Applying for Income Tax Advance Ruling
Under the advance ruling system, taxpayers (including companies, individuals, sole-proprietorships, partnerships, etc.) can make an application for the Comptroller of Income Tax to issue an advance ruling.
Scope of Income Tax Advance Ruling
An advance ruling only applies to the applicant and the particular arrangement that was the subject of the ruling request and, where applicable, to the year(s) or period(s), and provisions of the Income Tax Act stated in the ruling. It binds the Comptroller of Income Tax to apply the relevant provisions of the Income Tax Act in the manner that was set out in the ruling.
Declining a Request/ Application for Advance Ruling
Under certain circumstances, IRAS will not or may decline to rule. Some examples of such circumstances are:
- The matter on which the ruling is sought:
- Involves the interpretation of a foreign law or the application of an Agreement for the Avoidance of Double Taxation.
- Requires IRAS to determine a question of fact 1.
- Requires IRAS to form an opinion as to a generally. accepted accounting principle or a commercial practice
- Is subject to an objection or appeal, whether in relation to the company or any other person.
- The correctness of the ruling depends on the making of assumptions, whether in respect of a future event or any other matter
- IRAS has already raised an assessment (other than an assessment of any estimated tax) for the relevant Year(s) of Assessment in relation to the arrangement
- IRAS has embarked on an audit or investigation on how any provision of the Income Tax Act applies to the company or to other similar arrangements
- In IRAS' opinion, the application is frivolous or vexatious2, or the company is not seriously contemplating the arrangement for which the ruling is sought
- The company has not provided, within the specified timeframe, sufficient information despite IRAS' request for additional information
View the full list of circumstances (refer to Part I of the Seventh Schedule).
1Examples of applications that may require IRAS to determine a question of fact include those seeking IRAS' confirmation on:
- The nature and taxability of the gains to be derived from the sale of properties or shares
- Whether there was a change of intention with respect to the holding of a property (e.g. from investment holding to property trading or vice versa)
- Tax residency status of a company
IRAS will consider the merits of the application on a case-by-case basis and can, at our discretion, decline to make a ruling.
2 IRAS will take into account all surrounding circumstances in considering whether an application is frivolous or vexatious. An instance of a vexatious application is where IRAS views that the proposed arrangement is not carried out for bona fide commercial reasons or involves a scheme which has, as 1 of its main purposes, the avoidance or reduction of tax.
Example of Vexatious Application 1
Company A, a Singapore incorporated company, is the registered owner of a number of trademarks and receives royalty income from its trademarks. Company A plans to set up a wholly owned subsidiary in a low tax jurisdiction to which it will sell all its trademarks. The transfer price is to be paid by the subsidiary from cash flows generated from the operations as and when available. The subsidiary will then receive royalties from the users of the trademarks and will pay dividends from its profits to Company A. Company A claims that the proposed transfer of trademarks is an outright sale for the subsidiary to exclusively focus on owning and managing the trademarks. However, the subsidiary will not have employees and will use the services of an agent in that jurisdiction to handle its incorporation matters.
Ruling request: Confirmation that the gains from sale of trademarks derived by Company A will not be taxed and that future dividends received from the subsidiary will not be taxable in Singapore.
In IRAS' opinion, the proposed transaction is artificial as the transfer price is payable only as and when cash flows generated from the subsidiary's operations are available. The subsidiary appears to be just a shell company with no employees to manage the trademarks. The main purpose of transferring the trademarks to the subsidiary is to avoid or reduce tax payable and not for bona fide commercial reasons.
Example of Vexatious Application 2
Companies X and B are incorporated in Singapore. Company X plans to enter into a distribution agreement with Company B. Company X claims that Company B stipulates that the contracting party of the distribution agreement must be a Singapore incorporated company. Company X does not have employees or operations in Singapore. All of Company X's operations (including the negotiation and signing of the distribution agreement) will be managed and performed by Company Y's employees (on behalf of Company X) in Country Y. Company Y is incorporated in Country Y and is a related party of Company X. The income from reselling the products (arising from the distributing agreement) will be booked in Company X's books. Company X is not able to substantiate why its operations cannot be performed in Singapore.
