Singapore Taxation: income tax for expats in Singapore
Singapore adopts a 'territorial' basis of taxation, i.e. companies and individuals are taxed on Singapore sourced income. Foreign sourced income will in principle be taxed when it is remitted or deemed remitted into Singapore. A non-resident individual is exempt from tax on foreign sourced income received in Singapore. Director's fees, consultation fees & all other income The director's fees, consultation fees and all other income that you received will be taxed at 20%.
Individuals are either 'resident' or 'non-resident' in Singapore for tax purposes. Generally, an individual is resident if he or she resides in Singapore or is physically present or employed there for 183 days or more in the calendar year. Your employment income is taxed at 15% or resident rate, whichever gives rise to a higher tax amount.
Non-residents are subject to tax only on income from sources in Singapore. The general tax rate for non-residents' employment income is a flat 15%, or the tax payable if the person were resident, whichever is the greater. Employment income by a non-resident individual employed in Singapore for no more than 60 days in a calendar year is exempt from tax. Different rates apply to other categories of income. In particular, directors' fees (not employment income of directors) are taxed at the rate of 22%.
An individual' s Singapore tax liability may be minimized by one or more of the following arrangements
Provision of benefits in kind instead of cash allowances • Non-resident short-term visiting employees who exercise employment in Singapore for not more than 60 days are exempt from tax on their employment income
Individuals with regional functions who are employed by an overseas company may be assessed for Singapore tax purposes only on their income proportionate to their presence in Singapore; for individuals spending more than 90 days p.a. outside Singapore for business, the newly-introduced 'Not Ordinarily Resident' (NOR) scheme may apply (as illustrated in Appendix C 'Personal tax scheme NOR)
Dual employment contracts may be used to insulate offshore employment income from tax
The tax year in Singapore is the calendar year and referred to as the "year of assessment" or "YA". Income is subject to tax on a preceding year basis, i.e. business income from accounting years that end in calendar year 2009 and investment income earned in 2009 will be taxed in the YA 2010.
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Income Tax
Taxes need to be paid on any income that is accrued in or derived from Singapore.
First you need to check if you are:
a Singapore tax residents who has worked in Singapore more than 183 days of the tax assessment year
a NOR taxpayer who works in Singapore but spends more than 90 days a year outside Singapore on business
a taxable non resident who has worked in Singapore less than 183 days and needs to pay a flat rate of 15%
Non Resident Tax Payer
Tax rate for employment income for non-resident individuals is 15% or resident rates, whichever gives rise to higher tax. If an employment period or combined periods do not exceed 60 days in the calendar year of assessment no taxes have to be paid locally. You need to pay taxes in Singapore as soon as you work more than sixty days. There is a flat rate of 15 percent for employment periods between 60 and 183 days in one or more periods within one calendar year.
Resident Tax Payer
Be aware of the 183 days rule, stating the time you need to be physically present preceding the year of tax assessment in Singapore to qualify as a Resident Tax Payer for income tax in Singapore. Income tax is paid for income derived from and accrued in Singapore but not for income derived from outside Singapore and received in Singapore.
Please note that Benefits in Kind (BIK) like housing, leave passage and car benefits are taxable at nominal rates. BIK like school fees, utilities and residential phone bills are taxable on the actual amount paid by the employer.
You may deduct Personal Relief such as for your non working wife, delivery expenses for a fourth child, your children and children studying abroad, contributions to Retirement Schemes and Life Insurance and others. Please consult your tax adviser.
