The proposed dividend arrangement
Company A was incorporated and tax resident in Singapore. It intended to form Company B as a subsidiary tax resident in Country X. A would receive B’s dividend in its offshore bank account without physically remitting or transmitting the money to Singapore. It would then use part of that dividend to pay a Singapore one-tier tax-exempt dividend directly into its shareholder’s offshore account.
Two further factual restrictions
The foreign dividend used for that payment would not discharge any debt incurred for a trade or business carried on in Singapore by A. It would also not buy movable property subsequently brought into Singapore. These restrictions were part of the submitted facts, alongside the absence of a physical inward transfer.
The section 10(25) conclusion
IRAS ruled that the foreign dividend used in this way to pay A’s shareholder would not be income received or deemed received in Singapore under section 10(25). The reason was that the direct offshore payment, without remittance or transmission into Singapore, did not fall within that provision on the facts and conditions specified.
Condition 1: genuinely foreign-sourced income
The dividend from B must actually constitute A’s foreign-sourced income for Singapore income tax purposes. Merely receiving money in a foreign account is not the condition stated by IRAS.
Condition 2: a direct one-tier dividend payment
The payment must actually be a Singapore one-tier tax-exempt dividend paid directly into the shareholder’s offshore account. There must be no physical remittance or transmission of the funds to Singapore, and A must not bring them into Singapore for the dividend payment.
Condition 3: the full history of the funds
The amount must not have already been remitted, transmitted or brought into Singapore at any point between the time the foreign income accrued to A and the time A paid it to the shareholder. Looking only at the final offshore bank transfer would miss this explicit condition.
Condition 4: no section 33 avoidance arrangement
The transaction must not be a tax avoidance scheme within section 33. The ruling therefore cannot be read as approval of any arrangement that simply uses two offshore accounts. IRAS also refers readers to its guidance on when overseas income is considered received in Singapore.
Publication date and scope
This summary explains the IRAS advance ruling published on 1 July 2026. The ruling binds the applicant and the specified transaction only. Another taxpayer cannot assume that a similar arrangement will receive identical treatment. IRAS does not revise published ruling summaries when legislation or its interpretation changes. The provision numbers and conclusions below describe this dated source.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