Taxation on Foreign-sourced income in Singapore (2026)

As businesses become more global, many companies in Singapore earn income from other countries and want to manage their taxes more effectively. The Foreign Source Income Tax Exemption Scheme is a legal way for businesses to reduce their tax bills and avoid paying tax twice on the same income. We will explain the rules and requirements for businesses in Singapore to benefit from this scheme when they earn income from overseas. 

1. What is foreign-sourced income in Singapore?

Foreign-sourced income tax is a tax on money earned outside of Singapore but brought into the country by individuals or businesses that are considered tax residents in Singapore. Usually, this income is already taxed in the country where it was earned before being sent to Singapore.

However, to encourage investment and maintain its status as a global financial center, Singapore has introduced the Foreign-Sourced Income Exemption (“FSIE”) Scheme, which helps eligible businesses and individuals avoid double taxation.

2. Types of foreign-sourced income in Singapore

According to the Singapore Revenue Authority (Inland Revenue Authority of Singapore (“IRAS”)), common types of foreign income include:

• Business profits from outside Singapore: Money made from running a business or trade in another country.
• Foreign dividends: Dividends received from a company overseas by someone (a person or business) who lives in Singapore.
• Foreign service income: For example, a consulting company in Singapore provides services to a client in the US and gets paid from the US.
• Foreign interest income: Interest earned from loans or investments made in other countries.
• Foreign rental or trust income: For example, a person or company in Singapore owns a property in Australia and earns money by renting it out.

3. How do you determine if your income is foreign income received in Singapore?

Foreign-sourced income is considered received in Singapore if it meets any of the following conditions:

• Transferred into Singapore: If any foreign income is sent, deposited, or brought into Singapore in any way, it is treated as received in Singapore.
• Used to pay for things in Singapore: If the income from overseas is used to pay debts, bills, or other financial obligations in Singapore, it counts as received here.
• Used to buy items brought into Singapore: If foreign income is used to buy movable items like machines, equipment, or vehicles, and those items are later brought into Singapore, the income is considered received.

4. Cases of foreign income subject to tax in Singapore

If you are an individual or business with activities connected to Singapore, you may have to pay tax on certain income earned from overseas. Here are the situations where foreign income may be taxed in Singapore:

1. Income received through a Singapore partnership: If you get income from abroad through a business partnership based in Singapore, that income is taxable in Singapore.
2. Overseas work related to a Singapore job: If you are hired in Singapore and your job requires you to travel or work overseas, your income from that work may still be taxed in Singapore.
3. Running a business in Singapore with overseas transactions: If you operate a business in Singapore and do related business activities overseas, the income from those activities may be taxable.
4. Working in Singapore for a foreign company: If you work in Singapore for a company that is based outside Singapore, your income may still be taxed here.
5. Working overseas for the Singapore Government: If you are sent to work abroad on behalf of the Singapore Government, your income from that job may still be taxable in Singapore.

Understanding the tax regulations on foreign income helps you avoid violating tax obligations and have appropriate financial planning when working or doing business in Singapore.

5. Foreign Source Income Tax Exemption (FSIE) Program

The Foreign Sourced Income Exemption Scheme (FSIE) was introduced by the Singapore government to create a conducive environment for businesses operating globally. This scheme helps companies and individuals who are tax residents in Singapore avoid double taxation on income derived from overseas. This enhances Singapore's competitiveness as an international financial centre and attracts foreign investment.

Only businesses and individuals who meet the following three conditions are exempt from tax:

1. “Taxable” condition: Income has been taxed in the source country.
2. Condition “Minimum foreign tax rate 15%”.
3. “Beneficial Tax Exemption” Condition: The tax exemption must be beneficial to the business/individual residing in Singapore.

6. Registration process and administrative procedures

To qualify for the Foreign-Sourced Income Tax Exemption (FSIE) program, businesses and individuals need to take the following steps:

7. How can GLA help you comply with regulations for foreign-sourced income? 

GLA offers full support and expert advice to Singapore businesses in handling foreign-sourced income tax. Our services include:

1. Guide businesses on tax exemption conditions under FSIE and related regulations of the Inland Revenue Authority of Singapore (IRAS).
2. Assess whether income qualifies for FSIE tax exemption, based on criteria such as the tax rate in the source country and the nature of the income.
3. Support businesses in collecting documents, financial reports, and tax certificates paid abroad to ensure compliance with IRAS regulations.
4. Support and carry out steps to declare foreign income in corporate tax declarations, ensuring complete and accurate information.
5. Help prepare and declare your foreign income in your company’s tax return,
6. Assist with audits and provide clarification to IRAS in case IRAS requests further information or audits tax records.

With deep knowledge of Singapore’s tax system, our experts at GLA help businesses reduce tax risks, stay compliant, and make smart financial decisions.

8. FAQs on tax rates on foreign-sourced income in Singapore 

Highlights

• The Foreign-Sourced Income Exemption (FSIE) Scheme helps businesses in Singapore avoid being taxed twice on the same income and reduce their overall tax costs.
• To qualify for tax exemption, income must meet three main conditions: It must have been taxed in the foreign country; The foreign tax rate must be at least 15%, and the exemption must provide a clear benefit to the business.
• Businesses must keep proper documents to prove where the income came from and how much tax was paid overseas, in order to meet IRAS requirements.
• If the foreign income has not been brought into Singapore, the business does not need to declare or pay tax on it in Singapore.