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 1984 