Ruling request: Confirmation that Company X's income arising from the distribution agreement will be considered sourced outside Singapore and the income will not be subject to tax in Singapore.
In IRAS' opinion, there are no bona fide commercial reasons for having the agreement signed in Country Y and Company Y undertaking the business operations on behalf of Company X, other than for the avoidance or reduction of tax.
How to Apply
To obtain an advance ruling from IRAS, you are required to submit an application form along with the required fees and details of the arrangement.
If you are:
- Single Applicant: You may apply in your own right or on behalf of a person who has yet to come into legal existence.
- Joint Applicants: 2 or more persons may also jointly apply.
- Authorised Agent: If an agent is making the ruling request on your behalf, you need to authorise the agent in Section E of the Application form for income tax advance ruling (DOCX, 150KB)
Documents to Submit
Submit the following documents before the date of the proposed arrangement:
- Application form for income tax advance ruling (DOCX, 150KB)
- A written ruling request providing:
- Full particulars of the arrangement in question comprising:
- A comprehensive description of the proposed arrangement and the period concerned.
- Background of the parties to the arrangement.
- Business reasons for the arrangement, if applicable.
- Copies of all relevant documents with the relevant parts or passages identified
- The issue(s) to be considered
- The propositions of the law that relate to the issues raised in the request. This should include:
- Sections of the Income Tax Act that are relevant to the request.
- Appropriate case laws, if any, and legal reasons that support the applicant's interpretation of the said section(s) involved.
- Possible argument contrary to the interpretation.
- proposed and legal reasons and authoritative support, if any, for these arguments
- Whether a previous request has been made on the same or similar arrangement. If so, the outcome of the request and reference of the ruling issued, if applicable
- A draft ruling
To expedite the review of your ruling request, additional information is required if the arrangement involves a sale of property (PDF, 66KB), or sale of shares (PDF, 59KB). As the matter on which the ruling is sought will require IRAS to determine a question of fact, we can, at our discretion, decline to make a ruling after reviewing the additional information submitted.
Template for Written Ruling Request
You may submit the written ruling request using the template attached as Appendix 1 to the Application form for income tax advance ruling (DOCX, 150KB). We may decline to accept your ruling application if any of the above information is not provided in the written ruling request.
Address your application and ruling request to:
|For ruling requests with regard to arrangements concerning Corporate Income Tax matters||Assistant Commissioner (Corporate Tax Division) via email to [email protected]|
|For ruling requests with regard to arrangements concerning Individual Income Tax matters||Assistant Commissioner (Individual Income Tax Division) via email to [email protected]|
When you apply for an advance ruling, the aggregate of the following fees are payable:
|Fees Payable||When to Pay|
|1. Application fee of S$660
It is non-refundable even if IRAS declines to accept your ruling request. This fee takes into account the time taken to determine if we are able to accept the ruling request.
|Payable when submitting the advance ruling application form to IRAS.|
|2. Further time-based fee
You will be charged an hourly rate of S$165 (inclusive of GST) for each hour or part thereof subsequent to the first 4 hours taken to provide the ruling.
3. Additional fee
In the exceptional circumstance where we have agreed to the request for express ruling, you will be charged an additional fee (in addition to the application fee and further time-based fee above) of up to 1 time the aggregate of the application fee and further time-based fee above.
|If IRAS accepts your ruling application after its review, you will be informed of an estimate of the further time-based fee and additional fee payable (for express rulings) based on the estimated time that IRAS will spend to provide the ruling
('estimated fees') in IRAS’ letter of offer to rule.
To facilitate timely collection of such fees, you must pay the estimated fees when you accept IRAS’ offer to provide a ruling.
Upon the issue of the ruling or if you withdraw your ruling request after accepting IRAS’ offer to rule, you will be informed of the actual fees payable (based on actual time spent by IRAS) to provide the ruling or process the ruling request up to the point of your withdrawal respectively:
• Where the actual fees are more than the estimated fees already paid, IRAS will issue an invoice to collect the actual fees in excess of the estimated fees. Payment must be made within 30 days from the date of IRAS’ invoice.
