Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland

CST    |   20 May 2024   |   1 min read

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax issues and challenges in the Web3 space.

In this episode, our tax experts discussed how to successfully launch token offerings and how the crypto tax system works in Singapore. Gain valuable insights as they delve into the tax issues facing crypto businesses to avoid common pitfalls.

You may also listen to the podcast on Spotify.

Here is a link to the podcast transcript.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The webinar is designed for foreigners relocating to...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The...

Podcast: How To Successfully Scale Your Business Overseas

CST    |   26 Apr 2024   |   1 min read

Our CST Managing Director, Boon Tan joins MoneyFM 89.3 Breakfast Show in Singapore with host Audrey Siek to discuss “How to Successfully Scale your Business Overseas”.

Delve into the key strategies and tax obligations in the foreign market for Singaporean businesses looking to expand to Australia, the US, and regional Asian markets. Boon also discusses the risk of premature scaling and employment-related aspects that businesses should consider when expanding into the global market. 

Listen to the podcast on Spotify.

The podcast transcript is available here.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The webinar is designed for foreigners relocating to...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The...

Podcast: Navigating NFTs, DAO and GameFI

CST    |   21 Mar 2024   |   1 min read

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3. Together they unpack the tax implications of trading NFTs, investment strategies, and the vibrant community dynamics within the space.

In this podcast, Boon delves into topics such as DAOs, GameFI, and opportunities for additional income in Web3. Learn how to manage crypto and NFT profit taxes while navigating the evolving landscape of decentralized finance.

Listen to the podcast on Spotify.

To get the podcast transcript, click this link.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The webinar is designed for foreigners relocating to...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Webinar: Relocation To Singapore


13th Mar 2024
CST Tax Advisors

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar The...

Webinar: Relocation To Singapore

CST    |   13 Mar 2024   |   1 min read

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar.

The webinar is designed for foreigners relocating to Singapore, including job seekers, trailing spouses, and students.

Boon will be joined by Ms Marina Lopes, who has been residing in Singapore with her family since 2021. Boon and Marina will guide you through the process to ensure you embark on your Singaporean adventure with confidence.  

Hear from the personal experiences of those who have made the move, on various topics such as housing, transportation, children’s education, navigating work culture, social norms, and career options for trailing spouses.   

Whether you’re in the initial stages of planning or have already made the decision to relocate, we aim to assist you in assimilating seamlessly to our beautiful island, Singapore!  

Event sign up page: https://community.singaporeglobalnetwork.gov.sg/events/4585

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

Capital Gains Tax Introduction on the Sale of Foreign Assets

Boon Tan   |   3 Aug 2023   |   4 min read

In June 2023, the Ministry of Finance released a draft of the Income Tax (Amendment) Bill 2023. The contents of this Bill cover the announcements made in the 2023 Budget Statement and amendments which will bring the Singapore Tax Act inline with international standards. 

A key proposal in this Bill is the introduction of taxation on capital gains made from the sale of foreign assets, after 1 January 2024, where the proceeds are received in Singapore without the company having sufficient economic substance in Singapore.  

Section 10L, if enacted by parliament, is to align Singapore with the European Union Code of Conduct Group guidance in respect to these types of transactions.

Companies Affected by the New Legislation

Currently Singapore does not have a capital gain tax regime – meaning that profits derived from capital transactions, such as the sale of real estate, equipment, rights are exempt from taxation. 

The absence of capital gains tax has made Singapore a popular location for companies to hold assets which are based outside of Singapore and exploited for the benefit of the consolidated group. It is important to note that this provision only applies to Singapore companies which are part of a wider consolidated group. Meaning that the use of Singapore as a jurisdiction to establish a special purpose vehicle company may still be appropriate. 

The key points regarding the application of the provision are:

  1. The Singapore company which has disposed of the foreign asset must be part of a consolidated group. The company will be a member of a consolidated group if its financial accounts are consolidated by the parent entity.
  2. The group in question must have at least one member which operates its business outside of Singapore. 
  3. The foreign capital gain is either: 
    • Remitted to a Singapore bank account; or 
    • Applied against any debt incurred in relation to the operations carried out in Singapore; or 
    • The value of any immovable property brought to Singapore which has been acquired using the proceeds from the capital gain.
  4. Provision for IRAS to apply the market value to a transaction where it deems that the disposal of the asset was not undertaken on an arm’s length basis.

