Tax Exemption for Foreign-Sourced Income
Updated: Aug 18
Singapore has a tax exemption scheme for foreign-sourced income, known as the Foreign-Sourced Income Exemption (FSIE) scheme. Under the FSIE scheme, specified foreign income received by specified resident taxpayers is exempt from tax if the following qualifying conditions are met:
Subject to tax condition: The specified foreign income must have been subjected to tax in the foreign jurisdiction from which it was received.
Foreign headline tax rate of at least 15% condition: The headline tax rate of the foreign jurisdiction from which the income is received must be at least 15%.
Beneficial tax exemption condition: The Comptroller of Income Tax must be satisfied that the exemption will be beneficial to the taxpayer.
The specified foreign income that is eligible for the FSIE scheme includes:
Foreign branch profits
Foreign-sourced service income
Foreign-sourced rental income
Foreign-sourced interest income
Foreign-sourced royalty income
The FSIE scheme does not apply to foreign-sourced income that arises from a trade or business carried on in Singapore. For example, if a Singapore resident company earns profits from a branch office in another country, those profits will be taxable in Singapore, even if they are received in Singapore.
The FSIE scheme is a significant tax incentive for Singapore residents who earn foreign-sourced income. It can help to reduce their overall tax liability and make Singapore a more attractive place to live and work.
Here are some additional things to keep in mind about the FSIE scheme:
The qualifying conditions must be met for each year in which the specified foreign income is received.
The FSIE scheme does not apply to all types of foreign-sourced income.
The Comptroller of Income Tax may require additional information or documentation to be submitted in order to determine whether the exemption is applicable.
If you have any questions about the FSIE scheme, you should consult with a tax advisor.
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.
How Bestar can Help
Bestar is a Singapore-based accounting firm that specializes in providing tax advisory services to businesses and individuals. They can help you with the following:
Advise you on whether you are eligible for the FSIE scheme. Bestar will assess your specific circumstances and advise you on whether you meet the qualifying conditions for the FSIE scheme.
Prepare the necessary documentation for the FSIE scheme. Bestar will help you to prepare the necessary documentation, such as tax returns and supporting documents, to claim the FSIE exemption.
Represent you before the Comptroller of Income Tax. If the Comptroller of Income Tax has any queries about your claim for the FSIE exemption, Bestar can represent you in any discussions or appeals.
In addition to the FSIE scheme, Bestar can also help you with other tax matters, such as corporate tax, personal tax, and GST. They have a team of experienced and qualified tax advisors who can provide you with the best possible advice and assistance.
Here are some of the benefits of using Bestar to help you with the Tax Exemption for Foreign-Sourced Income Singapore:
They are a reputable and experienced accounting firm.
They have a team of experienced and qualified tax advisors.
They can help you with all aspects of the FSIE scheme, from eligibility assessment to documentation preparation and representation before the Comptroller of Income Tax.
They offer competitive fees.