Personal income tax rates in Singapore are one of the lowest in the world. In order to determine the Singapore income tax liability of an individual, you need to first determine the tax residency and amount of chargeable income and then apply the progressive tax rate to it. Key points of Singapore income tax for individuals include:
- Singapore follows a progressive tax rate starting at 0% and ending at 22% above S$320,000.
- There is no capital gain or inheritance tax.
- Individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation barring few exceptions.
- Tax rules differ based on the tax residency of the individual.
- Tax filing due date for individuals is April 15 of each year. Income tax is assessed based on a preceding year basis.
Personal income tax rates
Individuals resident in Singapore are taxed on a progressive tax rate as listed below. Filing of personal tax return is mandatory if your annual income is S$22,000 or more. You do not need to pay tax if your annual income is less than S$22,000. However, you may still need to file a tax return if you have been informed by Singapore tax department to submit your tax return.
Personal Tax for Singapore Residents
You are considered a tax resident if you are:
- a Singaporean; or
- a Singapore Permanent Resident and have established your permanent home in Singapore; or
- a foreigner who has stayed or worked in Singapore for 183 days or more in the tax year
Tax residents pay taxes on their chargeable income as per the tax rate table above. What is chargeable income? The chargeable income (i.e. income subject to taxation) for tax residents is determined as below:
- Total income means
- gains or profits from carrying on any business, trade, profession or vocation either as a sole proprietor or partner in a partnership
- gains or profits from any employment
- dividends, interests, investment income
- rents, royalties, premiums and other profits arising from properties
- exclude qualified income earned overseas (more deails provided later in the guide).
- Expenses means
- qualified employment related expenses
- qualified rental related expenses are expenses
- Donations means
- donations to qualified charitable organizations
- Personal Reliefs means
- special personal reliefs such as eligible course fees, earned income relief, parent relief, etc.
Chargeable income is this adjusted income after deductions from the total income (as shown in the picture above).
Personal Tax for Singapore Non-Residents
You are considered a non-resident for tax purpose if you are a foreigner who stayed or worked in Singapore for less than 183 days in the tax year. As a non-resident, you will be taxed as below:
- Your employment income is exempt from tax if you are here on short-term employment for 60 days or less in a year. This exemption does not apply if you are a director of a company, a public entertainer or exercising a profession in Singapore. Professionals include foreign experts, foreign speakers, queen’s counsels, consultants, trainers, coaches etc.
- If you are in Singapore for 61-182 days in a year, you will be taxed on all income earned in Singapore. You may claim expenses and donations to save tax. However, you are not eligible to claim personal reliefs. Your employment income is taxed at 15% or the progressive resident rate (see rate table above), whichever gives rise to a higher tax amount.
- Director fees and remuneration, consultant fees and all other incomes are taxed at a range of 15% to 22%.
Filing personal income tax returns
Filing your tax return is a yearly obligation for every eligible taxpayer. All completed forms must be submitted to Singapore tax department by the 15th of April.
You do not need to pay tax if your annual income is less than S$22,000. However, you may still need to file returns if you have been informed by tax authority to submit your tax form. Even if you do not have any income in previous years, you still need to declare zero income in your tax form and submit by 15 Apr. You need to compulsorily file tax returns if your annual income is S$22,000 or more.
You can choose to file your returns online or by mail. IRAS will send you the appropriate paper tax form, upon request, the online form will be available from 1 March every year.
- For tax resident individuals – Form B1
- For self-employed – Form B
- For non-resident individuals – Form M
You will be subject to penalties for filing late or not filing. IRAS might also take legal actions against the individual for non-filing of tax return or non-payment of the tax.
After you have filed your returns, you will receive your Notice of Assessment or tax bill in May to September. The tax bill will indicate the amount of tax you have to pay. If you disagree with your tax amount, you need to inform tax department within 30 days from the date of your tax bill and state your reasons for objection.
You need to pay the full amount of tax within 30 days of receiving your Notice of Assessment. This is regardless of whether you have informed tax authority about your objection. If your tax remains outstanding after 30 days, penalties will be imposed.
Tax treatment of income earned overseas
Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. This includes overseas income paid into a Singapore bank account. You do not need to declare overseas income that is not taxable.
There are certain circumstances under which overseas income is taxable:
- It is received in Singapore through partnerships in Singapore.
- Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
- You are employed outside Singapore on behalf of Government of Singapore.
You need to declare the qualified taxable overseas income under ’employment income’ and ‘other income’ (whichever applicable) in your tax form.
Tax treatment of employer benefits
All gains and profits derived by you in respect of your employment are taxable, unless they are specifically exempt from income tax or are covered by an existing administrative concession. The gains or profits include all benefits, whether in money or otherwise, paid or granted to you in respect of employment. Examples of taxable benefits received from your employer:
- Accommodation and housing allowance
- Car provided by employer
- Reimbursements of medical and dental treatments for dependants other than yourself, your spouse and children
- Overtime payments
- Per diem allowances (daily allowance given to employees on overseas trips, out of Singapore, for business purposes), provided the amount is in excess of acceptable rates
- Fixed monthly allowance for transport or if mileage on private cars are reimbursed
- Fixed monthly meal allowance
Note however that some of the non-cash benefits (e.g. accommodations) are taxed using special formulas resulting into a lower taxation on these benefits-in-kind. Thus, a properly structured compensation package (i.e. salary plus benefits in kind) for the executives can help reduce their individual tax liability in Singapore. Further details on this are outside the scope of this guide.
Capital gains tax, inheritance tax, estate duty
Capital gains may refer to “investment income” that arises in relation to real assets, such as property, financial assets, such as shares or bonds, and intangible assets such as goodwill. Singapore does not impose any capital gains tax.
Inheritance tax is a tax that you must pay when you die which comes out of the financial estate that you leave behind. In Singapore, it is commonly referred to as Estate Duty. Estate Duty in Singapore has been abolished effective 2008.