The Inland Revenue Authority of Singapore (IRAS) published an advance ruling summary on 1 July 2026 addressing a specific question under section 10(25) of the Income Tax Act 1947: does a Singapore company's use of foreign-sourced dividend income to fund a one-tier tax exempt dividend to its Singapore shareholder cause that foreign income to be received, or deemed received, in Singapore?
The IRAS ruled that it does not. The key conditions are that no funds are actually remitted or transmitted into Singapore, and that the arrangement does not constitute a tax avoidance scheme. Where both conditions are met, the foreign-sourced dividend income falls outside the charging provision.
The practical significance is considerable. Foreign income used in this way is not merely deferred from Singapore tax; the liability is permanently extinguished. Singapore companies sitting on pools of foreign income may therefore find that structuring dividends upstream in this manner removes the income from the Singapore tax base entirely, without triggering the deemed-remittance rules.
Practitioners should note the limits of the ruling. Advance ruling summaries published by the IRAS are binding only on the applicant. They do not constitute general guidance and cannot be relied upon directly by other taxpayers. Given the fact-sensitivity of the section 10(25) analysis, and the materiality of the outcome, companies considering a similar approach would be well advised to seek their own advance ruling to obtain certainty before proceeding.