What is Foreign Tax Credit and How to Claim

Foreign Tax Credit (FTC) is a mechanism that allows businesses to avoid double taxation on the same income. At Apexia Corporate Advisory, we help companies navigate the complexities of FTC claims to ensure compliance and maximize tax savings.

What is Foreign Tax Credit (FTC)?

Foreign Tax Credit is a tax relief provided to businesses that pay taxes on the same income in both Singapore and a foreign jurisdiction. FTC is designed to prevent double taxation and ensure businesses are not penalized for operating in multiple countries.

Types of FTC

There are two types of FTC available to Singapore tax residents:

• Double Tax Relief (DTR): Available under Singapore's Avoidance of Double Taxation Agreements (DTAs).
• Unilateral Tax Credit (UTC): Available for income derived from jurisdictions that do not have a DTA with Singapore.

Eligibility for FTC

To qualify for FTC, businesses must meet the following conditions:

• The income must be taxable in Singapore.
• Foreign taxes must have been paid or are payable on the same income.
• The claimant must be a tax resident in Singapore.

How to Claim FTC

To claim FTC, businesses must:

• Complete the FTC section in the Corporate Income Tax Return (Form C-S/ Form C).
• Provide supporting documents, such as foreign tax payment receipts or tax assessment notices from the foreign jurisdiction.
• Ensure the claim is supported by documentation proving the foreign income and taxes paid.

Tax Sparing Credit

Under some DTAs, Singapore offers tax sparing credits for foreign taxes that are exempted or reduced due to tax incentives in the foreign jurisdiction. This ensures businesses continue to benefit from the incentives while avoiding double taxation.

Documentation Requirements

To substantiate your FTC claim, ensure you maintain the following records:

• Foreign tax payment receipts or assessments
• Income statements detailing foreign-sourced income
• Evidence of the foreign jurisdiction's tax regulations
• Documents supporting Singapore tax residency

How Apexia Corporate Advisory Can Help

At Apexia, we specialize in assisting businesses with their Foreign Tax Credit claims. Our services include:

• Assessing eligibility for FTC
• Preparing and submitting accurate FTC claims
• Ensuring compliance with Singapore's tax regulations
• Providing strategic advice on cross-border tax planning

With our expertise, your business can focus on international growth while we handle the complexities of FTC compliance and optimization.