Exclusion of Some Industries and Exemptions

As a major commercial hub in the world, the proposed Bill does provide for the exclusions of some industries (e.g. financial) and Groups which have been awarded concessionary or exempt tax status. 

Where a company does not fall into these exemption categories, the Bill does define an “excluded entity”, which would not be subject to this change. This definitional exclusion is where the economic substance test comes into play. 

The definition allows for pure equity holding companies, and non-pure equity holding companies. A pure entity holding company’s main function in the group is to hold shares and derive income from dividends and the disposal of shares. 

If the company is a pure equity holding company, to be excluded from Section 10L, it must demonstrate that:

  1. The company complies with its annual lodgement obligations, and 
  2. The operations are managed and performed in Singapore. 

For a non-pure equity holding company, there are additional conditions to satisfy:

  1. The company carries on a trade in Singapore; and
  2. Operations are managed and performed in Singapore; and 
  3. There is sufficient economic substance in Singapore taking into account: 
    • The number of employees in Singapore performing the operations; 
    • The qualifications and experience of the employees in Singapore; 
    • The amount of business expenditure incurred in Singapore relative to its income; 
    • Whether key business decisions are made in Singapore. 

Should the Bill pass as drafted, a greater emphasis is required on multinational companies to ensure that they establish themselves appropriately in Singapore, with an office, employees, and senior management. Demonstrating the significance of the Singaporean operations will be key to ensuring that concession tax regimes are accessible. 

It should be noted that the introduction of Section 10L is primarily an anti-avoidance measure and not a hindrance to the many businesses that choose to expand to or establish operations in Singapore.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

5 Key Tax Items a Company Expanding to Singapore Needs to Consider

Boon Tan   |   6 Jun 2023   |   5 min read

Expanding overseas is a big, and often complicated step for any business to manage. Singapore has many appealing features as a business location, including appealing tax rates, a strong economy, and a desirable location. As it is a move abroad, you may find the tax system is completely different to the one you are familiar with.

There are five key tax items that you need to understand when making the move to expand to Singapore. This includes:

  1. Tax residency in Singapore 
  2. Tax provisions
  3. Foreign income (from Singapore’s perspective)
  4. Withholding taxes 
  5. Double tax agreements

1. Corporate Tax Residency

In Singapore, corporate tax residency is determined by the location where the business is controlled and managed. Control and management of the company is looked at from the strategic board level of operations, rather than the day-to-day management of the business. This means that while assessing the location of control and management can be complex, the primary way this is assessed is by considering the physical location of company board meetings.

Given the different tax jurisdictions may have different tax laws surrounding residency, make sure you are familiar with your local regulations regarding residency as well. Otherwise you may face unintended conflicts regarding the residency of your company.

For a more in depth look at Corporate Residency in Singapore, read our “Corporate Tax Residency in Singapore: Understanding the Tax Residency of Your Company” article.

2. Inland Revenue Authority of Singapore (IRAS) Can Issue a Certificate of Residence to Allow Companies to Access Double Tax Treaty Provisions

To certify that your company is a Singapore tax resident, you can apply for a Certificate of Residency (COR) from IRAS. This ensures you can claim benefits under a double tax agreement between Singapore and another jurisdiction. 

Note that a COR is not available for nominee companies or companies that are a branch of a foreign company.

Since a nominee company merely acts on behalf of the foreign beneficial owners, the beneficial owner of the income resides in a foreign jurisdiction.

A Singapore branch of a foreign company is controlled and managed by an overseas parent company.

The company must be able to meet the legislative provisions of Singapore corporate residency to be entitled to a COR to be issued.

3. Foreign Sourced Dividends, Branch Profits, and Services Income is Exempt from Singaporean Tax if not Remitted into Singapore

Due to Singapore’s foreign tax laws, there is a significant advantage to a multinational company being based in Singapore.

