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Singapore Personal Income Tax for Non-Residents

Singapore Personal Income Tax Non Residents

Who Is Singapore Non-resident?

You will be considered as a non-resident if you are a foreigner who stayed or worked in Singapore for less than 183 days in the tax year. For Foreigners working in Singapore, the following conditions are also applicable for the taxability of their income in Singapore:

  • If you work in Singapore for 60 days or less in a calendar year, you will be exempt from tax on your earnings here.
  • If you stay or work in Singapore for 61 to 182 days in a calendar year, your income will be taxed at 15% or resident rates for individuals, whichever gives the higher tax.
  • If you stay or work in Singapore for 183 days or more in a calendar year, your income will be taxed at resident rates for individuals.
  • If you stay or work in Singapore for a continuous period of at least 183 days over two years, your income will be taxed at resident rates for individuals.
  • If you stay or work in Singapore for three consecutive years, your income for all years will be taxed at resident rates.

Director fees, consultant fees and all other incomes are taxed at 20% There is an exemption in respect of the employment income of a non-resident individual (other than a director or public entertainer) who does not exercise employment in Singapore for more than 60 days during the year.

What is Singapore Tax Rates?

Non-resident individuals are subject to tax on all Singapore-sourced income unless the income is exempt from tax, such as income from a deposit in an approved Singapore bank. Foreign income received in Singapore by a non-resident individual is exempted from tax. The income of a non-resident individual in Singapore is taxed at: 15% on the gross amount (without any deduction for personal reliefs and contribution to provident funds); or, resident rates whichever is higher.

The Not Ordinarily Resident Scheme

The NOR scheme extends favourable tax treatment to qualifying individuals for a period of five years.

Eligibility for the NOR scheme

To enjoy the tax concessions, you have to apply for the NOR status. To qualify for the NOR status, you must be a non-resident in the past three years of assessment (YA); and in that YA in which you first qualify for the NOR status, you must be a Singapore tax resident.

If you meet these qualifying conditions, you will be accorded the NOR status for five consecutive YAs, starting from the YA in which you first meet the criteria

Availability of the NOR scheme

If your application is successful, you will be given the NOR status for five consecutive YAs, starting from the YA in which you first meet the criteria.

Tax Concessions Available under the NOR Scheme

If you are given the NOR status, you can enjoy one or more of the following tax concessions during the NOR period as long as you are a tax resident in the respective YA: 1) Time apportionment of Singapore employment income Under this concession, you will not be taxed on the portion of your Singapore employment income that corresponds to the number of days you have spent outside Singapore for business reasons, as a resident Singapore employee. Qualifying Criteria You must have spent at least 90 days outside Singapore for business reasons; and Your total Singapore employment income must be at least $160,000. If the tax on the apportioned income is less than 10% of your total employment income, you will still be subject to a tax of 10% of your total employment income. Income Not Apportionable Director’s fees; and Any amount of income tax payable in Singapore that is borne, directly or indirectly, by your employer. 2) Tax exemption of employer’s contribution to non-mandatory overseas pension fund or social security scheme Under this concession, if you are a resident Singapore employee, tax exemption will be given to you on any contribution made by your employer to any non-mandatory overseas contribution scheme. The amount of exemption is subject to a cap. Qualifying Criteria You are not a Singapore citizen or Permanent Resident; and Your Singapore employment income must be at least $160,000; and Your employer should only claim deduction on contributions made to non-mandatory overseas pension or provident funds and social security schemes in excess of the NOR cap.

Letter of Guarantee (LOG)

A non-resident individual who is employed in Singapore is needed to submit a LOG from a local bank or an established limited company in Singapore to cover his / her estimated tax for the coming Year of Assessment. If the LOG is not provided to the IRAS, an advance assessment will be issued.

Leaving Singapore or Changing job

If you are planning to leave Singapore or changing to another job within Singapore, your current employer needs to notify IRAS and confirm that you have settled all your taxes before you leave. This procedure is known as ‘Tax Clearance’. If you have any existing stock options or awards on hand which have yet to be exercised or vested, you will be deemed to have derived gains from the stock or awards at the point of tax clearance.

Filing of Singapore Personal Income Tax Returns

It is mandatory for every taxpayer to file the annual personal income tax returns to IRAS. All completed forms must be submitted to Singapore tax department by the 15th of April.

