Statute Details
- Title: Income Tax (Exemption of Foreign Income) (No. 4) Order 2018
- Act Code: ITA1947-S503-2018
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Authorising Power: Section 13(12) of the Income Tax Act
- Enacting/Legal Citation: SL 503/2018
- Order Date / Made By: Made on 16 August 2018 (Minister for Finance; signed by Permanent Secretary, Ministry of Finance)
- Commencement: Not stated in the extract (practitioners should confirm via the legislation timeline/version)
- Status: Current version as at 27 Mar 2026 (per the platform’s status note)
- Key Provisions: Section 1 (Citation); Section 2 (Exemption)
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) (No. 4) Order 2018 is a targeted tax exemption order made under the Income Tax Act. In plain terms, it provides that certain foreign-sourced income—specifically, dividends received in Singapore from overseas companies—will be exempt from Singapore income tax, but only for the particular income and taxpayer described in the Order.
Unlike broad-based tax regimes that apply generally to all taxpayers, this Order is highly specific. It identifies a particular Singapore company, Lodgis Hospitality Holdings Pte. Ltd., and specifies the type of income (dividends), the amount (US$3,800,000), the relevant foreign payors (companies incorporated in the British Virgin Islands), and the date the dividends were received in Singapore (12 September 2017). The exemption is therefore best understood as an instrument granting relief for a defined transaction or set of circumstances.
Finally, the Order makes the exemption conditional. It states that the exemption is subject to terms and conditions set out in a letter of approval dated 25 July 2018 addressed to the taxpayer’s tax agent. This reflects a common Singapore tax administration approach: exemptions granted by subsidiary legislation may be conditional upon compliance with approval terms, which can include documentation, reporting, and other compliance requirements.
What Are the Key Provisions?
1. Citation (Section 1)
Section 1 simply provides the formal name of the instrument: the “Income Tax (Exemption of Foreign Income) (No. 4) Order 2018.” While this appears procedural, it is important for practitioners when cross-referencing the correct subsidiary legislation in filings, correspondence with the tax authority, and internal tax governance documents.
2. Exemption of foreign dividends (Section 2)
The substantive operative provision is Section 2. Section 2(1) states that income comprising dividends of US$3,800,000 received in Singapore by Lodgis Hospitality Holdings Pte. Ltd. (a company incorporated in Singapore) on 12 September 2017 from Madrid Holdings (BVI) Limited and Prime Value Asia Limited (both incorporated in the British Virgin Islands) is exempt from tax.
Practically, this means that, for the specified dividends, the taxpayer should not be assessed to Singapore income tax on that amount. The Order’s wording is transaction-specific: it does not say “dividends generally” or “all foreign dividends.” Instead, it fixes the exemption to the precise amount, the receipt date, and the identified foreign sources. For tax practitioners, this specificity is critical when advising on whether other dividend streams (different amounts, different receipt dates, different payors, or different corporate structures) would fall outside the exemption.
3. Conditions attached to the exemption (Section 2(2))
Section 2(2) provides that the exemption in Section 2(1) is subject to the terms and conditions specified in paragraphs 3 and 4 of a letter of approval dated 25 July 2018 addressed to Deloitte & Touche LLP, the tax agent of Lodgis Hospitality Holdings Pte. Ltd.
This conditional language is legally significant. It indicates that the exemption is not purely automatic upon receipt of the dividends; rather, it depends on compliance with the approval terms. Although the extract does not reproduce the content of paragraphs 3 and 4, practitioners should treat the approval letter as an essential part of the exemption’s legal framework. In practice, such conditions may relate to documentation (e.g., proof of foreign dividend payments), declarations, compliance with anti-avoidance requirements, and/or ongoing reporting obligations. Failure to comply with conditions could jeopardise the exemption or expose the taxpayer to reassessment or penalties, depending on the circumstances and the tax authority’s enforcement approach.
4. Legal effect and scope
Because the Order is made under section 13(12) of the Income Tax Act, it operates as a statutory instrument that modifies the general tax treatment of the specified income. The legal effect is to carve out an exemption from tax for the identified dividends. However, the scope is narrow: the exemption is limited to the income described in Section 2(1) and is further constrained by the approval conditions in Section 2(2). This narrow scope is a key feature for practitioners assessing risk and advising on whether the exemption can be relied upon for other related transactions.
How Is This Legislation Structured?
The Order is structured in a simple, two-part format:
(a) Section 1 (Citation)—sets out the short title of the Order.
(b) Section 2 (Exemption)—contains the operative exemption and its conditions. Section 2 is divided into two sub-paragraphs: subsection (1) describes the exempt income and the taxpayer and payors; subsection (2) attaches conditions by reference to an approval letter.
Notably, the extract indicates that there are no additional Parts or sections beyond these. This is consistent with many “exemption orders” that are drafted to address a specific taxpayer and transaction rather than to establish a general policy framework.
Who Does This Legislation Apply To?
This Order applies to Lodgis Hospitality Holdings Pte. Ltd., a company incorporated in Singapore, but only in respect of the dividends of US$3,800,000 received in Singapore on 12 September 2017 from the two specified British Virgin Islands companies: Madrid Holdings (BVI) Limited and Prime Value Asia Limited.
Accordingly, the Order does not create a general exemption for all Singapore companies receiving foreign dividends. It is best viewed as a bespoke statutory exemption for a defined fact pattern. For other taxpayers, even if they receive dividends from similar jurisdictions, the exemption would not automatically apply unless their circumstances match the exact income description and conditions set out in the relevant exemption order (or unless another exemption instrument applies).
Practitioners should also note the reference to the tax agent, Deloitte & Touche LLP, in the approval letter. While the taxpayer is the legal recipient of the income, the approval letter’s conditions are communicated to the agent. In advising clients, it is therefore important to ensure that the taxpayer and its advisers have access to the approval letter and understand the compliance steps required under paragraphs 3 and 4.
Why Is This Legislation Important?
Although the Order is short, it can be highly consequential for tax outcomes. Dividends received by a Singapore company from foreign subsidiaries can be subject to Singapore tax depending on the applicable rules. By granting an exemption for a specific dividend receipt, this Order can materially reduce or eliminate the tax liability associated with that income.
From a practitioner’s perspective, the importance lies in both certainty and conditionality. The statutory exemption provides a clear legal basis to treat the specified dividends as tax-exempt. However, the exemption is expressly subject to conditions in the approval letter. This means that tax certainty is not solely determined by the Order’s text; it also depends on compliance with the approval terms. In practice, this requires careful document management, confirmation of receipt details, and ensuring that the taxpayer’s reporting and governance align with the approval conditions.
Finally, the Order illustrates how Singapore uses subsidiary legislation to implement tax relief in a controlled manner. Rather than relying entirely on administrative practice, the tax authority can formalise exemptions through statutory instruments. For lawyers, this underscores the need to treat exemption orders as part of a broader compliance ecosystem: the subsidiary legislation, the authorising provision in the Income Tax Act, and the approval letter conditions collectively determine the taxpayer’s rights and obligations.
Related Legislation
- Income Tax Act (Chapter 134) — in particular, section 13(12) (the authorising provision for this exemption order)
- Income Tax (Exemption of Foreign Income) (No. 4) Order 2018 — SL 503/2018 (this instrument)
- Legislation Timeline / Versions — to confirm the correct version in force for the relevant tax period (as indicated by the platform’s “current version as at 27 Mar 2026” note)
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) (No. 4) Order 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.