Gains from Sale of Property, Shares and Financial Instruments in Singapore

Capital gains tax is a type of tax that is levied on gains or profits that an investor (individuals, corporations, etc) realises when they sells the capital asset for a price that is higher than the original purchase price paid previously.

Capital gains taxes are only triggered when an asset is sold, not while it is still being held by the investor. For example,  the investor can own properties that appreciate every year, but no capital gains tax liability will be incurred on the gains until it is sold or realised.

In Singapore, capital gains on sale of properties are not assessable to tax. However, the gains may be taxable if the tax authorities were to deemed that the gains were made from trading of properties. In this respect, it will be prudent for investors to take into account the criteria commonly used by the tax authorities to assess whether the gains are from trading of properties, as follows:

  1. Frequency of transactions – how often you buy ans sell properties
  2. Reasons for acquiring and selling of properties – change of use, migrating to other country
  3. Financial means to hold the property for long term – whether investor have the financial means to hold the properties
  4. Holding period – longer holding period will most likely indicate it is capital

As for gains from sale of shares or other financial instruments, the general view is that it is a personal investment. Thus, no tax will be levied this gains.

The absence of capital gains tax regime in Singapore helps to attract investors to invest or set up holding companies in Singapore. This together with one of the lowest corporate tax rate in the world and a host of tax incentives, Singapore is well placed for investors to grow their businesses and wealth in the region.

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