SINGAPORE Law and Practice Contributed by: Sim Bock Eng, Josephine Choo, Aw Wen Ni and Vincent Ho, WongPartnership LLP
The IIR applies to in-scope MNE groups that are parented in Singapore, in respect of the profits of their group entities that are operating outside Singa - pore, while the DTT applies to in-scope MNE groups in respect of the profits of their group entities that are operating in Singapore. The amendments to the Economic Expansion Incen - tives (Relief from Income Tax) Act 1967 came into effect on 25 December 2024. This introduced an additional concessionary tax rate tier of 15% for the Development and Expansion Incentive (DEI) scheme, expanded the scope of companies eligible for the DEI award and extended the tenure of this sub-scheme to 31 December 2028. A new Section 93B of the ITA introduced the Refund - able Investment Credit, which offers tax credits of up to 50% of their qualifying expenditure to companies engaged in qualifying activities. Such qualifying activi - ties include high-value and substantive economic activities such as: • investing in new productive capacity; • expanding or establishing the scope of activities in digital services, professional services and supply chain management; • expanding or establishing headquarter activities or Centres of Excellence; • setting up or expanding activities by commodity trading firms; • carrying out R&D and innovation activities; and • implementing solutions with decarbonisation objectives. Capital Gains Tax There is no capital gains tax in Singapore; whether a gain on the disposal of an asset is capital in nature (and hence not taxable) or income in nature (which is taxable) depends on the circumstances of each case. Factors taken into account in the determination include: • the intention at the time of acquisition; • the length of time of ownership of the asset; • the frequency of similar transactions; • the nature of the assets; • any improvements made to the asset;
• the means of financing the acquisition; and • the circumstances of the disposal. Section 10L of the ITA came into operation on 1 Janu - ary 2024 and was a significant development. Section 10L treats any gains from the sale or disposal of for - eign assets by an entity of a relevant group that are received in Singapore as income that is chargeable to tax. A “relevant group” is one that has entities estab - lished in more than one jurisdiction or if any entity of the group has a place of business in more than one jurisdiction. This means that an entity that only has business operations in Singapore will not be subject to Section 10L of the ITA. Withholding Tax Generally, withholding tax rates of 15% and 10%, respectively, are imposed on interest and royalties that are paid to non-residents (it was announced in the Singapore Budget 2024 that the current conces - sion of taxing only 10% of gross royalties will be with - drawn in phases over three years). For certain pay - ments, such as technical assistance and service fees, and management fees, the withholding tax rate is the prevailing corporate rate of 17%, unless the services are performed outside Singapore. Singapore does not levy tax on dividends in the hands of shareholders as it has a single-tier corporate tax system. Accordingly, Singapore does not levy a separate withholding tax on dividends. Other Taxes and Stamp Duties There is no gift tax, estate tax or inheritance tax in Singapore. Stamp duties are chargeable on the execution of doc - uments transferring interests in Singapore immovable property, shares of Singapore-incorporated compa - nies, and shares of foreign-incorporated companies that are registered in a Singapore branch register. However, no stamp duty is payable on the transmis - sion of Singapore immovable property or shares if such transmission is in accordance with a distribution under a will or the laws of intestacy, or if such property is transferred to a spouse pursuant to an order of court made in divorce proceedings.
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