Income Tax Act 1947 - Singapore Statutes Online

Gains from the sale of foreign assets

10L.—(1) Despite anything in this Act, gains from the sale or disposal by an entity (called in this section the seller entity) of a relevant group of any movable or immovable property situated outside Singapore at the time of such sale or disposal or any rights or interest thereof (called in this section a foreign asset), that are received in Singapore from outside Singapore, are treated as income chargeable to tax under section 10(1)(g) for the year of assessment relating to the basis period in which the gains are received in Singapore.

(2) Subsection (1) only applies if —

(a)	the gains would not otherwise be chargeable to tax as income under section 10(1); or
(b)	the gains would otherwise be exempt from tax under this Act.

(3) Subsection (1) applies only to gains from a sale or disposal of a foreign asset that occurs on or after 1 January 2024.

(4) In this section, unless the circumstances require otherwise, the time when the foreign asset vests in the buyer or transferee under the law governing the sale or disposal, is treated as the time of the sale or disposal of the foreign asset.

(5) In this section —

(a)

an entity is a member of a group if its assets, liabilities, income, expenses and cash flows —

(i)	are included in the consolidated financial statements of the parent entity of the group; or
(ii)	are excluded from the consolidated financial statements of the parent entity of the group solely on size or materiality grounds or on the grounds that the entity is held for sale; and

(b)

a group is a relevant group if —

(i)	the entities of the group are not all incorporated, registered or established in a single jurisdiction; or
(ii)	any entity of the group has a place of business in more than one jurisdiction.

(6) Subsection (1) does not apply to the prescribed percentage of gains from the sale or disposal of any qualifying intellectual property right as defined in section 43X(13) that are received in Singapore from outside Singapore.

(7) In subsection (6), the prescribed percentage is the percentage of the qualifying intellectual property income (as defined in section 43X(13)) mentioned in paragraph (c), that would have qualified for the concessionary rate of tax under section 43X —

(a)	had the seller entity been approved as an approved company under that section on 1 January 2024 and its tax relief period under that section had included the basis period in which the sale or disposal occurred;
(b)	had the seller entity made an election in respect of the qualifying intellectual property right under section 43X(7) for the year of assessment for that basis period; and
(c)	had qualifying intellectual property income been derived from that qualifying intellectual property right in that basis period.

(8) Subsection (1) does not apply to the gains from a sale or disposal of a foreign asset (not being an intellectual property right) that is —

(a)	carried out as part of, or incidental to, the business activities of a prescribed financial institution;
(b)	carried out as part of, or incidental to, the business activities or operations of an entity, being activities or operations from which the entity derives income that is exempt from tax, or that is taxed at a concessionary rate of tax, under section 13A, 13E, 13P, 43C, 43E, 43I, 43J, 43L, 43N, 43P, 43Q, 43R or 43U for the year of assessment for the basis period in which the sale or disposal occurred;
(c)	carried out as part of, or incidental to, the business activities or operations of an entity, being activities or operations from which the entity derives income that is exempt from tax, or that is taxed at a concessionary rate of tax, under Part 2, 3 or 4 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 for the year of assessment for the basis period in which the sale or disposal occurred; or
(d)	carried out by an entity that is an excluded entity in the basis period in which the sale or disposal occurred.

(9) For the purpose of subsection (1), the following amounts of gains from the sale or disposal of any foreign asset are treated as received in Singapore from outside Singapore:

(a)	any amount from such gains that is remitted to, or transmitted or brought into, Singapore;
(b)	any amount from such gains that is applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore;
(c)	any amount from such gains that is applied to the purchase of any movable property which is brought into Singapore.

(10) For the purpose of subsection (1), where the sale or disposal of a foreign asset by the seller entity was at a price less than the open‑market price for the foreign asset, the Comptroller may treat the following amount as the amount of the gains received in Singapore from outside Singapore:

where —

(a)	A is the amount of the gains actually received in Singapore from outside Singapore;
(b)	B is the open-market price for the foreign asset; and
(c)	C is the actual price for the sale or disposal of the foreign asset.

(11) In subsection (10), the open-market price for a foreign asset is either —

(a)	the price which the foreign asset could have been sold for in the open market on the date of its sale or disposal; or
(b)	where the Comptroller is satisfied by reason of the special nature of the foreign asset that it is not practicable to determine the price mentioned in paragraph (a), such other value as appears to the Comptroller to be reasonable in the circumstances.

(12) Subject to subsection (13), in ascertaining the amount of any gains chargeable to tax under subsection (1), there is to be deducted —

(a)

any expenditure incurred by the seller entity to acquire, create or improve the foreign asset (including any expenditure that would be deductible under section 14(1)(a) if the foreign asset were capital employed in acquiring income), to protect or preserve the value of the foreign asset, or to sell or dispose of the foreign asset; and

(b)

any loss incurred by the seller entity from the sale or disposal of any other foreign asset —

(i)	where, had the sale or disposal resulted in gains (after deducting any expenditure under paragraph (a)) and all of those gains had been received in Singapore, they would have been chargeable to tax under subsection (1); and
(ii)	to the extent it has not already been deducted against any gains chargeable to tax under subsection (1).

(13) The following are not deductible under subsection (12):

(a)

any expenditure deducted under this Act against any other income (whether or not chargeable to or exempt from tax);

(b)

capital expenditure computed by the following formula:

where —

(i)	D is the amount of capital expenditure for which any allowance (including any balancing allowance) is made under this Act against any other income (whether or not chargeable to or exempt from tax); and
(ii)	E is the amount of any balancing charge (or similar charge) made under this Act on the sale or disposal of the foreign asset.

