Non-Singapore-Dollar Functional Currency: Tax Computations and Return Conversion

Key steps and distinctions

Companies compute through chargeable income after exemption in their functional currency. Partnerships do so through distributable income and capital allowances; sole proprietors through adjusted profit before brought-forward loss and their capital allowances. Convert the specified results to Singapore dollars at the relevant year’s average rate. An existing business changing from Singapore dollars elects irrevocably between the changeover-rate and average-rate methods for existing balances. The former uses the average for the twelve months before the last Singapore-dollar accounting period ended and keeps residual balances in functional currency. The latter uses the relevant basis-period average and reconverts residual balances into Singapore dollars for carry-forward and retranslation in later years. Make the election in the first affected return. Group-relief losses use the relevant year’s average rate, while section 24 or 25 asset transfers use the rate on sale or transfer. Exemption thresholds and incentive base income need their specified conversion. Corporate returns and appendices remain in Singapore dollars despite foreign-currency computations. The guide excludes licensed insurers from section 62 B for accounting periods beginning on or after 1 January 2023; their FRS 117 treatment requires the separate insurer guidance.