The updated guidance now features a revised eligibility flowchart and provides clearer time limits for claiming a Foreign Tax Credit (FTC).
The Inland Revenue Authority of Singapore (IRAS) has released revised guidance on claiming a Foreign Tax Credit (FTC), incorporating several key updates.
One major addition is a new flowchart designed to help companies assess whether they qualify to claim an FTC on income that has been taxed overseas.
IRAS has also clarified the time limits for submitting FTC claims, which vary depending on the relevant Year of Assessment (YA) in which the income is subject to tax in Singapore.
Time limit for claiming foreign tax credit
The time limit for submitting a FTC claim depends on the relevant Year of Assessment (YA) in which the income is assessable to tax in Singapore.
For YA 2021 and before
FTC claim must be submitted within two years after the end of the relevant YA. For example, if your company wishes to claim FTC for a foreign income that was brought to tax in YA 2021, the deadline to submit the claim is 31 Dec 2023.
For YA 2022 and after
The time limit for submitting FTC claim has been extended to 4 years after the end of the relevant YA. For example, if your company wishes to claim FTC for a foreign income that was brought to tax in YA 2024, the deadline to submit the claim is 31 Dec 2028.
The updated guidance also includes a new frequently asked question on claim timing:
Scenario: A company acquired foreign financial instruments in YA 2023 for trading purposes. The unrealised gains from these instruments were taxed in YA 2023 when recognised in the profit and loss account. However, foreign taxes will only be paid when the instruments are disposed of in YA 2025. Can the company claim FTC when filing its YA 2023 tax return?
Answer: No. FTC cannot be claimed in YA 2023 since no foreign tax has been paid or is payable on the unrealised gains. Once foreign tax is paid upon disposal in YA 2025, the company may submit FTC claims for the relevant YA(s) in which the income was assessed to tax. The claim must be lodged within four years from the end of the relevant YA. For gains assessed in YA 2023, the FTC claim must be submitted by 31 December 2027.
