The Inland Revenue Authority of Singapore (IRAS) has announced amendments to several key notifications governing tax exemptions for specific interest and other payments made to non-residents. These changes, enacted under Section 13(4) of the Income Tax Act 1947 (ITA), aim to support economic and technological development initiatives. The amendments took effect on various dates as specified in the revised notifications, published in the Electronic Gazette on 15 April 2024.
The updated notifications clarify and refine the scope of exemptions for various cross-border financial transactions. The affected notifications and the nature of the exempted payments they cover (subject to specific conditions) are detailed below:
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 2) Notification 2018: Amended to cover margin deposit interest payments required by members of approved exchanges. This applies to contracts for trading in gold futures, financial futures, spot foreign exchange (excluding SGD contracts), other exchange-traded derivatives, and derivatives cleared/settled by approved clearing houses.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2009: Amended regarding payments made by approved securitisation companies on over-the-counter (OTC) financial derivatives related to asset securitisation transactions.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2008: Details of specific amendments for this notification should be confirmed directly via the Gazette or IRAS sources.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2013: Amended concerning payments made by financial institutions (including Section 43E approved Finance and Treasury Centres) on OTC financial derivatives.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2000: Amended regarding payments made by financial institutions (including Section 43A Fund Managers, Section 43E Finance and Treasury Centres, and Section 43J financial sector incentive (fund management) companies) under interest rate or currency swap contracts.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification 2012: Amended concerning the exemption of interest, commission, fees, or other payments derived from loans deemed under Section 12(6) ITA to be from Singapore, when made by banks, merchant banks, or finance companies.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) Notification: Amended regarding payments made by a Singapore swap counterparty to a non-resident issuer of SGD debt securities (not derived through the issuer’s Singapore PE) under a cross-currency swap contract.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 2) Notification 2001: Amended concerning payments made by the Monetary Authority of Singapore (MAS) under interest rate or currency swap contracts.
- Income Tax (Exemption of Interest and Other Payments for Economic and Technological Development) (No. 3) Notification 2003: Amended concerning borrowing fees, loan rebate fees, price differentials, interest payments, and compensatory payments made by specified institutions under securities lending or repurchase agreements.
Financial institutions, approved exchanges and clearing houses, securitisation companies, fund managers, treasury centres, and entities engaged in cross-border derivatives, swap transactions, securities lending, and debt issuance should review the specific amendments to the relevant notifications applicable to their operations. These changes may impact the tax treatment of certain payments made to non-residents.
Professionals are advised to consult the official Gazette notices or IRAS for the precise legal wording and effective dates of each amendment.
Source: Government Gazette, 16 April 2024.