Singapore has introduced a new tax on sale of foreign capital assets with effect from 1st Jan, 2024

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⏩1. Historically, Singapore does not tax capital gains. Only gains which are “income” in nature are taxed.

⏩2. However, from January 1, 2024 onwards, Singapore has introduced into law the new Section 10L of the Income Tax Act 1947 (“ITA”).

⏩3. Foreign-sourced gains from the sale or disposal of a foreign asset (not being an Intellectual Property Right) will not be subject to Singapore income tax, if the entity concerned can meet the “adequate economic substance” requirement in the basis period in which the sale or disposal occurs.

⏩4. The scope is limited to gains derived by an entity1 of a “relevant group”. A group is a “relevant group” if one of the entities of the group is incorporated, registered or established in another jurisdiction or where at least one entity of the group has a place of business outside Singapore. As such, domestic groups and standalone entities are excluded.

⏩5. The remittance of foreign-sourced dividends originating from gains from disposal of foreign assets is not in scope of Section 10L.

⏩6. Only gains that are received in Singapore from outside Singapore are caught. Gains are typically considered to be received in Singapore if (deemed) remitted into Singapore. As such, foreign entities that are not operating in or from Singapore are not in scope of Section 10L.

Team – Intellex Strategic Consulting Private Limited
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