Singapore does not tax capital gains, so selling SGX shares held as an investment generally triggers no income tax. Gains of an income nature, such as trading profits, are taxed, and section 10L reaches certain foreign-asset gains of entities in groups with a foreign presence, not individuals. The case for borrowing rests on control, upside and signalling, not tax.
Key takeaways
- No tax on capital gains. The Inland Revenue Authority of Singapore (IRAS) states that Singapore does not tax capital gains, and lists an individual's gains from buying and selling shares among those generally not taxable.
- Trading gains are income. Gains that are revenue in nature are taxed. IRAS weighs the facts of each case, including motive, holding period and how often similar transactions are made.
- Section 10L is narrow. For sales on or after 1 January 2024, it taxes certain gains from selling foreign assets, when received in Singapore, by entities of relevant groups. It does not apply to individuals.
- Custody moves rarely cost duty. IRAS says the electronic entry made by The Central Depository (CDP) to transfer scripless shares is exempt from stamp duty. A share mortgage can still attract duty, capped at SGD 500.
- Borrowing is about the position. In Singapore, the case for a loan over a sale rests on control, upside and discretion rather than tax.
This note sets out the position as IRAS's published guidance describes it in October 2026. It is general information only, not tax advice. Tax turns on your own facts and structure, so confirm your position with a tax adviser before relying on any of it.
Does Singapore tax gains on shares?
Singapore does not tax capital gains, and IRAS's page on gains from sale of property, shares and financial instruments lists an individual's share gains among those generally not taxable. Gains of an income nature, such as trading gains, are taxed, as are gains caught by specific rules like section 10L.
The principle is the same for companies. IRAS's guidance on taxable and non-taxable income for companies states that capital gains are not taxable, while taxable income includes gains or profits from any trade or business and other gains that are revenue in nature. Whether a particular gain is capital or income is decided on the facts of each case.
That is why our comparison of a stock loan vs. selling shares treats tax as rarely the deciding factor for a long-term holder. The exceptions are real, though: the nature of a gain, section 10L for certain groups, and stamp duty on some documents can each matter.
When are share gains taxed as income?
Share gains are taxed as income when they are revenue rather than capital in nature, typically because the shares were bought and sold as part of a trade. IRAS judges each case on its facts, using factors drawn from case law known as the badges of trade.
IRAS's guidance for companies lists eight factors: the nature of the asset, the length of ownership, the frequency of similar transactions, supplementary work to make the asset more marketable, the circumstances of the sale, the motive at acquisition, the mode of financing, and other factors such as the accounting treatment. No single factor is conclusive. A shorter holding period and short-term financing of the purchase both point towards trading.
For individuals, IRAS treats buying and selling shares as generally a matter of personal investment. Its trading criteria for individuals are written for property, so anyone who buys and sells shares frequently or over short periods should ask a tax adviser how the same questions apply to them.
Companies also have a statutory measure of certainty. Under section 13W of the Income Tax Act 1947, gains a company derives from disposing of ordinary shares are not taxable if, immediately before the disposal, it had held at least 20% of the investee company's ordinary shares for a continuous period of at least 24 months, subject to exclusions set out by IRAS.
The scheme is for a company, which IRAS calls the divesting company; it is not a relief for individuals holding shares personally. It has applied to disposals since 1 June 2012. From 1 January 2026 it also covers qualifying preference shares and allows the 20% test on a group basis, and IRAS's e-Tax guide says the 31 December 2027 sunset date will be removed, as announced in Budget 2025.
Section 10L is not a general capital gains tax. It applies to sales or disposals of foreign assets on or after 1 January 2024, and only to entities of relevant groups: groups whose entities are not all incorporated, registered or established in Singapore, or in which any entity has a place of business outside Singapore. IRAS's e-Tax guide on gains from the sale of foreign assets defines an entity to exclude individuals.
Even within that scope, the gains are taxed only when received in Singapore, and only if the entity lacks adequate economic substance in Singapore or the gains come from foreign intellectual property rights. IRAS's examples of foreign assets include equity securities registered in a foreign exchange and unlisted shares issued by a company incorporated outside Singapore.
For an individual holding SGX shares personally, section 10L does not apply. For a holding company in a group with a foreign entity or a foreign place of business, it can, and IRAS's location rules for shares turn on where the company is incorporated and where registered shares are registered. A foreign-incorporated SGX issuer is a case to check with a tax adviser.
Is stamp duty payable when shares move into custody?
