Statute Details
- Title: Income Tax (Exemption of Foreign Income) (No. 2) Order 2019
- Act Code: ITA1947-S130-2019
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Authorising Provision: Section 13(12) of the Income Tax Act
- Enacting Formula: Minister for Finance makes the Order in exercise of powers under section 13(12)
- Citation: Income Tax (Exemption of Foreign Income) (No. 2) Order 2019
- Key Provisions (from extract): Section 1 (Citation); Section 2 (Exemption)
- Commencement Date: Not stated in the provided extract (Order made on 5 March 2019)
- Made Date: 5 March 2019
- Status: Current version as at 27 Mar 2026 (per the legislation page)
- Legislative Instrument Reference: SL 130/2019
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) (No. 2) Order 2019 is a targeted tax exemption instrument made under Singapore’s Income Tax Act. In plain language, it grants a specific exemption from Singapore income tax for a defined amount of foreign-sourced dividends received by a particular Singapore company from a specified overseas company.
Unlike broad-based tax regimes that apply generally to all taxpayers, this Order is narrow in scope. It identifies (i) the recipient company in Singapore, (ii) the payer company abroad, (iii) the type of income (dividends), (iv) the source and the relevant basis years, and (v) the exact quantum of dividends that qualify for exemption. The exemption is also conditional: it is expressly subject to requirements set out in a “letter of approval” issued to the recipient.
Practitioners should view this Order as part of Singapore’s administrative and legislative framework for granting tax reliefs where the Minister for Finance authorises exemptions under the Income Tax Act. The Order operationalises that authorisation for a particular transaction and taxpayer, ensuring that the exemption is legally effective for the specified years of assessment.
What Are the Key Provisions?
1. Citation (Section 1)
Section 1 provides the formal name of the instrument: “Income Tax (Exemption of Foreign Income) (No. 2) Order 2019.” This is standard drafting, but it is important for accurate referencing in submissions, tax computations, and correspondence with the Inland Revenue Authority of Singapore (IRAS).
2. The Exemption (Section 2)
The operative provision is Section 2, which contains the substantive exemption.
(a) Who receives the exemption and what income is exempt (Section 2(1))
Section 2(1) states that “dividends amounting to RM1,181,255” received in Singapore by S&P Global Asian Holdings Pte. Ltd. (a company incorporated in Singapore) from RAM Holdings Berhad (a company incorporated in Malaysia) in the basis periods for the years of assessment 2016 and 2017 are exempt from tax.
This language is highly specific. It indicates that the exemption is limited to dividends: (i) received in Singapore, (ii) from the named Malaysian company, (iii) received in the relevant basis periods corresponding to YA 2016 and YA 2017, and (iv) up to the stated amount of RM1,181,255. The use of a fixed amount suggests that the exemption is not open-ended; it is tied to the quantum approved for relief.
(b) Condition precedent/continuing conditions (Section 2(2))
Section 2(2) provides that the exemption in Section 2(1) is “subject to the conditions specified in paragraphs 4 and 5 of the letter of approval dated 1 February 2019 addressed to S&P Global Asian Holdings Pte. Ltd.”
This is a critical feature for legal and tax compliance. The Order itself does not set out the conditions in the text provided; instead, it incorporates them by reference to the approval letter. For practitioners, this means that the exemption’s validity and continued availability depend on whether the taxpayer satisfies the specified conditions. In practice, lawyers should obtain and review the approval letter (including paragraphs 4 and 5) and ensure that the taxpayer’s documentation, corporate actions, and reporting align with those conditions.
(c) Practical implications of the “basis periods” wording
The Order refers to dividends received “in the basis periods for the years of assessment 2016 and 2017.” In Singapore tax practice, “basis period” generally refers to the accounting period used for computing taxable income for a particular year of assessment. This drafting ensures that the exemption is tied to the timing of receipt and the taxpayer’s accounting/basis period alignment. Practitioners should therefore confirm the taxpayer’s accounting records and the dates of dividend receipt to ensure they fall within the relevant basis periods.
(d) Amount and currency
The exemption amount is expressed in Malaysian Ringgit (RM). While Singapore tax computations are typically in Singapore dollars, the Order’s quantum is in RM. This raises practical questions for tax filing: how the RM amount is translated for Singapore tax purposes, and whether IRAS expects a particular exchange rate or method. Although the Order does not address conversion mechanics in the extract, practitioners should anticipate that IRAS filings will require a consistent and defensible conversion approach, supported by contemporaneous records (e.g., bank statements, dividend vouchers, and exchange rate sources).
How Is This Legislation Structured?
This Order is structured in a minimal, two-section format:
Section 1 (Citation) identifies the instrument.
Section 2 (Exemption) sets out the exemption for specified dividends and incorporates conditions by reference to an approval letter.
There are no Parts or detailed schedules in the extract provided. The legislative design is consistent with “approval-based” exemptions: the Order functions as the legal vehicle granting exemption, while the approval letter contains the compliance conditions.
Who Does This Legislation Apply To?
The exemption applies to S&P Global Asian Holdings Pte. Ltd., a company incorporated in Singapore, in respect of dividends it receives in Singapore from RAM Holdings Berhad, a company incorporated in Malaysia.
Although the Order is made under a general statutory power (section 13(12) of the Income Tax Act), it is not a general rule for all taxpayers. It is effectively a taxpayer-specific and transaction-specific exemption. Other Singapore companies receiving dividends from other foreign companies, or receiving different amounts, would not be covered unless a separate exemption order (or another applicable relief) applies to them.
Why Is This Legislation Important?
For practitioners, the importance of the Income Tax (Exemption of Foreign Income) (No. 2) Order 2019 lies in its role as a legally binding exemption instrument. It provides certainty that, subject to conditions, the specified dividends are exempt from Singapore tax for the specified years of assessment.
From a compliance perspective, the conditional nature of the exemption is the main legal risk area. Because Section 2(2) ties the exemption to paragraphs 4 and 5 of a letter of approval dated 1 February 2019, the taxpayer must be able to demonstrate compliance with those conditions. If the conditions are not met, IRAS may deny the exemption, potentially resulting in tax assessments, penalties, or interest. Accordingly, lawyers should treat the approval letter as essential evidence and not merely administrative correspondence.
From a transaction and advisory standpoint, this Order illustrates how Singapore can grant relief for foreign income through a combination of statutory authority and ministerial approval. It also highlights the drafting approach used in such exemptions: precise identification of the income type, payer and recipient, basis periods, and the quantum of exempt dividends. This precision is valuable for tax planning and for reducing ambiguity, but it also means that practitioners must carefully match the facts of the taxpayer’s dividend receipt to the Order’s terms.
Related Legislation
- Income Tax Act (Chapter 134) — in particular, section 13(12) (the authorising provision for making exemption orders)
- Income Tax (Exemption of Foreign Income) (No. 2) Order 2019 — SL 130/2019 (this instrument)
- Legislation timeline / versions — to confirm the correct current version as at the relevant date for advice and filing
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) (No. 2) Order 2019 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.