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  1. Tax
  2. Singapore: New tax on gains from the disposal of foreign assets

Singapore: New tax on gains from the disposal of foreign assets

28 Nov 2023    1 minute read
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In brief

A new Section 10L in the Income Tax Act 1947 (ITA), which taxes gains received in Singapore from the sale of foreign assets by businesses without economic substance in Singapore in the Income Tax (Amendment) Bill 2023, has been passed by Parliament on 3 October 2023 and will come into force on 1 January 2024. This enactment aligns Singapore's tax regime with international norms.

In this alert, we discuss the potential impact of the new Section 10L on taxpayers and highlight issues that companies may consider in assessing the potential impact to their businesses ahead of time.


Contents

Key takeaways

  • The Income Tax (Amendment) Bill 2023 introduces a new Section 10L, which taxes gains received in Singapore from the sale of foreign assets by a seller entity without economic substance in Singapore. Whether a seller entity has economic substance will be assessed on an entity-by-entity basis, and no bright-line test has been prescribed.
  • The Section 10L that has been passed into law contains significant changes as compared to the draft bill that was previously released for public consultation in June 2023.  That said, ambiguities with regard to its application remain and the IRAS is expected to release further guidance through an e-Tax Guide.
  • Taxpayers (especially those with pending reorganisation or disposal of assets) should review the new legislation and their existing structures early, and seek advice on the potential impact of Section 10L ahead of time.

Click here to read the full alert.

* * * * *

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Contact Information
Allen Tan
Principal
Singapore
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allen.tan@bakermckenzie.com
Dawn Quek
Principal
Singapore
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dawn.quek@bakermckenzie.com
Shih Hui Lee
Principal (Tax Advisor)
Singapore
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shih.hui.lee@bakermckenzie.com
Jaclyn Ho
Principal (Tax Advisor)
Singapore
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jaclyn.ho@bakermckenzie.com
Jeremiah Soh
Local Principal
Singapore
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jeremiah.soh@bakermckenzie.com
Wenyu Wu
Senior Associate
Singapore
wenyu.wu@bakermckenzie.com
Shawn Joo
Senior Associate
Singapore
shawn.joo@bakermckenzie.com

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