Sunnyvale, CA -- (SBWIRE) -- 09/09/2011 -- The Singapore government recently issued certain clarifications on the Foreign Tax credit (FTC) pooling system which was introduced in the 2011 annual budget.
As per the specifications, from assessment year (YA) 2012, taxpayers may elect to pool foreign taxes paid on any item of foreign income, subject to the following conditions:
• Income tax was paid in the concerned foreign jurisdiction;
• The headline tax rate of the foreign jurisdiction is at least 15%, at the time the foreign income was received in Singapore;
• Singapore tax is payable on the foreign income, etc.
The Foreign Tax Credit pooling was introduced earlier this year to give businesses greater flexibility in using their FTCs and to encourage more resident tax payers to remit their overseas income into Singapore. It also aims to reduce Singapore taxes payable on remitted Foreign Income.
Implications of the FTC pooling system
Singapore’s FTC system allows for it to be computed on a pooled basis, rather than on a source-by-source and country-by-country basis for each particular stream of income.
The amount of claimable FTC would be the total Singapore tax payable on pooled foreign income or the pooled foreign taxes paid on the foreign income, whichever is lower.
Read more at http://www.nair-co.com/Singaporetaxpooling2011.aspx
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