Claiming Foreign Tax Credit for Foreign Income Received in Singapore

Generally, when a Singapore company received income from abroad, it is taxable in Singapore. In most cases, this same income may also be subjected to tax in the foreign country. This will result in double taxation where the same source of income is taxed twice.

Fortunately, a Singapore tax resident are allowed to claim a foreign tax credit for the tax paid in the foreign country. This is a relief provided under avoidance of double taxation agreements that Singapore has signed with other countries.

Under the foreign tax credit system, Singapore tax residents can claim a credit for the amount of tax paid in the foreign jurisdiction against the Singapore tax that is payable on the same income. Foreign tax credit that can be claimed is the lower of the actual amount of foreign tax paid or the amount of Singapore tax attributable to the foreign income (net of expenses).


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