Tax Bulletin

Update to the taxation of gains on disposal of foreign assets

Changes to Singapore’s tax regime for foreign-sourced income, first proposed in June 2023 (refer to our earlier Tax Bulletin), came into effect on 1 January 2024.

A new section 10L of the Income Tax Act 1947 (the Act) imposes tax on gains from the disposal of foreign assets taking place on or after 1 January 2024 when they are received in Singapore by an entity of a relevant group (unless certain exclusions apply). On 8 December 2023, the Inland Revenue Authority of Singapore (IRAS) published its e-Tax Guide “Income Tax: Tax Treatment of Gains or Losses from the Sale of Foreign Assets” (the e-Tax Guide) to further clarify the scope of this new taxing provision, the economic substance requirements for exclusion from this tax, and certain administrative requirements including an avenue for businesses to obtain an advance ruling on the adequacy of their economic substance.

Section 10L was introduced in response to updates to the EU Code of Conduct Group guidance. Hong Kong and Malaysia have likewise revised their foreign-sourced income taxation regimes to exclude gains from the disposal of foreign assets where economic substance requirements are not met.

Tax Bulletin

Update to the taxation of gains on disposal of foreign assets

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