IRAS Tax Rulings 2025

The first half of 2025 brought significant updates with IRAS issuing four advance tax rulings.Here’s what businesses and professionals need to know:

Earnout Settlement Payments Lump-sum earnout settlements can be regarded as capital receipts rather than taxable income if they are linked to a capital transaction such as a share sale. Structuring is crucial; ensure settlements are associated with such transactions.

Employee Partnership Interests For employees in Singapore holding partnership interests abroad, foreign-sourced distributions are exempt from tax if received in Singapore. Disposal gains are also considered non-taxable capital gains.

Contingent Consideration in Share Sales Contingent founder payments linked to company performance are non-taxable when considered part of share sale proceeds. Avoid connecting payments to individual performance to maintain tax-efficient structuring.

Pure Equity Holding Entities (PEHE) Gains from foreign share disposals by qualified PEHEs are exempt from tax, provided sufficient economic substance and management criteria are met in Singapore.

Why This Matters

Understanding how tax rulings affect asset sales, employee remuneration, and business structures can lead to tax efficiencies. But remember, these rulings are case-specific and non-binding.

Read detailed summaries of these advanced rulings at: https://lnkd.in/gBaMTCiV

Always seek professional advice to ensure compliance and optimise your tax strategy.