When your business is a Singapore resident, your foreign income may be completely exempt from Singaporean tax. However, this only applies if the foreign income relates to investments or offshore operations, and the income is not remitted into Singapore.

Note that foreign income generated from business trading or operations related to the business in Singapore is taxable in Singapore, regardless of whether it is remitted to Singapore or not. 

Specified foreign investment income (foreign sourced dividends, foreign branch profits and foreign sourced service income) that is remitted into Singapore is exempt from tax in Singapore. For the exemption to be granted all 3 of the following conditions must be met:

  1. The foreign income must have been subject to tax in the foreign jurisdiction.
  2. The foreign tax in the country of origin must be at least 15% at the time the foreign income is received in Singapore.
  3. The Comptroller of Income Tax must be satisfied that the tax exemption is beneficial to the Singapore tax resident company.

If all of these conditions are met then this income will not be taxed in Singapore when it is remitted.

By excluding these specified foreign investment income from assessment in Singapore, your company may benefit from a reduction in compliance regulations and potentially complex tax calculations.  

For more information on remitting foreign income into Singapore, read our “Remitting Revenue In and Out of Singapore: Corporate Tax Obligations” article.

4. Withholding Taxes

No withholding taxes are applicable on dividends paid by Singaporean companies to its foreign shareholders. Corporate taxes are paid by the company, which is then able to pass on the net profits to the shareholders as dividends without additional tax requirements.

Withholding taxes may be payable on certain types of payments made by a Singaporean company including royalties, loan interest, management fees, rent for movable property (e.g. ships).

5. Singapore Has a Wide Double Treaty Network

Double tax agreements help ensure that your business does not pay excessive taxes when taxes are required in both a source country and the country of residence. 

Singapore has a wide double treaty network. This assists companies based in Singapore to expand globally by reducing the application of withholding taxes on interest, and dividend and royalty payments made into Singapore.  It also assists foreign businesses expanding into new locations by allocating tax jurisdiction priorities.

Whether your business is a Singapore resident or a foreign resident, you may be impacted by the different tax jurisdictions assessing your Singapore business income.

For more details on the Singapore Double Tax Agreements, read our “An Overview of the Singapore Double Tax Agreement” article.

Expanding to Singapore

Expanding to Singapore, like expanding to any overseas country, can be a complex undertaking. You need to consider local Singapore laws, as well as laws in your country and other countries that the company may be involved with.

If, from a Singaporean perspective, your company is managed and controlled overseas, is a branch of foreign company, or is merely a nominee company with the real beneficiaries being located overseas, you may not qualify as a Singapore resident company. This means your company will miss out on the tax advantages of Singapore residency. 

Talk to international tax experts to get qualified tax advice from all tax jurisdictions to ensure you set up and run your business expansion the way you intend. 

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

Corporate Tax Residency in Singapore: Understanding the Tax Residency of Your Company

Boon Tan   |   12 May 2023   |   6 min read

Singapore is a popular location for companies looking for a central base for their international operations. With a corporate tax rate of 17%, reduced even further by tax exemptions, and no capital gains tax, Singapore has one of the lowest and simplest tax systems in the world. 

In addition to the tax advantages, Singapore has a strong local economy, stable government, respected financial industry and desirable geographical location. This all creates a strong incentive for multinational businesses to choose Singapore as a jurisdiction to set up a regional hub, or for the relocation of their global headquarters.

If you’ve weighed your options and chosen Singapore as the location for your business, you need to understand corporate tax residency for Singapore Companies.

Corporate Tax Residency in Singapore

To benefit from the tax advantages of being a Singapore tax resident, your company needs to actually be a resident in Singapore. This means that the actual control and management of your company must be physically located in Singapore.

It is not enough to have the day-to-day management of the business only located in Singapore. When it comes to tax residency, it is the strategic board level of operations that determines the location of the control and management of the company. While properly assessing the location of control and management can be complex, the primary method of assessment is the physical location of company board meetings.

