This is a very common question that many company owners grapple with. However, the Income Tax Act clearly covers this in Section 10(25).

 

(25)  It is hereby declared for the avoidance of doubt that the amounts described in the following paragraphs shall be income received in Singapore from outside Singapore whether or not the source from which the income is derived has ceased:

(a) any amount from any income derived from outside Singapore which is remitted to, transmitted or brought into, Singapore;

(b) any amount from any income derived from outside Singapore which is applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore; and

(c) any amount from any income derived from outside Singapore which is applied to purchase any movable property which is brought into Singapore.

 

You may refer directly to the clause in the Income Tax Act here.

 

Based on (a) which states that “any amount from any income derived from outside Singapore which is remitted to, transmitted or brought into, Singapore” “shall be income received in Singapore from outside Singapore whether or not the source from which the income is derived has ceased” means that even if the business transaction is done outside of Singapore but the monies are received in a bank account in Singapore, this income will be liable for Singapore corporate tax. If the income is derived from outside of Singapore and received in a bank account that is not within Singapore, the income can be deemed not to be earned from within Singapore and thus is not liable for corporate tax.

 

Based on (b) which states that “any amount from any income derived from outside Singapore which is applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore” means that if the income is earned from outside of Singapore but is used to pay for liabilities of the company’s business activities from within Singapore, this income is deemed to be earned from within Singapore and will be liable for Singapore corporate tax.

 

Based on (c) which states that “any amount from any income derived from outside Singapore which is applied to purchase any movable property which is brought into Singapore” means that if the income is earned from outside of Singapore and is used to purchase movable property, let’s say machinery, cabinets, laptops, this income is deemed to be earned in Singapore and will be liable for Singapore corporate tax.

 

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.

Yours Sincerely,
The editorial team at Singapore Secretary Services

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