Income Tax in Singapore

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Income Tax in Singapore

Disclaimer
Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Singapore tax law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

The taxation system is administered by the Inland Revenue Authority of Singapore (IRAS).

Singapore Taxation Laws

Foreigners who work in Singapore on a Work Permit or Employment Pass will be taxed in Singapore.

The amount of income tax payable depends on the income and whether a person is considered resident or non resident of Singapore.

Non resident for tax purposes

Foreigners on short term employment of less than 60 days per calendar year are considered non resident and are exempt from income tax, as are those whose main country of residence has an Avoidance of Double Taxation Agreement with Singapore.

An individual is considered a non resident when working (or living) in Singapore for less than 183 days per year. A non resident's employment income is taxed at 15 percent or the resident rate, whichever is higher. Only income derived in Singapore will be taxable. Non residents will not be considered for Personal Reliefs.

Foreigners working in Singapore on a Professional Visit Pass will be taxed regardless of the time spent working here.

Resident for tax purposes

A person is considered as a resident when:

• At least 183 days per calendar year have been spent in Singapore
• The person has been in Singapore (working or not) for three consecutive years
• See the IRAS page on Foreigners working in Singapore for a comprehensive guide to taxes payable: Click here

The Not Ordinarily Resident (NOR) taxpayer scheme

The Not Ordinarily Resident (NOR) scheme was announced in the 2002 Budget Statement and is aimed at attracting people "with talents" to relocate to Singapore.

Residents may apply for Not Ordinarily Resident (NOR) scheme if they fulfil the following criteria:

• They must not have been a Singapore tax resident in the three years of assessment before the year they first qualify for the NOR scheme; and
• They must be a tax resident for the year of assessment in which they wish to qualify for the NOR scheme

The NOR Scheme extends favourable tax treatment to those who meet the criteria for a period of five years from the date of assessment.

The time apportionment incentive means the person will pay income tax on only a portion of their employment income in Singapore. The taxable amount will be based on the number of days spent in Singapore per calendar year, as long as they have spend more than 90 days outside Singapore for business.

A minimum tax rate of 10 percent on the total apportioned employment income is payable.

• NOR taxpayers will also enjoy the other benefits. For details: Click here

The same rules apply to non-resident directors or entertainers, sportsmen and women, musicians and other professions considered to be of similar nature

Taxable Income

Taxable income includes income from a business, salary from employment, interest earned on deposits, and rental income.

Tax forms are sent to the individual's postal address annually. The form must be completed listing all that person's income. Completed forms should be returned to the Internal Revenue Authority of Singapore (IRAS) within a specified time. Tax returns may also be filed online; a SingPass or an IRAS PIN will be needed.

• See the IRAS website to apply for these: Click here (left side menu, forth line)

When employment ceases in Singapore, employers must inform IRAS at least one month before termination of employment, and are expected to withhold any payments due to the employee until tax clearance is given.

Reliefs and Rebates

As a tax resident, an individual is taxed on all income earned in Singapore including overseas income which is transmitted, remitted or otherwise brought into Singapore.

There are personal reliefs given under the Income Tax Act. Income without personal reliefs is taxed on a graduated scale from zero percent to twenty-two percent.

Tax reliefs and rebates are given in recognition of individuals' efforts. Instead of compensating for certain type of expenses fully, reliefs and rebates are given to promote certain social objectives. There are reliefs available to encourage family formation, retraining, training and upgrading of skills as well as reliefs given to those serving National Service.

• For a list of reliefs and more detailed information from the Ministry of Finance (MOF): Click here

Withholding Tax

A non resident is liable to pay income tax on income earned in Singapore. If a person makes a payment of a specified nature to a non-resident they are required by law to withhold a percentage of that payment and remit it to the Comptroller of Income Tax.

• See the AngloINFO INFOrmation Page on Taxes: Withholding, Capital Gains, Trusts, Estate Duty, Stamp Duty

Tax Treatment of Foreign Source Income

Any income arising from sources outside Singapore and received in Singapore on or after 1 Jan 2004 by an individual (other than partners of a partnership) is exempt from tax.

Tax Treatment of Singapore Investment Income

Investment income derived within Singapore by any individual on or after 1 Jan 2004 may be exempt from income tax. This includes income from annuities, or life insurance policies as well as other types of investment income.

• For a detailed listing of exempted income see the Ministry of Finance (MOF) website: Click here

Tax Treaties

If a country has a tax treaty with Singapore its citizens may be protected from paying tax twice on the same income. This depends on the provisions of the treaty.

Treaties have been agreed between Singapore and the following countries:

• Australia, Austria, Bangladesh, Belgium Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Mauritius, Mexico, Myanmar, Netherlands, New Zealand, Norway, Pakistan, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, the UK and Vietnam.

Inland Revenue Authority Singapore (IRAS) Contact Information

Further Information

• Ministry of Finance
• Individual tax forms
• Salaried individual tax information
• Self-employed tax information
• Non-resident professional tax information
• Foreign Public Entertainer tax information