Singapore: Proposed taxation of gains from the disposal of foreign assets

On 6 June 2023, the Ministry of Finance in Singapore published the draft Income Tax (Amendment) Bill 2023. This draft legislation proposes a tax on any gains:

arising on or after 1 January 2024;
from the sale or disposal of any movable or immovable property situated outside Singapore;
that are received in Singapore;
by a relevant entity; and
which does not have economic substance in Singapore;
unless an exemption applies.

Each of the above points requires careful consideration as to whether they apply to a particular taxpayer (although it does not apply to individuals), and some commentators have noted that there is ambiguity as to how the legislation would apply in practice.

However, it is worth noting that the new legislation seeks to align Singapore’s regime with guidance released by the EU Code of Conduct Group in December 2022, which aims to combat harmful tax competition and include capital gains in the general class of taxable items.

This reflects the growing trend towards reducing the scope for tax avoidance internationally, and taxpayers would be wise to consider their affairs on a worldwide basis and to take internationally joined-up advice. Tax planning that appears prudent in one jurisdiction could have disadvantages in another, and planning must be undertaken with this in mind, whether for individuals themselves, or in relation to their companies and other structures.

Edwin Coe is a member of the international Ally Law network of law firms and routinely works with other lawyers around the world to ensure that clients receive the joined-up, international advice they need.

If you need advice regarding your international estate, taxation or succession affairs please do not hesitate to contact David Goepel, Denise Li Gates or any member of the Private Client team.

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