Taxpayers across Singapore are taxed at various rates. Some are not subject to any income tax at all, while others are taxed at the highest possible tax rates. A taxpayer's residential status also plays a role in determining the amount of tax to be paid.
In Singapore, personal income taxes are imposed at progressive rates. Under a progressive tax structure, taxpayers who earn more income per year are required to pay a larger proportion of their income as tax compared to those who earn lower amounts.
Individuals are only to be taxed based on income earned in Singapore. Income earned in another country is not subject to taxation. Exceptions to this rule include the following instances: if the income has been received through partnerships in Singapore, if the taxpayer’s employment abroad is a part of the taxpayer’s work in Singapore, if the taxpayer works abroad on behalf of the Singaporean government, if the taxpayer carries on a business or trade abroad which is incidental to the taxpayer’s Singapore employment, or if the taxpayer has received non-exempt service income from abroad.
Resident Tax Rates
The lowest possible personal income tax rate in Singapore is 0%. This 0% rate applies to tax residents who earn S$20,000 or less in chargeable income every year. However, even tax residents who are not required to pay any income tax may still need to file a tax return if the Singapore tax authorities demand as such from the resident. The rate directly above this is 2%, and as is the case in any progressive tax system, the rates continue to increase as the taxpayer’s chargeable income does so. After the 2% rate, Singapore personal income tax rates for residents reach 3.5%, 7%, 11.5%, 15%, 18%, 19%, 19.5%, and 20% before finally reaching a maximum personal income tax rate of 22%. The 22% rate applies to tax residents who earn more than S$320,000 in chargeable income annually.
Non-resident Tax Rates
Taxpayers who are not Singapore tax residents are not subject to the same tax rates mentioned in the previous paragraph. Non-residents are those who work or live in Singapore for less than 183 days of a year. Non-residents who are in Singapore for short-term employment purposes, defined as living or working in Singapore for 60 days or less per year, are not required to pay any income tax. However, this exemption does not apply to non-resident company directors, certain professionals, or public entertainers.
We offer Singapore company incorporation, consultancy services, auditing, taxation, immigration work visas & annual compliance services.
Non-residents who live or work in Singapore for between 61 and 182 days of a year are taxed on all of the income that they earn in Singapore. They are allowed to claim any of various expenses or donations for which they are eligible. By doing so, they can ease their tax burden. However, they may not claim personal reliefs. Taxpayers in this category will either be taxed at a flat rate of 15% or the resident progressive tax rates. The rate to be used will be the higher of the two. Non-resident directors’ remuneration, consultant fees, and any other related income are taxed within a range of 15% to 22%.
After a taxpayer files an income tax return, the taxpayer may find out the exact amount of tax required to be paid upon receiving a Notice of Assessment. Notices of Assessment are issued by the Inland Revenue Authority of Singapore (IRAS) between May and September of each year. The taxpayer is obliged to pay the full amount of income tax within 30 days of receiving a Notice of Assessment.