• Where the actual fees are less than the estimated fees already paid, IRAS will refund you the estimated fees paid in excess within 15 working days after IRAS informs you of the actual fees, provided that all information for a refund via interbank transfer has been made available to IRAS.
|4. Reimbursement fee
Any costs and reasonable disbursements incurred by IRAS in relation to the ruling and any fees paid by us for external professional advice must be reimbursed by the applicant. We will seek your agreement before obtaining any external professional advice.
|Payable within 30 days from the date of IRAS’ invoice which will be sent to you.|
You can pay via Internet Banking Fund Transfer/ Telegraphic Transfer to IRAS' bank account as stated below:
|Payee||Inland Revenue Authority of Singapore|
|DBS Current Account Number||0010516000 - SGD|
|DBS Bank/ Branch Code||7171/ 001|
|DBS Bank Swift Code||DBSSSGSG|
Indicate the UEN number and/or applicant's name under the Beneficiary Reference/ Purpose of Payment/ Remittance Information/ Payment Details field to avoid delay in the processing of the application.
Application Review Process
Applications may or may not be accepted.
- Application Accepted
You will be informed when you can expect the ruling to be issued and the estimated amount of total fees payable. You will be required to confirm in writing your acceptance of the terms under which the ruling is to be issued.
Generally, we will give a ruling within 8 weeks of receiving all necessary information. If the request is complex and we require more time, we will keep you informed.
- Application Not Accepted
You will be informed of the non-acceptance and the reason(s). The application fee of S$660 will not be refunded.
Applications for rulings are generally processed on a first-come-first-serve basis. An overview of the application review process is as follows:
|1||IRAS receives advance ruling application via email||IRAS will acknowledge receipt of the application via email within 3 working days of receipt of the application.|
|2||IRAS issues first query letter with a view to accept the application/ IRAS rejects the application1||Within 4 weeks of receipt of application.
After reviewing the application, IRAS may write to you or your authorised tax agent for additional information to process your ruling request. We will process your ruling request only when the additional information has been submitted.
To help us expedite the review of your application, ensure that you provide complete/ detailed information in your ruling requests.
|3||IRAS receives Applicant's reply|
|4||IRAS issues second query letter||Within 4 weeks of receipt of first reply.|
|5||IRAS receives Applicant's reply|
|6||IRAS issues letter of offer and informs Applicant of the estimated fees to provide a ruling/ IRAS rejects the application||Within 4 weeks of receipt of second reply. IRAS assumes that full information has been made available at this stage. If otherwise, IRAS reserves the right to request for further information.|
|7||IRAS receives Applicant's acceptance of offer letter and payment for the estimated fees|
|8||IRAS issues advance ruling||Within 8 weeks from date of receipt of acceptance letter, payment for the estimated fees or complete information, whichever is later.|
1 IRAS may decline to give a ruling/ will not give a ruling if the application falls within paragraphs 1, 2 and/or 3 of Part I of the Seventh Schedule of the Income Tax Act or the information in the ruling application is incomplete.
As applicants are generally in the position to plan and put in an advance ruling application, IRAS does not agree to requests for express rulings except in exceptional circumstances where there are good and valid reasons, and only if IRAS' resources permit. IRAS does not accept the following reasons (non-exhaustive) as grounds for express rulings:
- The ruling is required to finalise the proposed structure/ transaction so that the applicant can proceed with the next steps
- The listing of the proposed structure/ proposed transaction is targeted to take place soon
- The ruling is required to obtain certainty of the tax treatment of the proposed transaction before the filing of the Income Tax Return/ completion of a deal/ Board meeting
In the exceptional circumstance where IRAS agrees to a request for an express ruling, we will issue the advance ruling within 6 weeks from the date of receipt of acceptance letter or complete information, whichever is later.
Withdrawing Your Application
You can withdraw your ruling request any time before the ruling is given. The withdrawal must be made in writing.
- Withdrawing before the confirmation of your acceptance
If you withdraw before the ruling is given and before you confirm in writing your acceptance of the terms under which the ruling is to be issued, no other fees are payable. The application fee of S$660 will not be refunded.
- Withdrawing after the confirmation of your acceptance
If you withdraw after you confirm in writing your acceptance of the terms under which the ruling is to be issued but before the ruling is given, you will be charged the further time-based fee, additional fee (for express rulings) and reimbursement fee (if any) for the time spent on the review of your ruling request up to the time of receipt of your withdrawal. These fees are on top of the application fee of S$660.