This means that as long as the company’s Board meets in Singapore, the company is likely a Singapore tax resident.

Inland Revenue Authority of Singapore (IRAS) Certificate of Residence

Companies that are controlled and managed within Singapore, can apply for a Certificate of Residency (COR) from IRAS. This gives certainty about your Corporate Residency and ensures you can claim any benefits to which your company would be eligible under an avoidance of double taxation agreements.

Nominee Companies and Branches of Foreign Companies Cannot be Singapore Residents

Note that nominee companies and branches of foreign companies cannot request a COR. This is because nominee companies and branches of foreign companies are merely acting on behalf of their foreign resident owners and therefore not genuinely being controlled and managed within Singapore.

Corporate Tax Rate is 17%

The corporate tax rate for resident Singapore companies is 17%. This makes it amongst the lowest tax rates in the world.  

Singapore charges income taxes on the net profits of your company, meaning you need to calculate your income less eligible deductions to determine the total tax payable. In Singapore, “chargeable income” is the term used for this net taxable profit.

In addition to this low tax rate, companies may be eligible for various tax offsets. These offsets can bring your effective company tax rate down to around 15%.

The  first SG$10,000 of your company’s chargeable income is 75% exempt from tax.

The next SG$190,000 is 50% exempt from tax.

While this is not quite the same as having an initial tax-free amount, it ultimately has a similar effect by ensuring that part of your company income is not taxed.  

In addition to this general reduction in taxes, eligible start-up companies (not including property development and investment holding companies) can access even higher tax exemptions during their initial three years of operations. These companies are 75% exempt from tax on the first SG$100,000 and 50% exempt from tax on the next SG$100,000.

GST is 8% from 1 January 2023 and 9% from 1 January 2024

Any company that has a turnover in excess of S$1million, is required to register for GST. Your company may also be liable for GST registration under the Reverse Charge and Overseas Vendor Registration.

GST is currently charged at a flat rate of 8%, and will increase to 9% from 1 January 2024. However, there are some exemptions on certain goods and services.

For more information on GST, read our “What you need to know about GST in Singapore: Registering, Charging GST and Filing GST Returns” article.

Tax Losses

If your company makes a tax loss you can usually carry this forward to reduce the chargeable income of future tax years.

Alternatively, subject to certain conditions, you may be able to carry back up to SG$100,000 in qualifying deductions to apply against previous year profits.

To carry forward tax losses, at least 50% of your company’s issued shares must remain owned by the same shareholder/s (so that primary ownership and control of the company is the same). Note that shareholders refers to the shareholders of the ultimate holding company.  

To carry losses back, both the same trade and continuity of shareholding tests must be passed. This means that as well as passing the shareholder test, the company’s principal business activities must continue to be the same.

Capital Gains are Not Typically Taxed

One of the biggest tax advantages of a Singapore company is that there is no capital gains tax.

This means that any capital assets held and used in Singapore can be sold without any tax consequences. Note that this typically only applies to assets held for at least two years. Assets that are held for under two years are typically regarded as trading assets (unless sold due to closing the business). An asset may also be considered a trading asset if extensive work was done on the asset to enhance it for sale as this indicates it was purchased with a profit motive, rather than with an intention to utilise it as a long term asset in your business.

For more information on capital vs trading assets, read our “Capital Asset vs Trading Asset: The Differences and Tax Obligations of Each” article.

Foreign Operations

It is important to note that when your Singapore company operates, or sells products or services in foreign locations, the company may also be subject to the foreign tax requirements under those tax jurisdictions. Most countries will have double tax agreements in place to limit the amount of tax to the higher rate of tax applied by either Singapore or the foreign location.

Singapore Tax Residency

In summary, Singapore corporate tax residency is primarily determined by the physical location of the strategic control and management of the company. 

In essence, this means that your board must hold the board meetings in Singapore. As a Singapore tax resident your company will benefit from low corporate tax rates and no capital gains tax. 

However, if the company also trades overseas, there will be foreign taxes to be dealt with. The impact of foreign tax requirements may be mitigated by double tax agreements. Find out more about the double tax agreements in our “An Overview of the Singapore Double Tax Agreement” article. 

