Singapore Tax Exemption for Foreign-Sourced Income

Singapore is a global financial hub with a competitive tax framework that benefits businesses and individuals. One of its key advantages is the tax exemption for foreign-sourced income, encouraging businesses to operate in Singapore without double taxation concerns.

What is Foreign-Sourced Income?

Foreign-sourced income refers to income earned outside Singapore. Common types include:

• Dividends: Earnings from overseas subsidiaries or investments.
• Branch Profits: Income from a company's foreign branch operations.
• Service Income: Payments for services rendered outside Singapore.

Singapore's Tax Exemption for Foreign-Sourced Income

Under Section 13(8) of the Income Tax Act, foreign-sourced income remitted into Singapore may be exempt if specific conditions are met. This exemption benefits multinational companies centralizing their operations in Singapore.

Eligibility Criteria

• Foreign Income Taxed Overseas: The income must have been subject to tax in its country of origin.
• Minimum Tax Rate of 15%: The foreign jurisdiction must impose at least a 15% corporate tax rate.
• Beneficial to Singapore: The income remittance must support Singapore's economic growth.

How to Apply

1. Prepare Supporting Documents: Tax assessments, withholding tax certificates, profit and loss statements.
2. Submit Application to IRAS: File a written request to claim the exemption under Section 13(8).
3. Await IRAS Approval: Ensure all documents are accurate to avoid delays.

Benefits of Tax Exemption

• Avoid Double Taxation: Income taxed overseas is not taxed again in Singapore.
• Encourages Regional Growth: MNCs can establish headquarters in Singapore.
• Supports Economic Development: Promotes profit repatriation into Singapore.

Common Mistakes to Avoid

• Failing to provide sufficient documentation.
• Remitting non-qualifying income without verification.
• Assuming automatic exemption without an IRAS application.

How Apexia Corporate Advisory Can Help

• Eligibility Assessment: We analyze if your foreign income qualifies for tax exemption.
• Application Assistance: We prepare and submit your IRAS application.
• Compliance Support: Ensuring your business meets all tax documentation requirements.
• Tax Advisory Services: Strategies to optimize tax efficiency for cross-border income.