The Ministry of Finance (MOF) on 6 June 2023 released 33 proposed legislative amendments to the Income Tax Act 1947 for public consultation, including introduction of section 10L to tax gains from the sale or disposal of any immovable or movable property situated outside Singapore (collectively “foreign assets”) that are received in Singapore by businesses without economic substance in Singapore.
- The scope of the proposed Section 10L is limited to gains derived by a “relevant entity”. A relevant entity is an entity which is part of a group where at least one entity of the group has a place of business outside Singapore. As such, domestic groups and standalone entities are excluded.
- Pure equity-holding entities (PEHE) are excluded. These are entities: (1) whose primary function is to hold shares or equity interests in other entities, and; (2) that have no other income than dividends or similar payments from the shares or equity interests, gains on the sale or disposal of the shares or equity interests or income incidental to its equity holding activities.