Singapore: Guidance on foreign-sourced capital gains and interest income

The Inland Revenue Authority of Singapore (IRAS) has issued Advance Ruling Summaries No. 13/2025 and No. 14/2025 regarding the economic substance requirements under Section 10L of the Income Tax Act (ITA) for foreign-sourced capital gains.

• Effective January 1, 2024, Section 10L subjects foreign-sourced capital gains to tax unless the economic substance requirements are met (for dispositions of foreign assets other than intellectual property (IP) rights).
• Summary No. 13/2025 confirms that foreign-sourced gains from the sale of shares by a Singapore-incorporated company will not be taxed when remitted to Singapore, as the company has met the economic substance requirements and qualifies as an excluded entity.
• Summary No. 14/2025 confirms that a Singapore-incorporated special purpose vehicle (SPV) divesting foreign investments will also be treated as an excluded entity having met the economic substance requirements and its gains from such divestments will not be subject to tax in Singapore.
• Both rulings remain valid for five years of assessment provided the relevant conditions remain unchanged.

The IRAS has also issued Advance Ruling Summary No. 15/2025, clarifying that the settlement of intercompany loans and interest receivables through the endorsement of promissory notes does not constitute foreign-sourced interest received in Singapore under section 10(25) of the Income Tax Act 1947. This treatment applies as long as the promissory notes remain outside Singapore, and the foreign-sourced interest income is not remitted or used in Singapore.
 

For more information, contact a KPMG tax professional in Singapore:

Audrey Wong | audreywong@kpmg.com.sg

Han Swee Peng | sweepenghan@kpmg.com.sg