• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/5/2014

Singapore - Insurance company’s gain is capital, not taxable 

March 5:  The Court of Appeal affirmed a decision of the High Court, finding that shares that an insurance company held in three other entities (i.e., core shares) were capital assets. Thus, the gain on disposal of these shares was capital and not subject to tax. Comptroller of Income Tax v. BBO (2014) MSTC ¶70-029

This case considered the taxability of the investment gain made by the taxpayer (an insurance company) in three entities and considered, among other items, the special rules under Singapore’s insurance law.

The Court of Appeal observed that the question whether certain investment gains were properly attributable to revenue or capital account is ultimately a question of fact.

Still, while the Court of Appeal conceded that the nature of the insurance business ordinarily would give rise to an inference that the gains arose out of a plan for profit-making, absent evidence to the contrary, a general principle is that whether gain is capital or revenue in nature—even when the taxpayer is an insurance company—must be determined under applicable law and facts. No industry is to be singled out for differing tax treatment on the basis of regulatory requirements, the court concluded.

Read a February 2014 report [PDF 188 KB] prepared by the KPMG member firm in Singapore: Tax Alert

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