Usually not for the transfer into custody itself. IRAS says the electronic entry CDP makes in its register to transfer scripless shares is exempt from stamp duty, and SGX shares normally move between accounts by such a book entry. Separate documents, such as a share mortgage, can still be dutiable.
Stamp duty is a tax on documents rather than on gains. IRAS's stamp duty basics for shares list contracts or agreements, transfer instruments and mortgages as dutiable documents, in physical or electronic form. A dutiable share transfer bears 0.2% of the purchase price or the value of the shares transferred, whichever is higher, while duty on a contract for the sale of scripless shares is remitted.
The document most relevant to a stock loan is the security itself. IRAS gives mortgage duty on shares as 0.4% of the loan amount granted on the mortgage, subject to a maximum duty of SGD 500, and treats an equitable mortgage, signed under hand rather than under seal, as exempt. How a particular share charge is treated is for your counsel and tax adviser to confirm.
Where beneficial ownership does not change, IRAS says most fixed and nominal duties were removed for documents executed on or after 19 February 2011. Its list of documents no longer liable includes a transfer of property from trustee to beneficial owners, or vice versa, where beneficial ownership stays the same. A declaration of trust under which beneficial ownership does not pass still carries a fixed duty of SGD 10.
How a charged holding sits, whether in a CDP securities account in your own name or a custodian sub-account, is covered in our note on CDP custody and share charges. Whether a nominee or custodian arrangement in your own structure fits IRAS's descriptions is a point for your tax adviser.
So why borrow instead of selling?
The point of borrowing against SGX shares is to keep the position, not to save tax, which seldom decides the matter in Singapore. You keep ownership and the upside, dividend entitlement and voting rights follow the facility's terms, and no shares are sold. A sale is permanent and visible.
A sale by a founder or controlling family is observed and read by the market, whatever its private reason, while a charge places no block on the screen. That contrast, more than tax, is the argument of our note on quiet liquidity from an SGX position.
Borrowing is not free of cost or risk. Interest accrues over the term, a falling share price can bring a margin call, and on enforcement the charged shares can be taken or sold, which raises the tax and disclosure questions of any disposal. If you have decided to exit, a sale is the honest route, and for a large stake a privately negotiated block trade manages price impact and signalling better than the continuous order book.
Disclosure differs as well. A sale that changes a substantial shareholder's percentage level, or ends the substantial holding, is notifiable under the Securities and Futures Act 2001. A charge can be reportable too, although a well-structured one often leaves the borrower's own interest unchanged, and an issuer can have to announce a controlling shareholder's pledge under SGX Rule 728 where the group's own borrowings contain a specified condition.
Our note on substantial-shareholder disclosure under the SFA 2001 sets out the 5% regime. We act as arranger and introducer and do not provide tax, legal or regulatory advice: confirm your tax position with your own tax adviser, and any disclosure or regulatory obligations with your own Singapore legal counsel, engaged in parallel.
| Point | Selling the shares | Borrowing against them |
|---|---|---|
| Tax | Capital gains are not taxed; gains of an income nature, such as trading gains, are. Section 10L can reach certain foreign-asset gains of entities in relevant groups. | No shares are sold. The same questions arise on any later sale, including a sale on enforcement. |
| Stamp duty | CDP's electronic entry transferring scripless shares is exempt, and duty on a contract for their sale is remitted. A dutiable share transfer bears 0.2% of the price or value, whichever is higher. | A book-entry move into custody is usually covered by the same CDP exemption; confirm with a tax adviser. A share mortgage bears 0.4% of the loan amount, capped at SGD 500; an equitable mortgage signed under hand is exempt. |
| Control | Ends for the shares sold; their votes pass to the buyer. | You remain the beneficial owner; voting rights follow the facility's terms. |
| Upside | Passes to the buyer for the shares sold. | Stays with you, as does the downside, which can lead to a margin call. |
| Disclosure | A change in a substantial shareholder's percentage level, or ceasing to be one, is notifiable under the SFA 2001; a disposal is visible. | A charge can be reportable but often leaves the borrower's interest unchanged, subject to structure; a controlling shareholder's pledge can be an issuer announcement under SGX Rule 728. |
Frequently asked questions
01Is a gain on SGX shares taxable if I hold them through a company?
02Does section 10L apply to individuals?
03Does the section 13W exemption end in 2027?
04Do I pay stamp duty when I sell SGX shares on the exchange?
This is a general description of Singapore income tax and stamp duty as IRAS describes them in October 2026, not tax advice. Your position depends on your facts and should be confirmed with a tax adviser.
