To avoid double taxation, Singapore tax resident companies can apply for the following tax relief:
- For remittances from countries without double taxation in Singapore, a unilateral tax credit agreement (DTA) can be obtained in accordance with Article 50A of the Singapore Income Tax Act ITA.
- According to Article 50 of the Singapore Income Tax Act ITA, double tax relief is provided for income remitted from countries with tax treaties
In order to increase Singapore’s attractiveness as a business center , it was announced in the 2003 and 2004 budgets that certain foreign sources of income may be tax-exempt in Singapore. The scope of overseas income includes:
Income derived from foreign dividends
In terms of tax exemption, if the dividend is paid by a non-Singapore tax resident company, the dividend is a dividend of foreign origin.
Income from foreign branch profit
Foreign branch refers to the business activities of a Singapore company registered as a branch in a foreign country. The profit of a foreign branch refers to the profit of the trade or business carried out by the foreign branch outside Singapore. It does not include non-trade or non-commercial income of foreign branches.
Income from foreign services
Service income refers to the income of professional, technical, consulting or other services obtained by a specific resident taxpayer in the industry, profession or business in which he is engaged. If the service is provided through a fixed place of business in a foreign country, the service income is considered to be from abroad.
In the following cases, the place of business is regarded as a fixed place of business:
It has permanent characteristics
It is dominated by designated resident taxpayers at any time. The existence of only designated resident taxpayers at a particular location does not necessarily mean that the location is a fixed place of business. For example, taxpayers regularly provide audit services to the premises of major customers. This does not mean that the property is disposed by the taxpayer for the purpose of its industry, profession or business. Therefore, they do not constitute a fixed place of operation
Designated resident taxpayers regularly use it for trade, business or service-providing occupations
Designated resident taxpayer does not use it only for auxiliary or preparation activities