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

An Overview of the Singapore Double Tax Agreement

Boon Tan   |   19 Apr 2023   |   8 min read

Like many tax jurisdictions around the world, Singapore has a number of Double Tax Agreements in place to ensure the amount of effective tax that taxpayers pay on their worldwide income is limited to one jurisdiction only.

Double Tax Agreements are the legal framework outlining which tax jurisdiction has taxation rights over tax residents and income sourced in their jurisdiction. In practice, this typically ensures that the maximum tax a taxpayer pays is the tax payable in the jurisdiction with the higher tax rate.

Why Double Tax Agreements are Necessary

Double Tax Agreements are necessary to ensure that the income of a resident of one jurisdiction, that may be sourced in another jurisdiction, is not taxed twice. Without Double Tax Agreements, it would be possible for gross income to be taxed twice – once in the jurisdiction in which the taxpayer is a resident, and again in the jurisdiction in which the income was sourced. 

A Double Tax Agreement provides rules over whether the source country has taxation rights and limits tax rates for certain types of income. This can provide tax relief or limit the total tax payable in a higher taxing jurisdiction. The key benefit of Double Tax Agreements is that any foreign tax paid is treated as a tax credit against any tax assessment that the local country may assess.

Example of Taxation with Foreign Tax Credits

For example, imagine a corporate Singapore resident taxpayer earns $10,000 in Australia.

Let’s assume Australia taxes this at 30%, meaning the resident pays $3,000 in taxes.

Let’s assume Singapore also taxes this income at 17%, meaning the resident pays $1,700 in taxes.

This would leave the corporate taxpayer only $5,300 of their income after taxes.

A Double Tax Agreement helps prioritise who has taxing rights over this $10,000 income. In this example let’s say Australia, as the source country, has taxation rights. This means that the corporate taxpayer is still taxed the $3,000 in Australia. Singapore can still tax the taxpayer, however they allow a credit for the tax already paid in Australia. Since the Australian tax paid exceeds the tax payable in Singapore, they do not pay any additional taxes.

If the scenario was flipped and the company was an Australian resident corporation earning income in Singapore, Singapore would have initial taxation rights. The taxpayer would then pay $1,700 in Singapore taxes. The income could then be taxed in Australia, but the $1,700 already paid would be credited as tax already paid. This means the corporate taxpayer would only have to pay $1,300 in Australian tax so that they have paid a net total of $3,000, meeting Australia’s tax rate.

Tax Treaty with Australia

The Australia-Singapore Double Tax Agreement (DTA) gives tax relief to Australian and Singapore tax residents.

For Australian residents, the DTA covers income tax and petroleum resource rent tax relating to offshore profits.

For Singapore residents, the DTA covers income tax.

Under the DTA the foreign country is only able to tax interest income at 10%. This means that if a Singapore resident earns $1,000 interest income in Australia they will be taxed at the flat rate of 10% and pay $100 in tax. This is much lower than Australia’s usual foreign tax rate. In a similar vein, royalties and dividends have capped, flat rates of tax applied to them.

 Singapore Resident earning income in AustraliaAustralian Resident earning income in Singapore
Interest Income10%10%
Royalties10%10%
Dividend Income15%Exempt

The DTA limits profits of a business enterprise so that they can only be taxed in the country where the business operations are carried out, unless there is a permanent establishment in the other country. This ensures that incidental sales made in the other country are only taxed in the resident country.

An additional provision in the DTA recognises that Singapore authorities may reduce tax payable by a non-resident on interest and royalties to NIL. To ensure the non-resident receives the benefit of this provision, Australia still credits the taxpayer as if they had paid the agreed flat tax rate in Singapore.

