Proposed Singapore capital gains tax on sale of foreign assets: Are you prepared?

Proposed Amendments to Singapore's Foreign Source Income Exemption Regime

On 6 June 2023, the Singapore Ministry of Finance (MoF) released the draft Income Tax (Amendment) Bill 2023 for public consultation, aiming to modify the foreign source income exemption (FSIE) regime in Singapore to align with international tax standards.

Key Amendments:

• Applicability: The proposed changes primarily affect entities within Multinational Groups, excluding financial institutions and entities eligible for specified tax incentives.
• Taxation of Gains: Gains from the sale of foreign assets received in Singapore by entities lacking economic substance will be subject to taxation.
• Criteria for Exemption: To qualify for FSIE, entities (except pure equity holding entities) must meet cumulative criteria:
  • Conduct a trade, business, or profession in Singapore.
  • Manage operations in Singapore (by employees or other personnel).
  • Demonstrate reasonable economic substance in Singapore, considering factors like employee qualifications, business expenses, and key decision-making.

Implementation Timeline:

The amendments are proposed to apply to gains from the sale of foreign assets received in Singapore from 1 January 2024 onwards.

Amicorp's Advisory Services:

Amicorp offers comprehensive support to multinational businesses to navigate these regulatory changes:

• Impact Assessment: Evaluate implications of economic substance requirements on existing structures.
• Structural Optimization: Review and optimize tax/legal frameworks.
• Alternative Structures: Recommend efficient structures like Variable Capital Company (VCC) Funds.
• Corporate Support: Provide corporate secretarial services and ensure operational management in Singapore.
• Compliance Services: Assist with accounting, tax reporting, and regulatory compliance.

For more details on how Amicorp can assist your organization with the proposed FSIE regime changes in Singapore, please contact our team here.