Statute Details
- Title: Income Tax (Exemption of Foreign Income) (No. 2) Order 2018
- Act Code: ITA1947-S323-2018
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Power Exercised: Minister for Finance powers under section 13(12) of the Income Tax Act
- Citation: SL 323/2018
- Date Made: 24 May 2018
- Commencement: Not stated in the extract (practitioners should confirm via the legislation timeline/version history)
- Status: Current version as at 27 Mar 2026 (per the platform display)
- Key Provisions: Section 1 (Citation); paragraph 2 (Exemption and scope); paragraph 2(3) (conditions via letter of approval)
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) (No. 2) Order 2018 is a targeted tax exemption order made under the Income Tax Act. In plain terms, it provides that certain income received in Singapore by specified companies—derived from the sale of oil palms located in Malaysia—can be exempt from Singapore income tax.
Unlike broad-based exemptions that apply to entire categories of taxpayers or industries, this Order is highly specific. It identifies particular recipients (Lee Rubber Company (Pte) Limited and Selat (Pte) Limited), specific time periods, and particular Malaysian oil palm estates. The exemption is therefore best understood as a bespoke relief instrument, likely connected to a particular transaction structure and approved by the Ministry of Finance.
Practically, the Order functions as a legal “switch” that turns off tax liability for the defined income, but only if the statutory conditions are met. The Order also makes clear that the exemption is not unconditional: it is subject to conditions set out in a separate letter of approval issued by the Ministry of Finance.
What Are the Key Provisions?
1. Citation (Section 1)
Section 1 simply states the short title: the “Income Tax (Exemption of Foreign Income) (No. 2) Order 2018”. This is standard legislative drafting and is mainly useful for reference and legal citation.
2. The exemption mechanism (Paragraph 2(1) and 2(2))
Paragraph 2(1) provides the core rule: income described in sub-paragraph (2) is exempt from tax. The exemption is therefore triggered only for the income that falls within the detailed descriptions in paragraph 2(2).
Paragraph 2(2) then sets out four distinct categories of exempt income:
- Lee Rubber Company (Pte) Limited—income received in Singapore on 2 May 2014, 6 May 2014, 3 June 2014, and 15 September 2014, totalling $77,556,553, derived from the sale of oil palms from specified Malaysian estates.
- Lee Rubber Company (Pte) Limited—any income received in Singapore on or after 16 September 2014, derived from the sale of oil palms from the same estates listed for the earlier period.
- Selat (Pte) Limited—income of $3,012,818 received in Singapore on 16 October 2014, derived from the sale of oil palms from specified Malaysian estates.
- Selat (Pte) Limited—any income received in Singapore on or after 17 October 2014, derived from the sale of oil palms from the estates listed for the earlier period.
3. The estate-specific scope
The Order’s descriptions are anchored to particular oil palm estates located in Malaysia and owned by the relevant Singapore company. For Lee Rubber Company (Pte) Limited, the estates are:
- New Scudai Estate
- Scudai Estate
- Bakri Estate
- Ladang Senai
For Selat (Pte) Limited, the estates are:
- Shansi Estate
- Sungei Masai Estate
This estate-level specificity matters for practitioners because it limits the exemption to income derived from those estates. If income is derived from other estates, even if they are similarly situated or owned by the same company, it may fall outside the exemption’s literal terms.
4. Conditions: exemption is subject to a letter of approval (Paragraph 2(3))
Paragraph 2(3) is critical. It states that the exemption in paragraph 2(1) is subject to the conditions specified in paragraph 5 of a letter of approval dated 8 February 2018 issued by the Ministry of Finance and addressed to Ernst & Young Solutions LLP.
From a legal practice perspective, this creates an interpretive and compliance dependency on an external document. The Order itself does not reproduce the conditions; instead, it incorporates them by reference. Therefore, to advise a client accurately, counsel would need to obtain and review the letter of approval (or at least the relevant paragraph 5) and confirm that the taxpayer’s facts and documentation align with those conditions.
In disputes, the incorporation-by-reference approach can be decisive: if the conditions are not satisfied, the exemption may be denied or withdrawn, and tax may become payable with possible penalties and interest depending on the assessment and enforcement posture.
How Is This Legislation Structured?
This Order is very short and consists of:
- Section 1 (Citation): identifies the Order.
- Section 2 (Exemption): contains the operative exemption rule and its scope, including the detailed income descriptions and the condition that the exemption is subject to specified conditions in a Ministry of Finance letter of approval.
There are no “Parts” or “chapters” in the extract, and no additional sections are shown beyond the exemption framework. The legislative structure reflects the bespoke nature of the relief: it is designed to apply to a narrow set of facts rather than to establish a general regime.
Who Does This Legislation Apply To?
The exemption applies to income received in Singapore by two identified companies: Lee Rubber Company (Pte) Limited and Selat (Pte) Limited. It is not framed as a general exemption for all taxpayers with foreign-sourced income; rather, it is a company- and transaction-specific relief.
Additionally, the exemption is limited to income that is (i) derived from the sale of oil palms, (ii) linked to the specified Malaysian oil palm estates, and (iii) received within the specified dates/time windows described in paragraph 2(2). Even within the same companies, income outside those parameters may not qualify.
Finally, the exemption is conditional on compliance with the conditions in the Ministry of Finance letter of approval dated 8 February 2018 (paragraph 5). Thus, even if the income appears to match the estate and timing descriptions, eligibility may still depend on satisfying the approval conditions.
Why Is This Legislation Important?
This Order is important because it demonstrates how Singapore’s Income Tax Act can be supplemented by subsidiary legislation to grant relief in a targeted manner. For practitioners, it is a useful example of how tax exemptions may be implemented through specific orders under section 13(12), rather than through broad statutory provisions.
From a compliance and advisory standpoint, the Order’s practical impact is twofold:
- Tax computation and filing: The taxpayer must correctly identify which receipts fall within the exempt categories and ensure that the exemption is applied only to qualifying income. Misclassification could lead to underpayment and subsequent adjustments.
- Evidence and audit readiness: Because the exemption is tied to specific estates and dates, taxpayers should maintain transaction records (sales contracts, settlement dates, estate ownership documentation, and mapping of receipts to the described estates and periods).
Second, the incorporation of conditions by reference to a Ministry of Finance letter of approval highlights a common risk area in tax exemptions: eligibility may depend on meeting procedural or substantive conditions that are not contained in the Order itself. Practitioners should therefore treat the letter of approval as part of the “legal instrument” governing the exemption, and should confirm whether any conditions were time-bound, ongoing, or subject to reporting requirements.
Finally, this Order may be relevant in negotiations with tax authorities, in handling tax audits, or in structuring future transactions. Even if the Order is narrow, it can inform how the Ministry of Finance approaches approvals and how section 13(12) exemptions are operationalised.
Related Legislation
- Income Tax Act (Chapter 134) — in particular, section 13(12) (authorising power for the Minister for Finance to make exemption orders)
- Income Tax (Exemption of Foreign Income) (No. 2) Order 2018 — SL 323/2018 (this Order)
- Income Tax legislation timeline / versions — to confirm the current version and any amendments (as indicated by the platform’s timeline functionality)
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) (No. 2) Order 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.