Statute Details
- Title: Income Tax (Exemption of Foreign Income) (No. 6) Order 2018
- Act Code: ITA1947-S715-2018
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134), section 13(12)
- Order Number: SL 715/2018
- Enacting Formula (Power Source): Minister for Finance powers under section 13(12) of the Income Tax Act
- Citation: 1. This Order is the Income Tax (Exemption of Foreign Income) (No. 6) Order 2018
- Key Provision: Section 2 (Exemption)
- Made Date: 24 October 2018
- Status: Current version as at 27 March 2026 (per the legislation record)
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) (No. 6) Order 2018 is a targeted tax exemption order made under the Income Tax Act. In plain terms, it grants an exemption from Singapore income tax for certain dividends received in Singapore by two Singapore-incorporated companies, where those dividends originate from a Malaysian company and are ultimately traced to underlying Malaysian subsidiaries.
Orders of this type are typically used to implement specific tax outcomes that depend on corporate structures, cross-border flows of income, and conditions approved by the tax authorities. Rather than creating a general rule for all taxpayers, this Order applies to a defined set of companies and a defined period of dividend receipt.
Practitioners should view this Order as a “narrow instrument”: it does not broadly change the Income Tax Act. Instead, it provides a statutory exemption for specified foreign-sourced dividends, subject to conditions set out in a letter of approval. The exemption is therefore both company-specific and transaction/period-specific.
What Are the Key Provisions?
1. The exemption granted (Section 2(1)). The core operative provision is section 2. Under section 2(1), dividends received in Singapore by Singapore Aerospace Manufacturing Pte Ltd and Accuron Industrial Technologies Limited (both incorporated in Singapore) are exempt from tax. The dividends must be received from SAM Engineering & Equipment (M) Berhad, a company incorporated in Malaysia.
The exemption is limited to dividends received for the period from 1 April 2014 to 31 March 2015 (inclusive). This temporal limitation is crucial: if dividends are received outside that window, the exemption would not apply under the literal terms of the Order.
2. The “derived from” requirement (downstream source tracing). Section 2(1) further requires that the dividends received by the Singapore companies are “derived from dividends received” by SAM Engineering & Equipment (M) Berhad from three Malaysian companies: SAM Meerkat (M) Sdn Bhd, SAM Precision (M) Sdn Bhd, and LKT Automation Sdn Bhd. This is a tracing requirement: the exemption is not merely about the immediate payer being Malaysian, but about the underlying dividend chain.
For legal and tax practitioners, this means documentation and dividend flow analysis matter. The exemption is framed to cover a specific corporate dividend cascade: underlying Malaysian subsidiaries pay dividends to SAM Engineering & Equipment (M) Berhad, which then pays dividends to the Singapore recipients. If the underlying source differs (for example, if the Malaysian intermediate company’s dividends were sourced from other entities or other income streams not captured by the specified chain), the exemption may be challenged.
3. Conditions precedent/continuing conditions (Section 2(2)). Even where the dividends fall within the specified period and corporate chain, the exemption is expressly subject to conditions in a letter of approval dated 8 October 2018 addressed to KPMG Services Pte. Ltd., the tax agent of the two Singapore companies.
Section 2(2) states that the exemption in section 2(1) is subject to the conditions specified in paragraphs 3 and 4 of that letter of approval. This is a significant legal feature: the Order incorporates by reference conditions contained in an external approval letter. In practice, the letter of approval becomes essential evidence for compliance. If the conditions are not satisfied, the statutory exemption may not be available, or it may be subject to withdrawal/adjustment depending on how the tax authority enforces the conditions.
4. Formalities and making of the Order. The Order includes a “Made on” date and identifies the maker: TAN CHING YEE, Permanent Secretary, Ministry of Finance. While this is not a substantive tax rule, it confirms the instrument’s validity and the administrative authority behind it.
How Is This Legislation Structured?
This Order is structured in a very concise format, reflecting its function as a targeted exemption instrument. It contains:
(a) Enacting Formula — states that the Minister for Finance makes the Order under section 13(12) of the Income Tax Act.
(b) Citation (Section 1) — provides the short title of the Order.
(c) Exemption (Section 2) — the operative section, with two subsections:
- Section 2(1) — specifies the Singapore recipients, the Malaysian payer, the dividend source chain, and the exact period of dividends.
- Section 2(2) — makes the exemption conditional on compliance with specified paragraphs of a letter of approval dated 8 October 2018.
Notably, there are no “Parts” or extensive schedules in the extract provided. The legislative design is therefore straightforward: identify the taxpayers and income, define the relevant period and source chain, and then attach compliance conditions by reference.
Who Does This Legislation Apply To?
The Order applies to two specific Singapore-incorporated companies: Singapore Aerospace Manufacturing Pte Ltd and Accuron Industrial Technologies Limited. It does not apply to other Singapore companies, even if they receive dividends from Malaysian companies, unless they fall within the exact description in section 2(1).
It also applies only to dividends that meet all of the following criteria: (i) received in Singapore by the specified companies; (ii) received from SAM Engineering & Equipment (M) Berhad; (iii) received during the period 1 April 2014 to 31 March 2015; and (iv) derived from dividends received by SAM Engineering & Equipment (M) Berhad from the three specified Malaysian subsidiaries. Finally, the exemption is available only if the conditions in the referenced approval letter (paragraphs 3 and 4) are satisfied.
From a practitioner’s perspective, the “who” question is therefore not just about the recipient companies; it is also about the character and origin of the dividends and the compliance status under the approval conditions.
Why Is This Legislation Important?
This Order is important because it provides a statutory basis for exempting certain foreign-sourced dividends from Singapore tax for a defined set of corporate circumstances. For affected taxpayers, the exemption can materially reduce tax costs and simplify tax treatment—provided the conditions are met and the dividend chain is properly evidenced.
Practically, the Order illustrates how Singapore’s tax system can use targeted exemption orders to address cross-border corporate arrangements. It also highlights a common compliance theme: even when an exemption is granted by statute, the tax outcome may depend on meeting conditions set out in an approval letter. Lawyers advising on such matters must therefore treat the approval letter as part of the legal framework, not as mere administrative correspondence.
From an enforcement and risk perspective, the tracing requirement (“derived from dividends received by” the Malaysian intermediate company from specified subsidiaries) creates a factual and documentary burden. Practitioners should ensure dividend declarations, board resolutions, dividend payment records, and intercompany dividend flow statements align with the specified entities and period. Where the corporate structure changes or where dividends are funded by different sources, the exemption may not apply.
Finally, because the Order is dated and tied to a specific financial period (1 April 2014 to 31 March 2015), it is also relevant for historical tax filings, potential amendments, and disputes. If a taxpayer’s prior treatment did not reflect the exemption, the Order may be relevant to whether relief was available at the time and whether any adjustments or claims can be supported.
Related Legislation
- Income Tax Act (Chapter 134) — in particular section 13(12) (the authorising provision for making exemption orders)
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) (No. 6) Order 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.