Learn when to pay the above fees chargeable to you.
You may contact us for assistance or clarification on the advance ruling system for income tax:
|Arrangement that involves||Contact number|
|Individual Income Tax||(+65) 6351 3090|
|Corporate Income Tax||(+65) 6351 3367|
Upon Issuance of Income Tax Advance Ruling
Disagreeing with Income Tax Advance Ruling
An advance ruling is final and the taxpayer cannot appeal against the ruling i.e. there is no appeal process provided for in the Income Tax Act.
If you disagree with the ruling, you must declare in your annual Income Tax Return for the relevant Year of Assessment that you have obtained and chosen not to rely on the advance ruling. IRAS will review the difference in opinion when we review your Income Tax Return. You may appeal against any assessment raised on the basis of our advance ruling under the objection provisions in Section 76(2) of the Income Tax Act.
Publishing Income Tax Advance Rulings
IRAS issues e-Tax Guides and updates our website to set out our views on the tax treatment of general tax issues.
Where useful or appropriate, IRAS will include examples modified from advance rulings in the e-Tax Guides and on our website to provide greater tax certainty and transparency on IRAS interpretation of tax laws. You may wish to refer to these publications before making an advance ruling application.
In addition, to enhance taxpayers’ understanding of IRAS’ interpretation and application of tax laws in specific scenarios, we will publish a summary of the ruling (i.e. a summary of the background, facts and issues raised in the application for advance ruling, as well as the rulings given) on IRAS’ website in respect of advance ruling applications made on or after 1 May 2019, if:
- You have given your consent for the publication of a summary of the ruling in Section E of the advance ruling application form; and
- The issue that is the subject of the ruling request does not relate to Advance Pricing Arrangements.
For advance ruling applications made on or after 1 Feb 2021 where the subject of the ruling request relates to the characterisation of hybrid instrument and related issues, IRAS may exclude the ruling from publication if similar summaries of ruling have been published on IRAS’ website.
The summary of the ruling will be published in a form that does not set out the identity of the applicant, the arrangement or any other parties to the arrangement in the ruling, date of transactions or transaction values. View the sample format (PDF, 283KB) of an advance ruling that will be published.
Timeline for Publication of Advance Rulings
A summary of the ruling will be published on our website at least 6 months after the ruling has been issued.
Prior to publication, we will provide you with a draft copy of the summary of the ruling for your comments within 8 weeks from the date of the ruling letter. You must review the draft summary carefully and notify IRAS of any proposed edits (with reasons) within 6 weeks. We will consider any comments and proposed changes made by you before the publication of the summary. No fee is chargeable for the time spent in preparing the summary of the ruling for publication.
The expected timeline for the publication of an advance ruling is as follows:
|1||IRAS issues ruling to Applicant|
|2||IRAS sends first summary of ruling to Applicant for review and agreement||Within 8 weeks from date of ruling letter|
|3||Applicant to reply to IRAS with proposed edits and reasons for the edits, or confirmation that no edit is required||Within 6 weeks from the date IRAS sends the first summary1 2|
|4||IRAS sends second summary of ruling to Applicant for review and agreement||Within 6 weeks from the receipt of applicant’s reply on the first summary|
|5||Applicant to reply to IRAS with proposed edits and reasons for the edits, or confirmation that no edit is required||Within 6 weeks from the date IRAS sends the second summary1 2|
|6||IRAS uploads the summary of ruling on IRAS website||At least 6 months after the ruling is issued to the Applicant|
1 If a reply is not received by the timeline mentioned, IRAS may proceed to upload the ruling summary on the IRAS website after 6 months from the date of the ruling.
2 IRAS may consider requests for extension of time to reply on the summary on a case-by-case basis. Such extensions are to be requested for at least 1 week before the original deadline lapses.
Summary of Income Tax Advance Rulings Issued
Individual Income Tax
Other than Individual Income Tax
Spontaneous Exchange of Information
Singapore participates under an internationally agreed framework for the compulsory spontaneous exchange of information in respect of rulings. Under the framework, Singapore will spontaneously exchange information on specified categories of rulings with certain jurisdictions.
Learn more about the Spontaneous Exchange of Information.