Example of where certain income types are taxed

Type of IncomeWhere it is Taxed
Income from Fixed PropertyThe country where the property is situated
Business ProfitsThe country where the enterprise carries out their business
Profits from Shipping and Air TransportThe country where the enterprise carries out their operations
DividendsThe country where the dividends arise. Dividends can be taxed in Singapore as well unless there is a foreign-source dividend exemption
InterestThe country where the interest arises
RoyaltiesThe country where the royalty arises
Personal & Professional Services (Including Director’s Fees)The state where the individual is a resident unless the services are carried out in the other country
Income from Alienation of PropertyThe state where the property is situated
Pension and AnnuityThe state where the individual is a resident
Remuneration paid by the GovernmentTaxed by the government of the country
Payments to Students and TraineesTaxed in the country of residence

Tax Treaty with USA

Singapore does not have a Tax Treaty with the USA.

This means that taxpayers who are a resident in one of these countries and earn income in the other could be taxed in both countries.

Both the US and Singapore have unilateral exclusions or foreign tax credit policies in place which help ensure that double taxation is reduced or eliminated.

Tax Treaty with the UK

The Singapore-UK DTA ensures that a foreign resident of either country is allowed tax credits against any tax paid against income derived from the other country.

For UK residents the taxes covered are income tax, corporation tax, and capital gains tax.

For Singapore residents the taxes covered are income taxes.

Example of where certain income types are taxed

Type of IncomeWhere it is Taxed
Income from Fixed PropertyThe country where the property is situated
Business ProfitsThe country where the enterprise carries out their business
Profits from Shipping and Air TransportTaxed in the operator’s country of residence
Dividends15% or 5% where the beneficial owner controls at least 10% of voting power. Singapore tax exemption is given for foreign dividends and dividends paid to non-residents. This is subject to conditions being met. 
Interest(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.(2) However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax charged shall not exceed 10% of the gross amount of the interest in any other case.
Royalties(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax charged shall not exceed 10% of the gross amount of the royalties in any other case.
Personal & Professional Services (Including Director’s Fees)The country where the individual is a resident, subject to certain situations
Employment IncomeThe country where the employment is exercised, subject to certain conditions
Pension and AnnuityThe state where the individual is a resident
Remuneration paid by the GovernmentTaxed by the government of the country unless the official is a permanent resident or citizen of the country where the services are performed.
Payments to Students and TraineesExempt from tax in the visiting country where they are pursuing their education or training.
Payments to Visiting Teachers or ResearchersExempt from tax in the visiting country where they are offering teaching services or conducting research

The Impact of Singapore’s Double Tax Agreements

Double Tax Agreements can vary country to country. This means it is important to look for the specific provisions of the relevant countries in relation to any income earned from the foreign country.

The primary relief offered by DTAs is the provision for foreign tax paid to be deemed a tax credit against any tax assessment in the country of residence.

Additional relief can be found through limits on taxation rates on the foreign source income, exemptions from taxation in the foreign country, tiebreaker rules on determining residency, and other concessions.

Where no Double Tax Agreement exists, Singapore typically applies a unilateral foreign tax credit towards foreign tax that has been paid on any foreign income that is assessable in Singapore. 

Understanding and applying the relevant provisions will help ensure there are limits on the total tax you pay on foreign income.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

Remitting Revenue In and Out Of Singapore: Corporate Tax Obligations

Boon Tan   |   21 Mar 2023   |   4 min read

In addition to being assessed for Singapore taxes on foreign sourced income that is incidental to their Singapore based operations, a Singapore resident company is also required to pay Singapore taxes on any foreign sourced income that is remitted into Singapore.

When is Foreign Income Taxable to a Singapore Company?

Foreign income is taxable to a Singapore Company when it:

  1. is received through a Singapore partnership
  2. is incidental income to the trade or business carried out by your company. This would mean that any online orders from foreign clients, being incidental to your primary operation in Singapore, would be included in your Singapore tax assessment.
  3. is remitted into Singapore.

It is important to understand the difference between operating your business in Singapore and operating your business overseas. If your business is carried on in Singapore then all income relating to this business is taxable in Singapore, even if you make sales overseas and don’t bring that money into Singapore. Conversely, income that is generated from a business located and run in a foreign country will only be taxed in Singapore if it is remitted into Singapore.

The rule regarding remittance of foreign sourced business income applies to both resident and non-resident companies.

