Tax information: going to Singapore.
Welcome to your tax guide on going to Singapore, produced by Deloitte. Looking for tax information about leaving Singapore, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you arriveQ. Do I need a work permit to work in Singapore?
A. Employees who are neither Singapore citizens nor Singapore permanent residents are required to apply for Employment Passes ("EP") from the Ministry of Manpower ("MOM") to enable them to work in Singapore.
Q. Should I complete any documentation upon arrival in Singapore?
A. No. Once the EP is approved, this information will be provided to the Inland Revenue Authority of Singapore (IRAS).
Q . Is it beneficial to open an offshore bank account in comparison to opening an account on the Singapore mainland?
A. Interest received from deposits with approved banks or licensed finance companies in Singapore is not taxable. All foreign-source income received in Singapore by resident individuals is tax exempt. Therefore Singapore tax is not a consideration.
Q. What is the tax year?
A. 1 January to 31 December.
Q . How will I be taxed in Singapore?
A. Singapore taxes individuals on a territorial basis. Only income derived in Singapore is subject to tax. All foreign-source income received in Singapore by resident individual is exempt from tax.
Q. How is tax residence determined?
A. A Singapore citizen is a tax resident in Singapore if they normally reside in Singapore except for temporary absences that are consistent with the claim to be a resident. They may elect to be treated as a non-resident for Singapore tax purposes if they worked overseas for at least 6 months during the year.
foreign national will be regarded as a tax resident if they:
- Is residing or working in Singapore for at least 183 days in a calendar year
- Arrived in Singapore on or after 1 January 2007 and resides or works in Singapore for at least 183 days straddling over 2 calendar years even though the number of days in Singapore is less than 183 days in the arrival or departure year (2-years residency concession)
- Resides or works in Singapore for 3 consecutive years even though the number of days in Singapore is less than 183 days in the arrival or departure year (3-years residency concession)
See examples below.
2-years residency concession
|
Year
|
Period
|
Number of Days
|
|
1
|
1.9.2008 to 31.12.2008 |
122
|
|
2
|
1.1.2009 to 15.3.2009 |
74
|
3-years residency concession
|
Year
|
Period
|
Number of Days
|
|
1
|
1.9.2008 to 31.12.2008
|
122
|
|
2
|
1.1.2009 to 31.12.2009
|
365
|
|
2
|
1.1.2010 to 1.3.2010
|
60
|
An individual will be non-resident if they reside or work in Singapore for less than 183 days in a calendar year unless they meet the 2 or 3 years residency concession as discussed above.
Q. Are there any regional or state taxes?
A. No.
Q. Can I file a joint tax return with my spouse?
A . All married couples will be assessed separately under the Income Tax Act. By default, the wife’s income is taxed under her own name. Both she and her husband are each entitled to tax relief and rebates.
Nevertheless, if the wife’s annual Singapore income is $1,500, the husband can claim $2,000 for wife relief.
Q. What rate of tax will I pay in Singapore?
A. Please refer to resident and non-resident tax rates below.
Income tax rates for resident individuals with effect from Year of Assessment 2009 for income earned in year 2008:
|
Taxable income base (SGD)
|
Cumulative tax on base (SGD)
|
Tax on amount above base (%)
|
| 20,000 | 0 | 3.5 |
| 30,000 | 350 | 5.5 |
| 40,000 | 900 | 8.5 |
| 80,000 | 4,300 | 14.0 |
| 160,000 | 15,500 | 17.0 |
| 320,000 | 42,700 | 20.0 |
Income tax rates for non-resident individuals.
Employment income is taxed at a flat rate of 15% with no relief or the tax rates applicable to residents, whichever is higher .
Q. Can I claim a tax deduction for charitable contributions?
A.Taxpayers enjoy double tax deductions for donations made to a pre-approved list of charities, or institutions of a public character (IPC). Donations may come in the form of cash, shares, unit trusts, computer hardware or software, artefacts of an artistic or heritage nature, and plots of land or buildings.
Q . Are any other tax deductions available?
A. Resident taxpayers enjoy various forms of tax relief which are claimable as tax deductions. The more common relief includes:
Earned income relief: Relief automatically accorded to each working taxpayer up to a maximum of $1,000 for taxpayers below the age of 55. Taxpayers above this age as well as handicapped persons enjoy higher tax relief.
Wife relief: A husband may claim the full amount of wife relief of $2,000 as long as the annual income of his spouse is not more than $2,000 in the tax year.
Child relief: There are three types of relief, namely the Qualifying Child Relief, which is claimable up to $2,000, Handicapped Child Relief, up to $3,500, and Working Mothers Child Relief for working mothers, including divorcees, and widows who have Singapore citizen children, based on a percentage (5% to 25%) of her earned income. The maximum relief allowable to all qualifying parent in respect of each child is restricted to $50,000.
Parent relief: A taxpayer who is supporting his parents, and who meets all specific criteria may claim up to $5,000, or up to $8,000 should the parent be handicapped.
