Statute Details
- Title: Income Tax (Exemption of Foreign Income) (No. 2) Order 2007
- Act Code: ITA1947-S367-2007
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134), section 13(12)
- Enacting date / Made by: 6 July 2007
- Citation: Income Tax (Exemption of Foreign Income) (No. 2) Order 2007
- Key provisions (from extract):
- Section 1: Citation
- Section 2: Specific exemption granted to Ghim Li Group Pte Ltd
- Status: Current version as at 27 March 2026 (per the legislation portal)
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) (No. 2) Order 2007 is a targeted tax exemption instrument made under Singapore’s Income Tax Act. Unlike broad-based tax regimes that apply generally to all taxpayers, this Order grants a specific exemption to a particular company, namely Ghim Li Group Pte Ltd. The exemption concerns dividends received in Singapore from a foreign subsidiary.
In plain terms, the Order allows the recipient company to receive certain foreign dividends without paying Singapore tax on those dividends, provided the conditions set out in an approval letter are satisfied. Here, the dividends are received in Singapore from the company’s subsidiary in Australia, GLG Corp Ltd.
Because the Order is made pursuant to section 13(12) of the Income Tax Act, it fits within Singapore’s broader framework for granting exemptions from tax on foreign-sourced income in appropriate circumstances. Such exemptions are typically designed to reduce double taxation, encourage corporate structuring, and support cross-border investment—while still allowing the tax authority to impose conditions to protect the revenue and ensure compliance.
What Are the Key Provisions?
Section 1 (Citation) is a standard provision. It states that the instrument may be cited as the Income Tax (Exemption of Foreign Income) (No. 2) Order 2007. While not substantive, citation provisions matter for legal certainty and for practitioners when referencing the instrument in submissions, correspondence, or compliance documentation.
Section 2 (Exemption) is the operative clause. It provides that Ghim Li Group Pte Ltd is granted an exemption from tax on dividends received in Singapore from its subsidiary in Australia, GLG Corp Ltd. The exemption is not unconditional; it is expressly “subject to the terms and conditions specified in the letter of approval dated 26th February 2007 addressed to the tax agent of Ghim Li Group Pte Ltd.”
From a practitioner’s perspective, the key legal work is therefore not only reading the Order itself, but also identifying and reviewing the approval letter dated 26 February 2007. The Order incorporates those terms by reference. This means that the exemption’s scope, duration, and compliance requirements may be determined largely by the approval letter rather than by the Order’s text alone.
Although the extract does not reproduce the approval letter’s contents, the structure of the Order indicates that the approval letter likely sets out conditions such as: (i) the nature of the dividend payments covered; (ii) the corporate relationship between the Singapore parent and the Australian subsidiary; (iii) documentation requirements; (iv) anti-avoidance or integrity conditions; and (v) reporting obligations to ensure the tax exemption is properly administered. Practitioners should treat the approval letter as essential evidence for advising on eligibility and for defending the exemption in the event of a tax audit.
Finally, the Order includes the making clause (the formal act of issuance) and signature block. It states it was made by the Permanent Secretary, Ministry of Finance, on 6 July 2007, and it references internal legislative and administrative identifiers. While these elements are procedural, they confirm the instrument’s validity and the authority under which it was made.
How Is This Legislation Structured?
This Order is extremely short and consists of a minimal structure typical of specific exemption orders. Based on the extract, it contains:
(1) Enacting formula—identifies the statutory power under which the Minister for Finance acts, namely section 13(12) of the Income Tax Act.
(2) Citation provision (Section 1)—sets the short title for reference.
(3) Exemption provision (Section 2)—grants the exemption to a named taxpayer, for a defined type of income (dividends received in Singapore) from a defined foreign subsidiary (GLG Corp Ltd in Australia), subject to conditions in an external approval letter.
(4) Making clause—records the date and the signatory.
Notably, the Order does not create general rules, definitions, or detailed administrative procedures within its own text. Instead, it relies on the incorporated approval letter and on the general framework of the Income Tax Act for how exemptions are administered and enforced.
Who Does This Legislation Apply To?
The Order applies to Ghim Li Group Pte Ltd only. It is a named-person exemption, not a class exemption. This means that other companies—whether Singapore parents receiving dividends from foreign subsidiaries in Australia or elsewhere—do not automatically benefit from this Order.
However, the Order’s existence is still relevant to practitioners because it illustrates how Singapore grants foreign income exemptions under section 13(12) of the Income Tax Act. A different taxpayer seeking a similar outcome would typically need to apply for its own approval and obtain its own exemption order (or otherwise satisfy the statutory conditions applicable to exemptions). In other words, this Order is a precedent for process and structure, but not a source of entitlement for other taxpayers.
In terms of income scope, the exemption is limited to dividends received in Singapore from GLG Corp Ltd. The phrase “received in Singapore” suggests the tax treatment is tied to the location of receipt (i.e., the dividends are brought into or received in Singapore by the exempt company), rather than to the place of declaration or payment. Practitioners should align this with the dividend payment mechanics and the timing of receipt for tax reporting purposes.
Why Is This Legislation Important?
Although the Order is brief, it is legally significant because it confers a direct tax benefit: an exemption from Singapore tax on specified foreign dividends. For corporate groups, dividends are often a key mechanism for repatriating profits from overseas subsidiaries. A tax exemption can materially affect effective tax rates, cash flows, and the overall attractiveness of holding structures.
From an enforcement and compliance standpoint, the Order’s reference to an external approval letter dated 26 February 2007 is crucial. Exemptions are commonly conditional, and the tax authority may require evidence that the conditions were met at the relevant time. Practitioners should therefore ensure that corporate records, dividend declarations, shareholder registers, and tax agent documentation are consistent with the approval letter’s requirements.
In practice, this Order would be relevant when advising on: (i) whether dividends from a foreign subsidiary are taxable in Singapore; (ii) how to claim the exemption in tax filings; (iii) what documentation to retain; and (iv) how to respond to queries from the Inland Revenue Authority of Singapore (IRAS) during audits. Because the Order is a subsidiary instrument, it may be scrutinised alongside the Income Tax Act provisions and any related administrative guidance.
Finally, the Order demonstrates the policy approach behind section 13(12) of the Income Tax Act: Singapore can grant exemptions where appropriate, but it does so through formal instruments and approvals rather than leaving outcomes entirely to discretion or general principles. For lawyers, this means that entitlement is best assessed through the combination of: (a) the exemption order; (b) the approval letter; and (c) the statutory framework governing exemptions.
Related Legislation
- Income Tax Act (Chapter 134) — in particular section 13(12) (authorising power for the Minister to make exemption orders)
- Legislation timeline / Income Tax Act legislative history (as referenced in the portal interface)
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) (No. 2) Order 2007 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.