subpage banner

Forum Replies

Tax beyond first tier already recognised

27 May 2005

I refer to the article, 'S'pore shines as holding location' (BT, May 18), by Lim Gek Khim and Chong Lee Siang of Ernst and Young.

The writers said Singapore's competitive edge as a holding location would be enhanced if the 'subject-to-tax' condition were widened to recognise tax paid beyond first-tier overseas subsidiaries. This is already being done.

Applications for tax exemption under Section 13(12) of the Income Tax Act can be supported if the underlying income used to pay the dividends to the holding company is active in nature, or where it can be shown that tax has been paid beyond the first-tier overseas subsidiary on income derived from substantive business activities.

Interested parties may visit the Ministry of Finance website at for more details.

I would also like to point out that for foreign dividends remitted and received in Singapore that do not meet the 'subject-to-tax' condition, tax exemption is still allowed if these dividends are paid out of profits that are exempted from tax as a result of a tax incentive granted by the foreign jurisdiction.

Details of this concession can be found in the Supplementary Circular 'Tax exemption for foreign-sourced dividends, foreign branch profits and foreign-sourced service income' on the IRAS website at