Wef 1.1.2004 ALL foreign-sourced income received in Singapore by resident
individuals will be exempt from tax. This will put resident individuals
on par with non-resident individuals. The purpose of this tax change
is to encourage the remittance of offshore funds to Singapore to develop
the wealth management industry.
Until the 2004 Income Tax Amendment Act is passed,we
set out below the proposed tax changes as indicated in the draft Bill
:
(1) Foreign income in the form of dividends, branch
profits and services income, meeting the conditions of foreign tax
paid (15% headline tax), are tax-exempt when received in Singapore
:
On or after 1.6.2003 by any person, not being an individual,
resident in Singapore. This will benefit companies whether resident
or non-resident.
From 1.6.2003 to 31.12.2003 by any individual
resident in Singapore
On or after 1.1.2004 by any individual
resident in Singapore received through a partnership in Singapore
The above conditions at (1) broadly implement
the 2003 Budget proposals and clarify the 2003 Income Tax Amendment
Act.
(2) ANY income arising from sources outside
Singapore is tax-exempt when received in Singapore :
On or after 1.1.2004 by any individual
resident in Singapore, unless the income is received through a partnership
in Singapore.
At any time by any individual who is not resident in Singapore
The above conditions at (1) & (2) are still
not tax law till the 2004 Income Tax Amendment Act is passed.
If you are a resident individual and intends to remit foreign income
to Singapore you should check with us.
It is worth noting that the Minister may make
regulations to give effect to the conditions on the tax exemption
of foreign income. Under s.13(12) of the Act the Minister may by order
(published in the Gazette) exempt from tax, wholly or in part; or
agree to tax at a concessionary rate, on any income received by a
person (companies or individuals) resident in Singapore from sources
outside Singapore.
From 1.1.2005 withholding tax on royalties will
be reduced from 15% to 10%, conditions are (a) royalties are not derived
by the non-resident from a trade, business, profession or vocation
carried on or exercised by him in Singapore; and (b) royalties are
not effectively connected with any permanent establishment in Singapore
of the non-resident. The 10% tax is the final tax and apply to royalties
as defined in s.12(7)(a) and (b) of the Act only; and exclude (i)
payments for the rendering of assistance or service in connection
with the application or use of scientific, technical, industrial or
commercial knowledge or information, and royalties as defined in s.10(14)
and (16) of the Act.
Established 1983 