The Inland Revenue Authority of Singapore (IRAS) published an updated e-Tax Guide on Income Tax: Tax Treatment of Gains or Losses from the Sale of Foreign Assets (Second Edition) on 9 December 2024. This guide explains the income tax treatment of gains or losses from the sale or disposal of any movable or immovable property situated outside Singapore (referred to as “foreign asset”).

This e-Tax Guide is relevant to entities that derive gains or losses from the sale of foreign assets.

Currently, gains from the sale of foreign assets that are capital in nature are not taxable.

To address international tax avoidance risks relating to non-taxation of disposal gains in the absence of real economic activities, Singapore has amended its foreign-sourced income regime to subject foreign-sourced disposal gains to tax under specific circumstances. The amendment is in line with Singapore’s focus on anchoring substantive economic activities in Singapore and our longstanding policy to align key areas of our tax regime with international norms.

Singapore will treat gains from the sale or disposal of foreign assets as income chargeable to tax under section 10(1)(g) of the Income Tax Act 1947 (“ITA”) if: a) the gains are not otherwise chargeable to tax under section 10(1) of the ITA; or b) the gains are otherwise exempt from tax under the ITA. Such gains are referred to in this guide as “foreign-sourced disposal gains”.

Foreign-sourced disposal gains will be chargeable to tax under section 10(1)(g) of the ITA when the gains are received in Singapore from outside Singapore by a covered entity and: a) the covered entity that derived the gains does not have adequate economic substance in Singapore; or b) the covered entity derived the gains from a disposal of foreign Intellectual Property Rights (“IPRs”)

The changes will apply to the sale or disposal of a foreign asset that occurs on or after 1 January 2024.