Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/3/2012

Singapore - Tax certainty on gains from equity investment disposals 

July 3:   Measures in Singapore’s Budget 2012 afford companies “tax certainty” with respect to the treatment of gains derived from disposals of certain equity investments made on or after 1 June 2012.

Summary

Singapore’s tax system imposes tax on income receipts, but not on capital gains. However, the tax law does not define what constitutes a capital gain.


Historically, when a company derived gains from divestment of equity investments, taxpayers could claim that certain factors supported their tax treatment of the amounts realized as capital gains. However, it was not always certain that the Inland Revenue Authority would agree to this treatment.


To promote Singapore as an attractive location for regional headquarters, new tax provisions in Budget 2012 were intended to afford tax certainty on gains realized from divestments of certain equity investments.


Beginning 1 June 2012 to 31 May 2017, “certainty” on the non-taxation of gains from the divestment of ordinary shares is provided to a divesting company if, immediately prior to the date of divestment:


  • The divesting company has held at least 20% of the ordinary shares in the “investee company;” and
  • The holding period is for a continuous period of 24 months.

The Inland Revenue Authority issued guidance (30 May 2012) that sets forth details on the new tax measures that provide certainty to corporate investors.


Read a June 2012 report [PDF 337 KB] prepared by the KPMG member firm in Singapore: Tax Certainty on Disposal Gains from Equity Investments




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