Relief for life insurance premiums: Relief up to $5,000 is available for premiums paid on life insurance policies, which cover the lives of the taxpayer and his wife. Life insurance premiums paid to foreign insurance companies are deductible only if the company has an office or branch in Singapore. There is no deduction for the premiums paid where the contributions to the Central Provident Fund (CPF) and other approved pension/provident funds is at least $5,000.
Relief for course fees: Relief of up to $3,500 is available for expenses incurred for any course of study, seminar or conference to acquire approved academic and professional qualifications or that are related to the taxpayer’s trade, business, profession, vocation or employment.
Relief for foreign maid levy: For working women who meet certain conditions, double the amount of annual foreign worker levy paid in respect of one foreign maid employed by her or her spouse is deductible.
Q . I will also be paying tax in my home country. Am I being taxed twice?
A. There is generally no double taxation as a ll foreign-source income received in Singapore by resident individuals are exempt from Singapore tax. However depending on specific situation, you may explore the use of double taxation agreement to mitigate potential double taxation.
Q. Do I need to file an Singapore tax return?
A. You will need to file as long as an income tax form/IRAS Pin mailer/SingPass invitation letter has been sent to you. This is regardless of your income level.
However, if you did not receive an income tax form/IRAS PIN mailer/SingPass invitation letter and your annual income in Singapore is $22,000 or more, you are also required to file an income tax return.
Q . When does it need to be filed?
A. 15 April each year.
Q. Can the filing deadline be extended?
A. If an extension of time to file is required, individuals should write to the Inland Revenue Authority of Singapore (IRAS) on or before 31 March. You must state your reason, and provide an estimate of income after deducting donations and tax reliefs. Requests will be evaluated on an individual basis.
Q. What is the procedure for paying tax?
A. Payment of annual income tax liabilities can be made in one lump sum payment or by interest-free monthly instalments under the Singapore GIRO Payment Scheme.
Q. Will non-cash compensation be taxable (e.g. housing)?
A. Income includes gains or profits from a trade or profession and earnings from employment (including value of employer-provided food, clothing or housing and allowances other than for subsistence, transport, travel or entertainment).
Q. I will be working in different countries while living in Singapore. Will all of my employment income be taxable in Singapore?
A. If you have a Singapore employment, business trips outside Singapore are considered to be incidental to your Singapore employment and all income relating to your Singapore employment will be taxable in Singapore.
However, the area-representative basis of taxation or the time apportionment concession under the Not Ordinarily Resident (NOR) taxpayer scheme may provide some relief.
Area-representative status, which the IRAS grants to employees of non-resident companies based in Singapore, can reduce taxes considerably for employees who perform a major part of their responsibilities outside Singapore. Subject to meeting stringent criteria, such individuals are taxed on the total taxable income prorated for the number of days they are physically in Singapore.
There are two tax concessions for individuals who qualify for the NOR scheme and meet certain conditions, namely:
-
Time apportionment of income (provided the individual spends at least 90 business days outside Singapore during a tax year); and
-
Tax exemption of employer’s contribution to non-mandatory overseas pension fund or social security system.
As the tax rules for area-representative basis of taxation and the NOR scheme are complex, it is recommended that the taxpayer seeks professional advice.
Q. Will I pay Singapore tax on investments and rental income generated in my home country?
A. All foreign-source income received in Singapore by resident individuals is exempt.
Q. What kind of investment income are exempt from Singapore tax?
A. In general, the following types of investment income are exempt from Singapore tax:
- Dividends paid by companies under the one-tier tax system;
- Interest received from deposits with approved banks or licensed finance companies in Singapore;
- Income distributions from unit trusts and real estate investment trusts (REIT) that are authorised under Section 286 of the Securities and Futures Act; and
- Income from structured products offered by financial institutions in Singapore.
Q. Does Singapore have a Capital Gains Tax regime?
A. Singapore does not tax capital gains.
Q. What do I need to know about any other tax regime, e.g. inheritance, estate or wealth tax?
A. Property tax is levied on all immovable property in Singapore and is payable annually by the owners at the beginning of the year. Immovable properties include apartments, houses, offices, factories, shops and land. The annual property tax is calculated on a percentage (tax rate) of the gross annual value of the property as determined by the property tax department. The property tax rate is 4% for owner-occupied residential property and 10% for others. A property tax exemption for land under development may be granted in certain cases.
Estate duty has been abolished for deaths occurring on and after 15 February 2008.
Q. Will I be required to pay Singapore Social Security?
A. The Central Provident Fund (CPF) is the national social security and pension scheme in Singapore to provide retirement and medical benefits. All employers are required to make contributions to CPF for all employees who are Singapore citizens or Singapore permanent residents (under immigration rules) working in Singapore. Foreign employees are exempt from CPF contributions. When foreign employees become permanent residents of Singapore, they and their employers must contribute to the CPF.
Q. Are social security contributions deductible for tax purposes?
A. The employee’s contribution to the CPF is allowed as a tax relief against his income and the employer’s contribution is tax-exempt unless the contribution exceeds the statutory amount.
