section 10(25) of the ITA, such that the income becomes permanently unavailable for subsequent remittance.

How Bestar can Help

Bestar is a tax advisor. Bestar can provide significant assistance in obtaining tax exemption for foreign income not remitted to and received in Singapore. Here's how:

1. Comprehensive Assessment:

   
   

   • Detailed Analysis: Bestar will meticulously examine your specific situation, including the nature of the foreign income, the country of origin, and the structure of your investments or business activities.

   • Eligibility Determination: We will assess whether you meet the criteria for tax exemption under Singapore's tax laws and relevant double taxation agreements (DTAs).

     
     

2. Strategic Planning:

   
   

   • Tax Optimization: Bestar can help you structure your foreign income and investments to maximize tax benefits and minimize your tax liability.   

   • Compliance Strategies: We will guide you on how to comply with Singapore's tax regulations while taking advantage of available exemptions.   

     
     

3. Documentation and Filing:

   
   

   • Accurate Record-Keeping: Bestar will help you maintain proper documentation of your foreign income and related transactions, which is crucial for supporting your tax exemption claims.

   • Tax Return Preparation: We will assist in preparing and filing accurate tax returns, ensuring that all relevant information is included and that the claims for exemption are properly substantiated.

     
     

4. Representation and Advocacy:

   
   

   • Dealing with Tax Authorities: If you face any challenges or disputes with the tax authorities regarding your foreign income, Bestar can represent you and advocate for your position.

   • Staying Updated: Bestar will keep you informed about any changes in tax laws or regulations that may affect your tax obligations.   

     
     

5. Expert Advice:

   
   

   • Tailored Recommendations: Bestar will provide personalized advice based on your unique circumstances, taking into account your financial goals and risk tolerance.

   • Proactive Guidance: We will proactively identify potential tax issues and advise you on how to mitigate them.   

By engaging Bestar, you can gain valuable expertise and peace of mind, knowing that your tax affairs are being handled professionally and that you are taking full advantage of the available tax exemptions.   

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