Statute Details
- Title: Income Tax (Exemption of Foreign Income) Order 2007
- Act Code: ITA1947-S366-2007
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Authorising Power: Section 13(12) of the Income Tax Act
- Enacting Date / Made Date: 6 July 2007
- Commencement Date: Not specified in the extract (order is made on 6 July 2007; practitioners should confirm commencement in the official record)
- Key Provisions (from extract): Section 1 (Citation); Section 2 (Exemption)
- Related Legislation: Income Tax Act (Chapter 134); Income Tax legislation timeline (versioning)
- Current Version Status (as provided): Current version as at 27 Mar 2026
- Singapore Statutory Citation: SL 366/2007 (10 July 2007)
What Is This Legislation About?
The Income Tax (Exemption of Foreign Income) Order 2007 is a targeted tax exemption instrument made under the Income Tax Act. Unlike broad-based tax regimes that apply generally to all taxpayers, this Order is narrow in scope: it grants a specific exemption to a specific company, United International Securities Ltd, in relation to dividends received in Singapore from certain foreign subsidiaries.
In plain language, the Order addresses a common cross-border tax issue: when a Singapore company receives dividends from overseas subsidiaries, the tax treatment of those dividends can affect the overall tax burden and the attractiveness of holding structures. This Order provides relief from tax on specified dividends, but only if the statutory conditions are met—most notably, compliance with the terms and conditions in a referenced letter of approval dated 5 January 2007.
Because the Order is an “Order” made under a specific enabling provision (section 13(12) of the Income Tax Act), it functions as a legal mechanism for granting exemptions that are not automatically available under the general provisions of the Income Tax Act. For practitioners, the key point is that the exemption is conditional and company-specific, and it is anchored to an approval process evidenced by the letter dated 5 January 2007.
What Are the Key Provisions?
Section 1 (Citation) is straightforward. It provides the short title: the Income Tax (Exemption of Foreign Income) Order 2007. This matters for legal referencing, filing, and ensuring that the correct instrument is cited in submissions, tax computations, and correspondence with the Inland Revenue Authority of Singapore (IRAS).
Section 2 (Exemption) is the operative provision. It states that United International Securities Ltd is “hereby granted exemption from tax on the dividends received in Singapore” from its subsidiaries in Korea and Indonesia. The Order identifies the relevant subsidiaries by name:
- Korea: Daewoo Shipbuilding & Marine Engineering Co Ltd and KT&G Corporation
- Indonesia: P.T. Astra International Tbk and P.T. Telekomunikasi Indonesia Tbk
The exemption is not framed as a general participation exemption or a blanket rule for all foreign dividends. Instead, it is limited to dividends received in Singapore from the specified subsidiaries. Practically, this means that the exemption’s coverage depends on (i) the payer entity (the foreign subsidiary), and (ii) the nature of the income (dividends) and where it is received (in Singapore). If dividends are received from other subsidiaries, or if the income is not a dividend, the exemption would not automatically apply.
Section 2 also makes the exemption conditional. It is “subject to the terms and conditions specified in the letter of approval dated 5th January 2007 addressed to the company.” This is a critical legal feature. The Order itself does not list the conditions; instead, it incorporates them by reference to an external approval letter. For lawyers and tax advisers, this raises immediate diligence questions: what were the approval letter’s conditions, what is their legal status, and how are they evidenced and monitored?
From a compliance perspective, the incorporation-by-reference structure implies that failure to satisfy any term in the approval letter could jeopardise the exemption. In practice, advisers should obtain and review the letter of approval (and any subsequent amendments or clarifications) and ensure that the company’s tax reporting, corporate structure, and dividend flows remain consistent with those terms. Where conditions relate to holding periods, ownership thresholds, anti-avoidance safeguards, or documentation requirements, those must be tracked over time.
Finally, the Order includes the making clause and signature block: it was made on 6 July 2007 by TEO MING KIAN, Permanent Secretary, Ministry of Finance. The signature and making date confirm the formal exercise of the statutory power under section 13(12) of the Income Tax Act. The bracketed references at the end (including MF(R)32.16.056 V36 and AG/LEG/SL/134/2005/6 Vol. 1) are administrative identifiers used in legislative records.
How Is This Legislation Structured?
This Order is extremely concise. It contains:
- Section 1 (Citation): the short title.
- Section 2 (Exemption): the substantive exemption granting relief from tax on specified dividends, subject to conditions in an approval letter.
There are no additional parts, schedules, or detailed definitions in the extract provided. The structure reflects the nature of a subsidiary legislative instrument used to grant a specific exemption rather than to establish a comprehensive tax framework.
Who Does This Legislation Apply To?
The exemption applies only to United International Securities Ltd. The Order is not drafted as a general rule for all taxpayers. Therefore, other companies cannot rely on it unless they are the named beneficiary or unless a separate exemption order is issued in their favour.
Within the beneficiary company, the exemption applies to dividends received in Singapore from the specified foreign subsidiaries in Korea and Indonesia. Accordingly, the practical “who” is twofold: (1) the recipient taxpayer must be United International Securities Ltd, and (2) the dividend source must be one of the named subsidiaries. If either element is missing, the exemption would not be available on the face of the Order.
Why Is This Legislation Important?
Although the Order is narrow, it is legally significant because it demonstrates how Singapore’s tax system can provide bespoke relief through subsidiary legislation. For practitioners, this matters in two ways: (i) it informs how to structure and document cross-border dividend flows, and (ii) it highlights that exemptions may be granted through a formal approval process rather than through automatic statutory provisions.
The conditional nature of the exemption—“subject to the terms and conditions specified in the letter of approval dated 5th January 2007”—is particularly important. It means the exemption is not merely a matter of reading the Order; it requires verifying compliance with the approval conditions. In disputes or audits, IRAS may examine whether the company met the approval terms, whether the dividend payments correspond to the approved structure, and whether the documentation supports the exemption claim.
From a tax planning and governance standpoint, the Order underscores the value of maintaining a clear audit trail: corporate records showing the relevant subsidiary relationships, dividend declarations and payment records, and the approval letter and any amendments. For lawyers advising on ongoing compliance, the key question is whether the company’s operations and dividend policy remain aligned with the conditions that were accepted in January 2007.
Finally, the Order’s existence can affect how advisers interpret the broader Income Tax Act framework. Section 13(12) is the enabling provision, indicating that Parliament has authorised the Minister for Finance to grant exemptions in prescribed circumstances. This helps practitioners understand that certain reliefs may be implemented via ministerial orders and that the legal basis for relief may be found in both the Income Tax Act and the specific subsidiary instrument.
Related Legislation
- Income Tax Act (Chapter 134) — in particular, section 13(12) (the enabling provision for this Order)
- Income Tax legislation timeline — to confirm the correct version and any amendments or related instruments
Source Documents
This article provides an overview of the Income Tax (Exemption of Foreign Income) Order 2007 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.