Mitigating the Tax Impact on Taxable Foreign Income

Double tax agreements or unilateral tax credits in respect of foreign tax that has been paid, will mitigate, or even eliminate the impact of being taxed in multiple tax jurisdictions. This means that if the foreign tax paid is higher than Singapore taxes, there is unlikely to be any additional tax impact on foreign income that is also taxed in Singapore.

In addition, where certain conditions are met, foreign dividends, foreign branch profits, and foreign service fees remitted into Singapore may remain exempt from Singapore tax. 

Foreign sourced dividends, branch profits, and services income is exempt from Singaporean tax if not remitted into Singapore.

Foreign Investment Income Remitted into Singapore

Specified foreign investment income (foreign sourced dividends, foreign branch profits and foreign sourced service income) that is remitted into Singapore is exempt from tax in Singapore. For the exemption to be granted all 3 of the following conditions must be met:

  1. The foreign income must have been subject to tax in the foreign jurisdiction.
  2.  The foreign tax in the country of origin must be at least 15% at the time the foreign income is received in Singapore
  3. The Comptroller of Income Tax must be satisfied that the tax exemption is beneficial to the Singapore tax resident company.

If all conditions are met, then this income will not be taxed in Singapore.

By excluding such specified foreign investment income from assessment in Singapore, your company may benefit from a reduction in compliance regulations and potentially complex tax calculations.

Singapore Business Income that is Remitted Overseas

If your Singapore resident company remits Singapore sourced income to an overseas bank, business branch, subsidiary, or other recipient, the tax laws of that tax jurisdiction will determine if taxes are also assessed at that location.

So far as Singapore taxes are concerned, income earned under Singapore’s tax jurisdiction will be taxed in Singapore. Any double tax agreements between the foreign jurisdiction and Singapore, will likely ensure that your company is not excessively taxed on such income.

Summary of Corporate Tax Obligations in Singapore

In summary, a Singapore resident corporation will be assessed on any locally earned income, any incidental business income earned overseas, and any foreign income that is remitted into Singapore.

This does leave open an opportunity for a Singapore based business to operate branches that are set up and run in an overseas location, without having to be concerned with Singapore taxes.

However, it should be noted that Singapore has one of the lowest tax rates in the world. As long as there is a double tax agreement in place or a unilateral tax credit applied in relation to foreign taxes paid, then remitting the foreign income into Singapore may not result in additional tax obligations.

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...

Capital Asset vs Trading Asset: The Differences and Tax Obligations of Each

Boon Tan   |   28 Feb 2023   |   5 min read

In most jurisdictions, the sale of a capital asset is subject to capital gains tax law, while the sale of trading assets are subject to revenue laws. This distinction is a very important one as the way that revenue and capital items are taxed is very different in Singapore.

Capital Gains Tax in Singapore

There is no capital gains tax regime in Singapore.

This means that if you sell assets that are capital in nature there is no tax consequence from this sale, regardless of whether you make a profit or a loss on the sale.

Therefore, typically the sale of passive investments, such as real estate and share portfolios, are sold without any tax implications in Singapore. 

However, it is important to understand when assets may actually be considered trading assets as these assets would be covered by revenue laws instead. Where such assets are covered by revenue laws, their disposal will attract income tax consequences.

Assets Used as a Trading Asset

In Singapore there are rules that indicate an asset is a trading asset rather than a capital asset. These rules help ensure that a business doesn’t take advantage of the lack of capital gains tax by purchasing an asset with the express intent to turn this asset over for a profit instead of holding it as a long term, capital appreciating asset.

There are five specific factors, colloquially known as “badges of trade”,  that are considered in determining whether an asset might be a trade item. These are the holding period, frequency of sale, purpose of transaction, extent of enhancement work, and reason for the sale.

Holding Period

A short term holding period indicates that the asset was more likely purchased for profit-seeking activities. In general, capital assets must be held and used for their purpose for a minimum of two years in order to be considered capital in nature. Assets sold within two years of purchase are typically treated as revenue assets, unless there was a specific reason for the sale that caused the asset to be sold within two years.