You Must File the Tax Return

If you are an Resident/Employment pass/PEP/Entrepass holder, If your annual income in Singapore in 2010 is above S$22,000, If you have received a letter from Inland Revenue Authority of Singapore inviting you to file personal income tax. This is regardless of the amount of your annual income for the previous year. Even if you do not have any income in previous years, you still need to declare ’0′ income in your tax form and submit by 15 Apr. After filing your personal income tax returns, you will receive your Notice of Assessment(NOA) or tax bill by 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, a penalty will be imposed.

How income is assessed?

Answer:

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.

What if you are a Singapore tax resident? If you receive foreign income Active.

Answer:

When your company earns foreign income from a treaty country, you may wish to claim the benefits under the DTA that entitles a company not to pay tax or to pay tax at a reduced rate in the foreign country. To enjoy this benefit, you would need to submit a COR to the foreign country to prove that the company is a Singapore tax resident. To find out more about the application process, please refer to Applying for Certificate of Residence.

When you receive foreign income in Singapore, you may be taxed on the income. In the case where the benefit under the DTA is not an exemption of tax, but a reduction of tax rate, the Singapore company will also suffer tax in the foreign country. In this way, the same income is subjected to taxation twice.

The DTA provides relief for this double taxation by allowing the Singapore company to claim a credit of the foreign tax suffered against its Singapore tax payable on the same income. This credit is known as a double tax relief (DTR). To find out more about this relief, please refer to Claiming Double Tax Relief.

Complete Set of Accounts?

Answer:

A complete set of unaudited accounts consist of:
– Directors’ Report
– Statement by Directors
– Profit & Loss Statement
– Balance Sheet
– Detailed Profit & Loss Statement
– Notes to the Accounts

Where to apply for some tax incentives?

Answer:

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 legislationTypes of incentivesWhere to apply
ITA/S13FApproved International Shipping EnterpriseMPA
www.mpa.gov.sg
ITA/S13HApproved Venture CompanyEDB
www.edb.gov.sg
ITA/S14BFurther deduction of expenses relating to Approved Trade Fairs, Trade Exhibitions, Trade Missions or to maintain overseas Trade OfficeIE Singapore
www.iesingapore.gov.sg
ITA/S14EFurther deduction of expenses on Research and Development ProjectEDB
www.edb.gov.sg
ITA/S14OTax deduction of special reserves for catastrophic risks of approved general insurersMAS
www.mas.gov.sg
ITA/S19CWriting down allowance for cost sharing agreementEDB
www.edb.gov.sg
ITA/S43(9)Concessionary rate of tax for income of life insurance companies apportioned to policyholders
ITA/S43CConcessionary rate of tax for approved offshore general insurance companiesMAS
www.mas.gov.sg
ITA/S43CConcessionary rate of tax for approved offshore life insurance companiesMAS
www.mas.gov.sg
ITA/S43CConcessionary rate of tax for approved offshore composite insurance companiesMAS
www.mas.gov.sg
ITA/S43CExemption of tax for approved marine hull and liability insurer (onshore and offshore business)MAS
www.mas.gov.sg
ITA/S43CExemption of tax for approved offshore captive insurance companiesMAS
www.mas.gov.sg
ITA/S43CExemption of tax for approved insurer underwriting offshore qualifying specialised insurance riskMAS
www.mas.gov.sg
ITA/S43EConcessionary rate of tax for Approved Operational Headquarters (OHQs)EDB
www.edb.gov.sg
ITA/S43GConcessionary rate of tax for Approved Finance and Treasury CentreEDB
www.edb.gov.sg
ITA/S43QConcessionary rate of tax for Financial Sector Incentive CompaniesMAS
www.mas.gov.sg
ITA/S43PApproved Global Trading CompanyIE Singapore
www.iesingapore.gov.sg
EEIA/ Part IIPioneer IndustriesEDB
www.edb.gov.sg
EEIA/ Part IIIPioneer Service CompaniesEDB
www.edb.gov.sg
EEIA/Part IIIBApproved Shipping Logistics EnterpriseMPA
www.mpa.gov.sg
EEIA/ Part IIIBDevelopment & Expansion IncentiveEDB
www.edb.gov.sg
EEIA/Part XInvestment AllowancesEDB
www.edb.gov.sg
EEIA/Part XIIIBOverseas Enterprise IncentiveIE Singapore
www.iesingapore.gov.sg
EEIA/Part VIAExport Service CompanyEDB
www.edb.gov.sg

 

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