| Tax Info 2007 - Resident Rates | |
| Chargeable Income in SGD on the first | Tax Rate % |
| 0- 20,000 | 0 |
| 20,001 - 39,000 | 3.5 |
| 30,001 - 40,000 | 5.5 |
| 40,001 - 80,000 | 8.5 |
| 80.001 - 160,000 | 14 |
| 160,001 - 320,000 | 17 |
| more than 320,000 | 20 |
We strongly recommend that experts should handle the many exemptions and provisions offered to the various nationalities such as bilateral double taxation agreements. For more information about Singapore's Tax Treaties visit the web site of the Inland Revenue Authority of Singapore section on "Taxation of Foreigners". View info on tax allowances
Working Spouses
Married partners can choose to be assessed separately which is more beneficial if the wife's annual income exceeded $2,000. The husband can claim Spouse Relief on the difference between $2,000 and the wife's total income. Both are entitled to tax relief and rebates. Under certain preconditions regarding her higher educational qualification a married women can claim tax relief on her income for children below 12 years old. A married/divorced woman may also claim Foreign Maid Levy restricted to one maid of twice the amount of levy paid.
NOR Tax Payer
Executives based in Singapore who travel frequently need not pay taxes for the period they have been outside the Republic. To be classified as "Not Ordinarily Resident (NOR) taxpayer you must have spent 90 days s or more doing business outside the country in the year before the assessment year. You will also be exempted from paying tax on income earned before coming to Singapore. The NOR treatment will be extended for five years and you may qualify for this concession if you commenced employment in Singapore after July, 2, 1997.
Taxes are subject to a minimum of 10% on time apportionment.
Year of Assessment
Tax computations are done in arrears based on the previous year's tax status. This means that year of assessment is the following year.The tax returns must be filed with the Inland Revenue Authority of Singapore (IRAS) by the 15 April of the year of assessment e.g. 15 April 2003 for the basis period 1 January to 31 December 2002.
Consequently, as expatriate you usually only start paying taxes in arrears approximate. 18 months after commencing work in Singapore. After submission of the tax returns the IRAS will issue a Notice of Original Assessment which may be followed by a Notice of Additional Assessment once the IRAS has finalized the computation which may initially have been submitted by your tax consultant.
Your tax liability will be stated in one lump sum payable. You can apply to discharge your tax liability by installments during the year until the next computation. This is usually granted.
The catch to this convenient tax payment delay is that if you intend to leave the country for good your last annual tax liability becomes due immediately and you need to obtain a stamp in your passport from IRAS confirming tax clearance. It is, therefore, advisable to in time create a separate fund for this one year tax reserve. See below E-Tax Clearance System web site.
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Goods & Services Taxes Taxes need to be paid on any income that is accrued in or derived from Singapore.
First you need to check if you are:
There is a 7 % Goods and Services Tax (GST) levied on the sale of goods and services by GST registered traders and on goods imported into Singapore. This tax increase is valid from July 1, 2007. Non-citizens have no tax-free limit when importing goods.GST will be refunded at the airport, prior to departure if more than S$300 is spent on goods not consumed in Singapore.Restaurants add on a 10% Service Surcharge to the bill and tipping is discouraged.1% Government Tax (CESS)Refunds
Once you spend a minimum of S$ 100 a visitor is entitled to Goods and Services Tax refunds (7%) through Premier Tax Free or Global Refund Singapore. Ask for Tax Free Shopping vouchers for receipts of purchases above S$100 or more. Refund can be claimed in cash at the airport departure hall or credited to Credit Card accounts. Refunds are in Singapore Dollar only and limited to SGC 500 per tourist.
You may collect your refund either at the airport or in the city. Global Refund and Premier Tax Free provide refund vouchers at point of sale terminals with 21 refund options. Produce these receipts and vouchers as well as the purchased goods at the GST refund counters at Changi airport.
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Central Provident Fund (CPF) CPF is a comprehensive social security saving scheme. Employers are exempted from making mandatory CPF contributions for new foreign employees on an Employment/ Professional Visit Pass or Work Permit. Contribution rates need to be paid by the employer and the employee as soon as the employee acquires Permanent Resident status. CPF contributions are exempted from income tax. See web sites below for more information and contribution rates.
If you are self-employed you are required to contribute to Medisave if your net trade income is above SGD 6,000 per year.
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For withdrawal requirements before reaching the age of 55 and leaving the country inquire at the CPF Call Center.