The historical example and its inputs
The source uses financial year 2020, YA 2021, for ABC Pte Ltd. Local service income is S$300,000 and Country X service income is S$50,000, with foreign tax of S$10,000. Shared service deductions and capital allowances total S$15,000. Country Y interest is S$20,000, foreign tax S$1,000 and associated deductible expenses S$100. Approved donations are assumed at S$1,000. The source states that both foreign income streams qualify for credit; it is an allocation example, not a universal eligibility decision.
Reconcile the Singapore tax before credits
Total service income B is S$350,000; after S$15,000 deductions, C is S$335,000. Net Country Y interest D is S$19,900. Total statutory income E is S$354,900; deduct S$1,000 donations to reach S$353,900 before exemption. The example deducts partial tax exemption S$102,500, leaving S$251,400. At 17%, Singapore tax F before foreign credits is S$42,738. Use this historical exemption amount in this worked example rather than silently substituting another year’s scheme.
Country X service-income limit
Allocate Singapore tax using A/B × C/E × F: 50,000/350,000 × 335,000/354,900 × 42,738 = S$5,763.08. Compare this Singapore tax with Country X foreign tax S$10,000. Credit is the lower amount, S$5,763.08. This first allocates the net service-income tax share and then the foreign service share; applying 17% directly to S$50,000 would not reproduce the example.
Country Y interest limit and the final payable
Allocate Singapore tax to the net interest using D/E × F: 19,900/354,900 × 42,738 = S$2,396.41. Compare Country Y foreign tax S$1,000; credit is S$1,000. Combined credits are S$5,763.08 + S$1,000 = S$6,763.08, giving net Singapore tax S$42,738 − S$6,763.08 = S$35,974.92. The separate limits mean unused Country X tax is not carried across to increase the Country Y credit in this source-by-source/country-by-country example. The PDF does not set out pooling, carry-forward or alternative-scheme conditions.
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 ↗