The example and its historical period
ABC Pte Ltd receives local service income of S$300,000, service income from Country X of S$50,000 and interest from Country Y of S$20,000 during financial year 2020, corresponding to YA 2021. Country X’s headline corporate rate is 20% and foreign tax paid is S$10,000; Country Y’s headline rate is 30% and foreign tax paid is S$1,000. The headline rate means the jurisdiction’s highest corporate rate, not necessarily the effective rate imposed on this income. The company elects pooling and the example expressly assumes both foreign incomes qualify for double tax relief. It is not a complete eligibility test for every pooling election.
Build the Singapore tax computation
Local and foreign service income total S$350,000 (B). Deductible service expenses and capital allowances of S$15,000 leave S$335,000 (C). Country Y interest is reduced by its S$100 expense to S$19,900 (D). Total statutory income is S$354,900 (E). Deduct assumed approved donations of S$1,000 to reach S$353,900 before exemption; partial tax exemption of S$102,500 leaves S$251,400. At 17%, Singapore tax before FTC is S$42,738 (F). These are the amounts used in this YA 2021 example, not a newly asserted exemption entitlement for another year.
Allocate Singapore tax to the pooled foreign income
Country X’s foreign service income (A) is allocated Singapore tax using A/B × C/E × F: 50,000/350,000 × 335,000/354,900 × 42,738 = S$5,763.08. Country Y’s net interest uses D/E × F: 19,900/354,900 × 42,738 = S$2,396.41. The total Singapore tax on income qualifying for FTC is therefore S$8,159.49. The service formula first recognises the share of total service income and then its share of statutory income after common service deductions.
Compare the pooled totals and finish the computation
Foreign tax paid totals S$11,000. The pooled FTC is the lower of S$11,000 and the S$8,159.49 Singapore tax attributable to the qualifying income, so the credit is S$8,159.49. Deducting it from S$42,738 leaves net Singapore tax of S$34,578.51. The excess foreign tax of S$2,840.51 is not allowed as an additional credit by this computation. The PDF does not specify another relief, carry-forward or refund treatment for that difference.
Official source
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