Depending on the situation and the value of the gifts, some gifts given by employers to employees may be subject to taxation in Singapore. Gifts given in conjunction with public holidays, for the employee’s birthday or wedding, or for the birth of the employee’s child are not taxable unless their value is deemed to be substantial and if the gifts are generally available to all staff.
What is the value of a taxable gift in Singapore?
Singaporean tax laws define a “substantial” gift as any gift with a value that exceeds S$200. This cap is an increase from that prior to the 2008 year of assessment (YA 2008), when the exemption threshold was S$100. Should the value of any gift exceed S$200, its full value is taxable. This rule applies to both cash gifts and non-cash gifts alike.
The threshold of S$200 applies to each individual gift. For example, if an employee were to receive four gifts with values of S$50, S$180, S$120, and S$70 respectively, none of the gifts would be taxable. However, if an employee were to receive one gift with a value of S$242, then the entire value of the gift would be taxable.
Gifts given in conjunction with bereavement are not treated the same way as other types of gifts are. Such gifts are never taxable, even if their value exceeds S$200.
When immovable properties or shares are given as gifts, they are also taxed differently compared to most other gifts. Both immovable properties and shares are related to stamp duty charges when they are given as gifts.
If a property is transferred to another person as a gift and no consideration is paid to the owner or if the property to be given as a gift is to be distributed without a Will, Intestate Succession Act, or Muslim Law of Inheritance, current stamp duty rates are to be applied.
Ever since February 22, 2014, the first S$180,000 of the property’s market value is to be taxed at a stamp duty rate of 1%. The next S$180,000 of the property’s market value is taxed at 2%, and the remaining amount is subject to a stamp duty rate of 3%.
When shares are transferred to another person as a gift, starting from February 22, 2014, 0.2% of the purchase price or market value of shares must be paid as stamp duty.
Singapore’s tax authorities will conduct audit checks on all documents related to transfers of property or shares as gifts. Anyone who has been found to have deliberately undervalued the value of the property to be transferred, filed, and submitted any misleading documents, or underpaid on the stamp duty which should have been paid has committed a serious offense and will be suitably punished. The remaining amount of tax will also be recovered.
To prevent breaking any tax laws, the person who is transferring the property or shares as a gift is highly advised to be aware of any changes or updates related to Singapore taxes. It is also important that the giver of the gifts keeps all documents related to the transfer of the gifts up to date.
Conclusion
If you are a foreigner thinking of setting up a business or as an individual in Singapore, it is crucial to have tax advice on Singapore tax residency, income source and incentives for your company or personal tax planning.
FAQs
A company, regardless of whether it is a local or a foreign company, will be taxed on its:
- income accruing in or derived from Singapore; or
- income received in Singapore from outside Singapore
You are required to make a declaration in your income tax returns by giving the nature and amount of the foreign-sourced income that was remitted to Singapore. You are also required to complete the Declaration Form for Foreign-Sourced Income Received in Singapore From 22 Jan 2009 to 21 Jan 2010 (60KB) for submission to IRAS. Although you have to state the use of the foreign income in the declaration form, the usage of such foreign income will not affect the claim for tax exemption.
An Avoidance of Double Taxation Agreement (DTA) is an agreement signed between Singapore and another country (a treaty country) which serves to relieve double taxation of income that is earned in one country by a resident of the other country.
It makes clear the taxing rights between Singapore and her treaty partner on the different types of income arising from cross-border economic activities between the two countries.
The DTA also provides for reduction or exemption of tax on certain types of income.
Only Singapore tax residents and tax residents of the treaty country can enjoy the benefits of a DTA. To find out who are our treaty partners, please refer to the List of Avoidance of Double Tax Agreements.
Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.
There are various types of tax incentives available to companies and these are provided in the Singapore Income Tax Act (ITA) and Economic Expansion Incentives Act (EEIA). Some of the tax incentives available are listed in the table below.
| Governing legislation | Types of incentives | Where to apply |
|---|---|---|
| ITA/S13F | Approved International Shipping Enterprise | MPA www.mpa.gov.sg |
| ITA/S13H | Approved Venture Company | EDB www.edb.gov.sg |
| ITA/S14B | Further deduction of expenses relating to Approved Trade Fairs, Trade Exhibitions, Trade Missions or to maintain overseas Trade Office | IE Singapore www.enterprisesg.gov.sg |
| ITA/S14E | Further deduction of expenses on Research and Development Project | EDB www.edb.gov.sg |
| ITA/S14O | Tax deduction of special reserves for catastrophic risks of approved general insurers | MAS www.mas.gov.sg |
| ITA/S19C | Writing down allowance for cost sharing agreement | EDB www.edb.gov.sg |
| ITA/S43(9) | Concessionary rate of tax for income of life insurance companies apportioned to policyholders | – |
| ITA/S43C | Concessionary rate of tax for approved offshore general insurance companies | MAS www.mas.gov.sg |
| ITA/S43C | Concessionary rate of tax for approved offshore life insurance companies | MAS www.mas.gov.sg |
| ITA/S43C | Concessionary rate of tax for approved offshore composite insurance companies | MAS www.mas.gov.sg |
| ITA/S43C | Exemption of tax for approved marine hull and liability insurer (onshore and offshore business) | MAS www.mas.gov.sg |
| ITA/S43C | Exemption of tax for approved offshore captive insurance companies | MAS www.mas.gov.sg |
| ITA/S43C | Exemption of tax for approved insurer underwriting offshore qualifying specialised insurance risk | MAS www.mas.gov.sg |
| ITA/S43E | Concessionary rate of tax for Approved Operational Headquarters (OHQs) | EDB www.edb.gov.sg |
| ITA/S43G | Concessionary rate of tax for Approved Finance and Treasury Centre | EDB www.edb.gov.sg |
| ITA/S43Q | Concessionary rate of tax for Financial Sector Incentive Companies | MAS www.mas.gov.sg |
| ITA/S43P | Approved Global Trading Company | IE Singapore www.iesingapore.gov.sg |
| EEIA/ Part II | Pioneer Industries | EDB www.edb.gov.sg |
| EEIA/ Part III | Pioneer Service Companies | EDB www.edb.gov.sg |
| EEIA/Part IIIB | Approved Shipping Logistics Enterprise | MPA www.mpa.gov.sg |
| EEIA/ Part IIIB | Development & Expansion Incentive | EDB www.edb.gov.sg |
| EEIA/Part X | Investment Allowances | EDB www.edb.gov.sg |
| EEIA/Part XIIIB | Overseas Enterprise Incentive | IE Singapore www.iesingapore.gov.sg |
| EEIA/Part VIA | Export Service Company | EDB www.edb.gov.sg |
