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Singapore - New Capital Gains Tax Regime 

Global Tax Adviser 

March 06, 2012

Walter Pela
Vancouver, Tax Business Unit Leader

Bill Lau
Vancouver, Canadian Corporate Tax


Singapore's 2012 budget clarifies its tax treatment of capital gains. Under the budget's proposed changes, Singapore will not tax capital gains if the holding period is at least two years or the percentage of shares held is at least 20%. The proposed change provides greater certainty for corporate groups investing in Singapore.

Background
Although Singapore does not impose tax on capital gains, the definition of capital is not addressed in its tax legislation or other government sources. Historically, this has created uncertainty for share transactions in Singapore, as the divesting company must justify the facts and circumstances of each case in determining whether a transaction is capital (i.e., not taxable) or revenue (i.e., taxable).

 

Proposed change
Under Singapore's 2012 budget, gains arising to Singapore companies on the disposal of shares would not be subject to income tax where the following conditions are met:

 

  • The divesting company holds a minimum shareholding of 20% in the company being disposed of
  • The divesting company maintains the minimum shareholding for a minimum of 24 months prior to disposal.

 

For disposals that do not meet these conditions, Singapore will continue its existing approach of looking at the facts and circumstances of each transaction.

 

For more information, contact your KPMG adviser.

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