(14) Where not all the gains from the sale or disposal of a foreign asset are received in Singapore in the same basis period, a portion of the amount deductible under subsection (12)(a) as the Comptroller considers reasonable is deductible for each basis period in which any such gains are received in Singapore.

(15) In this section, the situation of property, and any right or interest therein, is determined in accordance with the following provisions:

(a)	any immovable property, or any right or interest in immovable property, is situated where the immovable property is physically located;
(b)	any tangible movable property, or any right or interest in such property, that is not the subject of any other paragraph in this subsection, is situated where the tangible movable property is physically located;
(c)	a ship or aircraft, or any right or interest in a ship or aircraft, is situated where the owner, or the person entitled to the right or interest, is resident;
(d)	a secured or unsecured debt (other than a judgment debt or securities), or any right or interest in such secured or unsecured debt, is situated where the creditor is resident;
(e)	a judgment debt, or any right or interest in a judgment debt, is situated where the judgment is recorded;
(f)	any shares, equity interests or securities issued by any municipal or governmental authority, or by any body created by such authority, or any right or interest in such shares, equity interests or securities, are situated where that authority is established;
(g)	subject to paragraph (f), any shares in or securities issued by a company, or any right or interest in such shares or securities, are situated where the company is incorporated;
(h)	subject to paragraph (f), any equity interests in any entity which is not a company, or any right or interest in such equity interests, are situated where the operations of the entity are principally carried out;
(i)	subject to paragraph (f) (and despite paragraphs (g) and (h)), any registered shares, equity interests or securities, or any right or interest in any registered shares, equity interests or securities, are situated where the shares, equity interests or securities are registered or, if registered in more than one register, where the principal register is situated;
(j)	goodwill relating to a trade, business or profession is situated where the trade, business or profession is principally carried on;
(k)	any intellectual property right, or any licence or other right in respect of any intellectual property right, is situated where the owner of the intellectual property right, licence or right is resident;
(l)	any intangible movable property, or any right or interest in any intangible movable property, that is not the subject of any paragraph in this subsection, is situated where the ownership rights in respect of the property, right or interest would be primarily enforceable.

(16) In this section —

“consolidated financial statements” means financial statements prepared by an entity in accordance with generally accepted accounting standards, in which the assets, liabilities, income, expenses and cash flows of the entity, and the entities in which it has a controlling interest, are presented as those of a single economic unit;

“controlling interest”, in relation to an entity, means an equity interest in the entity such that the holder of the interest is required by the law or a regulatory body of the jurisdiction it is resident in, to consolidate in its financial statements the assets, liabilities, income, expenses and cash flows of the entity on a line-by-line basis in accordance with generally accepted accounting standards;

“debt securities” has the meaning given by section 43H(4);

“entity” means —

(a)	any legal person (including a limited liability partnership) but not an individual;
(b)	a general partnership or limited partnership; or
(c)	a trust;

“equity interest”, in relation to an entity, means an interest that carries rights to the profits, capital or reserves of the entity and is accounted for as equity under generally accepted accounting standards;

“excluded entity”, in relation to a basis period, means —

(a)

a pure equity-holding entity that satisfies all of the following conditions in that basis period:

(i)	the entity submits to a public authority any return, statement or account required under the written law under which it is incorporated or registered, being a return, statement or account which it is required by that law to submit to that authority on a regular basis;
(ii)	the operations of the entity are managed and performed in Singapore (whether by its employees or by other persons where the activities performed by such other persons for the entity are subject to the direct and effective control of the entity);
(iii)	the entity has adequate human resources and premises in Singapore to carry out the operations of the entity; or

(b)

an entity that is not a pure equity-holding entity and that satisfies all of the following conditions in that basis period:

(i)

the operations of the entity are managed and performed in Singapore (whether by its employees or by other persons where the activities performed by such other persons for the entity are subject to the direct and effective control of the entity);

(ii)

the entity has adequate economic substance in Singapore, taking into account the following considerations:

(A)	the number of full-time employees of the entity (or other persons managing or performing the entity’s operations) in Singapore;
(B)	the qualifications and experience of such employees or other persons;
(C)	the amount of business expenditure incurred by the entity in respect of its operations in Singapore;
(D)	whether the key business decisions of the entity are made by persons in Singapore;

“parent entity”, in relation to a group, means an entity that has a controlling interest in all the other members of the group;

“prescribed financial institution” means —

(a)	a bank licensed under the Banking Act 1970;
(b)	a merchant bank licensed under the Banking Act 1970;
(c)	a finance company licensed under the Finance Companies Act 1967;
(d)	an insurer licensed or regulated under the Insurance Act 1966; or
(e)	a holder of a capital markets services licence under the Securities and Futures Act 2001;

“pure equity-holding entity” means an entity —

(a)

whose function is to hold shares or equity interests in any other entity; and

(b)

that has no income other than —

(i)	dividends or similar payments from the shares or equity interests;
(ii)	gains on the sale or disposal of the shares or equity interests; or
(iii)	income incidental to its activities of holding shares or equity interests in any other entity;

“securities” means debentures and debt securities;

“shares” includes stocks.

(17) In this section, where an entity is a trust —

(a)	references to anything done by, to or in relation to the entity are to that thing done by, to or in relation to the trustee of the trust; and
(b)	references to gains, income or property (or any right or interest thereof) of the entity are to those gains, income or property (or any right or interest thereof) of the trustee of the trust derived or held by it in its capacity as the trustee of the trust. [Act 30 of 2023 wef 01/01/2024]

Search within Legislation