Tax Treatment of Foreign Source Income

Section 13(12)

In Budget 2003, the DPM/Minister for Finance announced that foreign-sourced dividends, branch profits and service income (collectively "specified foreign income") derived by any person resident in Singapore will be exempted from tax if the following conditions are met:

1. the specified foreign income has been subjected to tax in the foreign jurisdiction from which the income is received; and
   
2. the headline tax rate of the foreign jurisdiction from which the specified foreign income is received is at least 15%.

Where the above conditions cannot be met, application for tax exemption under section 13(12) of the Income Tax Act can be made to the Ministry of Finance for consideration.

Any of the following income arising from sources outside Singapore and received in Singapore on or after 1 Jun 2003 by any resident persons will be exempted from tax (subject to conditions below):

1. any dividend derived from any territory outside Singapore;
2. any profit derived from any trade or business carried on by a branch in any territory outside Singapore of a company resident in Singapore; and
3. any income derived from any professional, consultancy and other services rendered in any territory outside Singapore.

The income will be exempted from tax if the following conditions are met:

1. the specified foreign income has been subjected to tax in the foreign jurisdiction from which the income is received; and
2. the headline tax rate of the foreign jurisdiction from which the specified foreign income is received is at least 15%.

Please refer to the e-tax guides found at IRAS' website for more details.

Section 13(12) Exemption

Where the above conditions cannot be met, application for tax exemption under section 13(12) of the Income Tax Act can be made to the Ministry of Finance for consideration.

Applications should be made using the following form:

Form for the Application For Exemption From Income Tax On Foreign Sourced Income Remitted To Singapore.

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