Okay so as I previously said, I asked one advisor in Singapore about whether I’d need to pay tax on foreign income remitted into a bank account outside of Singapore and they said this:
"It will be subject to corporate tax in sg. Unless you can show evidence that you are paying corporate tax in another jurisdiction. Revenue regardless from inside or outside Singapore, would be subjected to cooperate tax declaration. From Singapore's end, the declaration still needs to be done.( even if revenue is offshore), then tax authority might have questions if your company setup is in Singapore, however revenue goes to bank account outside sg. You will most likely need to furnish tax declaration if already paying in other jurisdiction. If the tax you are paying overseas is more than SG tax, sg tax will receive tax credits to offset. If not , you will still need to pay corporate tax in SG."
I then sent this reply to another Singapore tax advisor who’d previously told me I wouldn’t need to pay tax, and they responded to specific parts of the other tax advistor’s response :
“It will be subject to corporate tax in sg. Unless you can show evidence that you are paying corporate tax in another jurisdiction.”
Your tax advisor may have said this based on the assumption the foreign income is received in Singapore.
Under Section 10(25) of the Income Tax Act 1947, income from outside Singapore is considered received in Singapore when it is:
- Remitted to, transmitted or brought into Singapore;
- Used to satisfy any debt incurred in respect of a trade or business carried on in Singapore; or
- Used to purchase any movable property (such as equipment, raw material, etc.) brought into Singapore.
Evidence required to show corporate tax has been paid in other jurisdiction is to avoid double taxation (i.e. same income tax twice) and claim for Foreign Tax Credit.
“Revenue regardless from inside or outside Singapore, would be subjected to cooperate tax declaration.”
The tax declaration will include the foreign income. However the unremitted portion will be adjusted out when preparing the tax computation (declare but not subject to tax).
“If the tax you are paying overseas is more than SG tax, sg tax will receive tax credits to offset. If not , you will still need to pay corporate tax in SG.”
Companies may claim foreign tax credit (FTC) for tax paid in a foreign jurisdiction against the Singapore tax payable on the same income.
Foreign tax credit is the lower of:
- The actual amount of foreign tax paid; or
- The amount of Singapore tax attributable to the foreign income (net of expenses).
Tax payable @ 17% X
Less: Foreign tax credit (X)
Net tax payable X
In summary, the taxation of business income presents a nuanced landscape, intricately influenced by diverse elements, including the organizational structure of your business, the characteristics of your revenue streams, and the tax regulations prevailing in the respective jurisdictions. Our ability to provide more precise guidance hinges on the availability of pertinent documentation.
