On or about 14 March 2019, the Inland Revenue Authority of Singapore (IRAS) has published the second edition of e-Tax Guide: Income Tax Treatment of Foreign Exchange Gains or Losses for Businesses. It replaces the first edition which was published on 29 June 2012.
This e-Tax Guide provides details on the tax treatment of foreign exchange gains or losses for businesses (banks and businesses other than banks). This e-Tax Guide consolidates the two e-Tax guides issued previously on the income tax treatment of foreign exchange gains or losses:
- “Treatment of foreign exchange gains or losses for banks” published on 2 Nov 1993; and
- “Income Tax Treatment of Foreign Exchange Gains or Losses for Businesses” published on 28 Nov 2003.
It would be relevant to businesses which have foreign exchange gains or losses.
The e-Tax Guide has been updated to incorporate the following changes:
- Update paragraph 6 on the introduction of Section 34AB of the SITA which provides for the legislative basis to accept the accounting treatment adopted by businesses for revenue foreign exchange differences.
- Specify the exclusion from the default capital tax treatment for bank accounts (refer to paragraphs 7.2 and 7.3).
- Clarify when a bank account will not be regarded as a designated bank account (refer to paragraph 7.4)
- Clarify the administrative requirements for businesses which wish to claim the revenue tax treatment for designated bank accounts.
Source: IRAS, 14 March 2019