A Singapore tax resident company can enjoy tax exemption on its foreign-sourced dividends, foreign branch profits, and foreign-sourced service income that is remitted into Singapore on or after 1st Jun 2003 if the following conditions are met:
- The highest corporate tax rate (headline tax rate) of the foreign country from which the income was received is at least 15%; and
- The foreign income had been subjected to tax in the foreign country from which they were received. The rate at which the foreign income was taxed can be different from the headline tax rate.
To enjoy the tax exemption, a company has to furnish the following information in its Form C and Appendix for Additional Information on Income and Deduction (Form IRIN 301):
- Nature and amount of income received;
- Country from which the income is received;
- Headline tax rate of the foreign country; and
- Confirmation that foreign tax has been paid in the country from which the income was received. Otherwise, company has to prove that income was exempt in the foreign country due to incentive granted for substantive business.
For details of this exemption, please read the e-tax guides listed below.
Remittance during 22 Jan 2009 to 21 Jan 2010
There is an expansion of scope in the exemption of foreign-sourced income to help companies tap on financing from their overseas investment and operations to meet their business financing needs in Singapore.
As announced in the 2009 Budget Statement, tax exemption will be granted on all foreign-sourced income accrued on or before 21 Jan 2009 to a resident company and which is received or deemed received in Singapore from 22 Jan 2009 to 21 Jan 2010 (both dates inclusive).
For the purpose of the tax exemption on foreign-sourced income remitted to Singapore during the said period, the "subject to tax" and "foreign headline tax rate" conditions specified in Section 13(9) of the Income Tax Act will be temporarily lifted.
All expenses incurred in respect of foreign-sourced income received in Singapore which qualifies for tax exemption shall be deducted against those foreign-sourced income, and will not be available for deduction against any other taxable income.
For details, please refer to the e-Tax Guide,
Temporary Liberalisation of Income Tax Exemption for Foreign-Sourced Income Received in Singapore From 22 Jan 2009 to 21 Jan 2010 (93KB)
How to claim for tax exemption
You are required to make a declaration in your income tax returns by giving the nature and amount of the foreign-sourced income that was remitted to Singapore. You are also required to complete the
Declaration Form for Foreign-Sourced Income Received in Singapore From 22 Jan 2009 to 21 Jan 2010 (60KB) for submission to IRAS. Although you have to state the use of the foreign income in the declaration form, the usage of such foreign income will not affect the claim for tax exemption.