Statute Details
- Title: Income Tax (Nexstep Discovery Pte. Ltd. — Section 13(12) Exemption) Order 2025
- Act Code: ITA1947-S668-2025
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act 1947
- Authorising Provision: Section 13(12) of the Income Tax Act 1947
- Enacting Formula: Minister for Finance makes the Order in exercise of powers under section 13(12)
- Legislation Number: SL 668/2025
- Date Made: 3 October 2025
- Status: Current version as at 27 March 2026
- Key Operative Sections: Section 1 (Citation); Section 2 (Exemption)
What Is This Legislation About?
The Income Tax (Nexstep Discovery Pte. Ltd. — Section 13(12) Exemption) Order 2025 is a targeted tax exemption order made under the Income Tax Act 1947 (“ITA”). In plain terms, it grants a specific company—Nexstep Discovery Pte. Ltd. (“Nexstep”)—an exemption from Singapore income tax on certain profit distributions it receives from Kaer Air LLP (“Kaer Air”), an Indian limited liability partnership.
Although the ITA contains general rules for taxing income and for exempting certain categories of income, this Order operates as a bespoke instrument. It does not create a broad class of exemptions for all taxpayers. Instead, it identifies particular income streams and particular parties, and it ties the exemption to conditions set by the Inland Revenue Authority of Singapore (“IRAS”) in a letter dated 23 September 2025 issued on behalf of the Minister for Finance.
Practically, the Order is designed to address a specific cross-border income arrangement involving profit distributions. It provides certainty to Nexstep that specified distributions will not be taxed in Singapore, provided the conditions in the IRAS letter are satisfied.
What Are the Key Provisions?
1. Citation (Section 1)
Section 1 simply identifies the instrument: it is the “Income Tax (Nexstep Discovery Pte. Ltd. — Section 13(12) Exemption) Order 2025.” This is standard for subsidiary legislation and is mainly relevant for formal referencing.
2. The Exemption (Section 2)
The substantive provision is Section 2, which sets out the scope of the exemption. The Order provides that the following income received in Singapore by Nexstep is exempt from tax:
(a) Specific profit distribution received on 25 April 2022
The Order exempts “the profit distribution amounting to S$34,965 received on 25 April 2022.” This is a fixed amount and a fixed date, indicating that the exemption is not merely category-based but also fact-specific.
(b) Profit distributions received on or after 26 April 2022
In addition to the fixed distribution, the Order exempts “any profit distribution received on or after 26 April 2022,” but only to the extent that the distributions are “paid out of Kaer Air LLP’s income derived from its principal trade of providing air-conditioning services.” This introduces an important limitation: the exemption is linked to the underlying source of Kaer Air’s income (its principal trade), not merely to the fact that a distribution was paid.
(c) Party and jurisdictional nexus
The exemption applies to income received by Nexstep “from Kaer Air LLP,” and it specifies that Nexstep is a company incorporated in Singapore, while Kaer Air is a limited liability partnership incorporated in the Republic of India. This reflects the cross-border nature of the arrangement and ensures that the exemption is confined to the identified relationship.
(d) Condition precedent/ongoing condition: IRAS letter dated 23 September 2025
Section 2(2) is critical: “The exemption in sub-paragraph (1) is subject to the conditions specified in the letter from the Inland Revenue Authority of Singapore dated 23 September 2025 that is issued on behalf of the Minister for Finance and addressed to Nexstep Discovery Pte. Ltd.”
This means the exemption is not unconditional. For practitioners, the IRAS letter is effectively part of the operative framework. Even where the income falls within the categories described in Section 2(1), the exemption may be denied, withdrawn, or become inapplicable if Nexstep does not satisfy the conditions. Because the Order itself does not reproduce those conditions, counsel should treat the IRAS letter as essential evidence of the compliance requirements (for example, documentation, reporting, or restrictions on how the arrangement is implemented).
3. Making and formalities
The Order was “Made on 3 October 2025” and signed by NGIAM SIEW YING, Second Permanent Secretary, Ministry of Finance. The signature and making date confirm that the exemption was formally authorised under the ITA and that it is a valid exercise of the Minister for Finance’s powers under section 13(12).
How Is This Legislation Structured?
This Order is very short and is structured in a typical subsidiary legislation format:
Section 1 (Citation) identifies the instrument.
Section 2 (Exemption) sets out the substantive tax exemption, including (i) the categories of exempt income, (ii) the parties involved, (iii) the time periods and amount/date specificity, (iv) the source-of-income limitation for later distributions, and (v) the overarching condition that the exemption is subject to conditions in an IRAS letter.
There are no additional Parts or schedules in the extract provided. The operative content is concentrated entirely in Section 2, with the IRAS letter functioning as the compliance “bridge” between the Order and the taxpayer’s obligations.
Who Does This Legislation Apply To?
The exemption applies to Nexstep Discovery Pte. Ltd., but only in respect of income received in Singapore from Kaer Air LLP. The Order is therefore person-specific (Nexstep) and relationship-specific (from Kaer Air LLP).
It also applies only to the specified profit distributions: the S$34,965 distribution received on 25 April 2022, and subsequent profit distributions received on or after 26 April 2022, provided they are paid out of Kaer Air’s income derived from its principal trade of providing air-conditioning services. In addition, Nexstep must comply with the conditions in the IRAS letter dated 23 September 2025 issued on behalf of the Minister for Finance.
Why Is This Legislation Important?
Although the Order is narrow in scope, it can be highly significant for the taxpayer and for advisers managing cross-border income tax outcomes. For Nexstep, the Order provides a clear statutory basis to treat the specified profit distributions as exempt from Singapore tax, reducing uncertainty and potential exposure to tax assessments, penalties, or disputes.
From a practitioner’s perspective, the most important feature is the conditional nature of the exemption. Section 2(2) makes the exemption dependent on conditions in an IRAS letter. This means that tax outcomes will not be determined solely by whether the distribution falls within the described categories. Instead, the taxpayer’s compliance with the conditions—whatever they are—will be decisive. Counsel should therefore obtain and review the IRAS letter dated 23 September 2025 and ensure that internal tax reporting and documentation align with those conditions.
Second, the Order illustrates how Singapore uses subsidiary legislation under the ITA to implement targeted exemptions for specific arrangements. This is relevant when advising on structuring, documentation, and the tax treatment of cross-border profit distributions. It also signals that exemptions may be granted where there is a policy rationale or administrative basis, but they may be tailored to the facts (amount, dates, and the underlying source of income).
Finally, because the Order is “current version as at 27 March 2026,” practitioners should be mindful of version control and amendments. While the extract indicates the Order is current, it is still prudent to check the legislation timeline and any amendment annotations for changes that could affect interpretation or compliance requirements.
Related Legislation
- Income Tax Act 1947 (including section 13(12), which provides the Minister for Finance with the power to make exemption orders)
- Legislation timeline / IRAS-related administrative instruments (not legislation per se, but the IRAS letter dated 23 September 2025 referenced in Section 2(2) is central to the exemption’s conditions)
Source Documents
This article provides an overview of the Income Tax (Nexstep Discovery Pte. Ltd. — Section 13(12) Exemption) Order 2025 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.