If you are a Singapore tax resident earning income from overseas, you may qualify for the Foreign-Sourced Income Exemption (FSIE). This scheme can save you from double taxation and help you optimise your Singapore income tax position. This comprehensive guide explains the eligibility, qualifying conditions, and common scenarios for FSIE in 2025.
Become Our Featured Tax Expert.
This premium ad space is reserved for one tax professional. Put your firm in the spotlight and reach qualified Singapore leads directly.
To claim this exclusive spot, contact us at [email protected].
📌 What is Foreign-Sourced Income?
Foreign-sourced income refers to income earned outside Singapore, including:
- Foreign-sourced dividends – Payments from overseas companies
- Foreign-sourced interest – Interest earned from foreign bank accounts or bonds
- Foreign-sourced service income – Income from services performed overseas
Under normal rules, if this income is received in Singapore, it may be taxable unless it qualifies for the Foreign-Sourced Income Exemption.
✅ Who Qualifies for FSIE?
The FSIE applies to Singapore tax residents who meet all of the following:
- The income has already been subjected to tax in the foreign jurisdiction
- The highest corporate tax rate in the foreign country is at least 15%
- IRAS is satisfied that the exemption is beneficial to the individual
📝 Key Conditions for Exemption
To enjoy FSIE benefits, you must meet these conditions under Section 13(8) of the Income Tax Act:
- Taxed Overseas: The income must have been subject to tax in the country of origin.
- Tax Rate Requirement: The foreign jurisdiction’s highest corporate tax rate must be at least 15% at the time the income was earned.
- Beneficial to You: IRAS must be convinced that granting the exemption is beneficial to the individual taxpayer.
🌏 Common Examples of FSIE
- Receiving dividends from a UK-listed company, taxed in the UK before transfer to Singapore
- Earning interest from an Australian bank account, taxed in Australia
- Providing consultancy services abroad with the fees taxed overseas
📄 How to Claim FSIE
To claim FSIE, you should:
- Declare the foreign income in your Form B/B1
- Indicate your intention to claim the FSIE
- Provide documentary proof, such as:
- Tax assessment from the foreign country
- Bank credit advice or remittance slips
- Invoices and service agreements
🚫 When FSIE Does Not Apply
The FSIE will not apply if:
- The foreign-sourced income is not taxed overseas
- The foreign jurisdiction’s highest corporate tax rate is below 15%
- You fail to provide sufficient evidence of tax payment abroad
💡 Tips for Taxpayers
- Keep detailed documentation of all foreign income and related taxes
- Review double taxation agreements (DTAs) Singapore has with other countries
- Consult a tax advisor if you regularly receive foreign income
📌 Final Thoughts
The Foreign-Sourced Income Exemption is a valuable relief for Singapore residents with overseas earnings. Meeting the qualifying conditions can save you from double taxation and reduce your overall tax liability. Proper planning, accurate documentation, and timely reporting are essential to maximise this benefit.
