As a consequence, no income tax is due on sales of shares, properties, intangible assets, etc. This may be different, if the income is seen to have been derived from economic activities in conducting ones’ business. In Singapore, there is no clear written guidance on the characterization of such proceeds to be considered tax-free capital gains or taxable trading income. Typically, the nature of the income will have to be determined (e.g. by using the 6 badges of trade). Therefore, gains may be construed to be of an income nature and subject to income tax if they arise from activities which the IRAS regards as carrying on of a trade or business in Singapore.
There is a (safe harbour) rule of non-taxation on realizing gains for companies disposing shares subject to meeting the relevant qualifying criteria.
The rule is applicable whether the investee company is incorporated in Singapore or elsewhere; listed or non-listed and applicable to disposals of ordinary shares in an investee company made during the period from 1 June 2012 to 31 May 2022 (both dates inclusive).