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Proposed taxation of gains on disposal of foreign assets
Proposed taxation of gains from sale of foreign assets received in Singapore by businesses without economic substance.
The Ministry of Finance (MOF) recently proposed legislative amendments to the Singapore Income Tax Act 1947 (SITA) to tax gains from the sale or disposal of foreign assets that are received in Singapore by businesses without economic substance in Singapore even if the gains are capital in nature or tax exempt (e.g., under Section 13W of the SITA), unless certain exceptions are met. The proposed legislation is currently under public consultation and if passed, is expected to apply to gains received in Singapore from outside Singapore from the sale or disposal of foreign assets on or after 1 January 2024.
This alert provides a summary of the proposed changes and our observations. As the proposal has not been legislated, you should monitor this development and the potential implications for your business. EY has also submitted feedback to the MOF as part of the public consultation process.