Singapore has a progressive tax framework, which is based on territorial policy. This means that individuals and companies are taxed on incomes generated in the city-state, and on foreign sourced income remitted into the country.
Since 2003, in a bid to increase the country’s attractiveness as a wealth management hub, the government has progressively relaxed the taxation policy on qualifying foreign sourced remitted income.
Overseas Income Received in Singapore
The Sections 13 (7A) to 13 (11) of the Income Tax Act (ITA) of Singapore specifically deals with tax treatment of foreign sourced income under the foreign-sourced income exemption (FSIE) scheme.
The scheme applies to all Singapore tax resident companies, as well as resident individuals receiving the specified foreign income through a partnership in Singapore.
Notably, foreign individuals and companies who are not residents of Singapore for the purpose of taxation are free to bring in money into their Singapore bank accounts without attracting any tax liability.
What is foreign-sourced income?
Income that does not arise from a trade or business carried out in Singapore is considered as foreign sourced income.
Such income is considered “received” into the country when it is remitted, transmitted or brought into Singapore; or is used in settling a debt incurred during a business transaction in Singapore; or is used to purchase any movable property in Singapore.
Read more about Tax Exemptions of Foreign-Sourced Income in Singapore at Singapore Company Incorporation.
