The Inland Revenue Authority of Singapore (IRAS) has released the second edition of its e-Tax Guide on Filing Income Tax Computations in Currencies Other Than Singapore Dollars.

This guide explains the rules for filing income tax computations in non-SGD currencies and applies to businesses that prepare their financial statements in non-SGD functional currencies.

According to the e-Tax Guide, for accounting periods beginning on or after 1 January 2003, companies are required to prepare their financial statements in their functional currencies, which may be non-SGD. Sole proprietorships and partnerships may also choose to prepare their financial statements in non-SGD functional currencies.

Where a company, sole proprietorship or a partnership prepares its financial statements in a non-SGD functional currency, its tax computation should also be prepared in the same functional currency. This applies to all items within the tax computation up to:
(a) The chargeable income (after applying the partial or full tax exemption) for a company;
(b) Distributable profit / loss/ other income as well as the capital allowances (“CA”) claimed for a partnership;
(c) Adjusted profit / loss (but before any loss brought forward) and the CA claimed for a sole proprietorship. These three items will then be converted into S$ at the average rate for the relevant Year of Assessment (“YA”).

Rules Governing the Filing of Income Tax Computations in Non-SGD Functional Currencies

(a) For companies, all items in their tax computations up to the chargeable income (after applying any partial or full tax exemption, if applicable) should be presented in their non-SGD functional currencies.

(b) For partnerships, all items in their computations up to the distributable profit/loss/other income, as well as the capital allowances (CA) claimed, should be presented in their non-SGD functional currencies.

(c) For sole proprietors, all items in their tax computations up to the adjusted profit/loss (before any loss brought forward), as well as the CA for that trade or business, should be presented in their non-SGD functional currencies.