IRAS issues e-Tax Guide “Certainty of Non-taxation of Companies’ Gains on Disposal of Equity Investments”

1 June 2012

In  Budget 2012, Deputy Prime Minister and Minister for Finance announced that “certainty of non-taxation” will be given on gains derived by a company from disposal of equity investments that meet specified conditions.

This e-Tax Guide provides details on what those measures are.

For companies’ disposal of shares on or after 1 June 2012, gains derived from the disposal of equity investments by companies will not be taxed, if:

  • the divesting company holds a minimum shareholding of 20% in the company whose shares are being disposed, and
  • the divesting company maintains the minimum 20% shareholding for a minimum period of 24 months just prior to the disposal.

For share disposals in other scenarios, the tax treatment of the gains/ losses arising from share disposals will continue to be determined based on a consideration of the facts and circumstances of the case.

The rule is applicable whether the investee company is:

  • incorporated in Singapore or elsewhere,
  • listed or non-listed.

The rule does not apply to:

  • a divesting company whose gains or profits from the disposal of shares are included as part of its income based on the provisions of section 26 of the ITA.
  • disposals of shares in an unlisted investee company that is in the business of trading or holding Singapore immoveable properties (other than the business of property development).

The rule is applicable to disposals of ordinary shares in an investee company made during the period 1 June 2012 to 31 May 2017 (both dates inclusive).

Situations where normal tax rules continue to apply in determining nature of gains or losses from disposal of equity investments, administrative procedures and frequently asked questions (FAQs) are also covered in the Guide.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit for more information.