From 1 January 2024, under the Section 10L of the Income Tax Act, any foreign sourced disposal gains from the sale or disposal of a foreign asset by a Singapore company will be treated as income taxable in Singapore when received in Singapore if the Singapore company has insufficient economic activities in Singapore.
However, if the Singapore company has adequate economic substance in Singapore, the foreign sourced disposal gains will not be taxable in Singapore.
The Section 10L will likely impact businesses that uses Singapore investment holding companies to hold shares or equity interest in other companies outside of Singapore (use as an immediate holding entity or special purpose vehicle). This is especially true for the funds and fund management sector.
However, there is still time to strengthen the economic substance of these Singapore companies before the disposal of the shares held and remittance of the disposal gains into Singapore.
Even if you are not an investment holding company but an operating company in Singapore but also hold shares or equity interest in other companies outside of Singapore, you will still need to determine if you satisfy the Singapore economic substance conditions.
NovoPlus can help
If you are uncertain about where you stand, we are happy to help. Please feel free to contact us at finance@novopluscorp.com or reach out to us on Whatsapp using the button on the right of the website to chat.
Last Updated on 25/05/2024 by Dennis Chew