Frequency

If you frequently purchase and sell the assets in question, this indicates you are trading these assets, rather than purchasing them for use in a going concern. This can include significant assets such as property, shares, and other investments. Where your business frequently purchases and then sells real estate, the Inland Revenue Authority of Singapore will presume that you are in the business of trading real estate, rather than owning these assets for long term capital growth.

Purpose of Transaction

When an asset is not used for its intended purpose, this indicates that the asset was not actually purchased to be used as an asset.

A simple example would be purchasing a warehouse. If you leave the warehouse unused and vacant, then it has not actually been used for the purpose of a warehouse. Consequently, the sale of the warehouse is more likely to be a profit-generating motive. Conversely if the warehouse was purchased and used as a warehouse it is more likely to be an asset use motive.

Extent of Enhancement Work

When an asset is purchased, then significant resources are spent enhancing or renovating it prior to selling it, this would indicate the reason for the purchase was a profit motive. If an asset is purchased and renovated to be fit for specific use as a business asset, rather than for resale value, then this would more likely indicate an asset use motive.

Reason for Sale

The reason for selling the asset is also considered. If an asset is sold with a profit-making motive, it is more likely to be considered a trading asset. However if it is sold after being used for its intended purchase as an asset then it would be exempt from tax as a capital asset.

This factor is an important one. Even if a property is sold within two years, there could be a specific reason that indicates the property was still a capital asset. For instance, the sale may have been required due to liquidating the business, government acquisition, or other closure or reduction of business operations. In such situations, the sale would still likely be a capital gain because the underlying reason for the sale was not profit-generation.

Summary of Capital vs Trading Assets

The facts of the way an asset is used and the motivations for purchasing the asset determine if the asset is capital or revenue in nature. When an asset is purchased and used for a profit-motivation rather than an asset use motive, it is treated as a trading asset, or revenue in nature, rather than as a capital asset under capital gains rules.

The table below outlines the likely scenarios of how an asset could be classified. 

 

Likely Capital

Likely Trading

Holding Period

Over two years

Less than two years

Frequency

Low frequency

High frequency

Purpose of Transaction

To use as an investment or business asset

Profit-generation

Extent of Enhancement Work

Little renovations or work focused on adjusting asset for business use

High investment in enhancement or renovation to increase profit on sale

Reason for Sale

End of use, divest investment or liquidating business

To generate profits

NEED ASSISTANCE FOR YOUR SITUATION?

Contact us today
Contact Us

"*" indicates required fields

Do you need tax services in our other regions?
By providing us your information you agree to our privacy policy

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Corporate Residency

Please provide your details to access the online tool

Name is required.

Email is required.

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Place of
Incorporation

Is the company incorporated outside Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Central Management
and Control

Is the Central Management and Control
of the company exercised in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Carry on a Business

Does the company carry on a business in Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Voting Power

Is the company's voting power controlled
by shareholders who are residents of Australia?

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is an Australian Resident

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

The company is not a resident
but it could be a CFC

Contact us for tailored international tax advice
regarding your client's specific situation.

Contact us for tailored international tax advice regarding your client's specific situation.

Contact Us

Determining Corporate Residency

Use our online tool to determine the corporate residency of your client's business.

Contact Us

"*" indicates required fields

More articles like this

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from Holland & Marie discussed the crypto tax...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your Business Overseas" Delve into the key strategies...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3 Together they unpack the tax...

 

Podcast: Avoiding Crypto Tax Pitfalls with Boon Tan and Chris Holland


20th May 2024
CST Tax Advisors

In a podcast episode of Barely Legal in Web 3, hosted by Jamilia Grier, Boon Tan, the managing director of CST Tax Advisors, and Chris Holland from...

 

Podcast: How To Successfully Scale Your Business Overseas


26th Apr 2024
CST Tax Advisors

Our CST Managing Director, Boon Tan joins MoneyFM 893 Breakfast Show in Singapore with host Audrey Siek to discuss "How to Successfully Scale your...

 

Podcast: Navigating NFTs, DAO and GameFI


21st Mar 2024
CST Tax Advisors

Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the...