Many of Singapore's taxpayers are not tax residents. Therefore, they must adhere to certain tax rules and regulations which do not apply to residents. Non-residents are subject to different tax rates, may be taxed in areas which residents are not, and must reduce their tax burden in ways that residents do not have to.

Personal Income Tax Pay by Non-resident

Every taxpayer in Singapore is regarded as either a tax resident or non-resident. Residents and non-residents are subject to different income tax rates and regulations. Although some non-residents may become residents by living or working in Singapore for at least 183 days of a calendar year or by becoming a citizen or permanent resident of Singapore, many non-residents never do so, and therefore must be taxed as such.

 

Resident Status

A person is not regarded as a tax resident if the person has not lived or worked in Singapore for at least 183 days of a calendar year. If a non-resident has lived or worked in Singapore for between 61 and 183 days of a calendar year, the non-resident is taxed at either 15% of their income or the resident tax rate, whichever is higher. The resident tax rate is progressive, reaching a maximum of 22% – a rate imposed on those who earn at least S$320,000 in chargeable income per year. If a non-resident has lived or worked in Singapore for less than 60 days, the non-resident does not have to pay any personal income tax unless the non-resident is a director of a company, a non-resident professional (NRP), or a non-resident public entertainer (NRPE), or if the non-resident’s absences from Singapore are a result of the non-resident’s Singapore employment.

Certain forms of income earned by non-residents are neither taxed at a flat rate of 15% or at the progressive resident tax rates. The remuneration of a non-resident director, Supplementary Retirement Scheme (SRS) withdrawals made by non-citizen SRS members, and property rental income are all taxed at a rate of 22%. Any income earned from activity as an NRP, a category which includes people such as consultants, trainers, speakers, academics, and coaches, is taxed at either 15% of the NRP’s gross income or 22% of the NRP’s net income. The NRP may select at which rate tax will be imposed. Any income earned from activity as an NRPE, a category which includes the likes of musicians, actors, and athletes, is taxed at a 10% concessionary rate. Interest and royalties earned by non-residents are taxed at 15% and 10% respectively if reduced final withholding tax rates apply, or 22% apiece if they do not.

Want to Start business in Singapore
Want to Start business in Singapore

How Non-residents may Reduce their Tax Burden

Unfortunately for non-residents, Singapore tax residents are allowed to claim certain tax reliefs and deductions which non-residents may not. However, this does not mean that there are no ways for non-residents to reduce their income tax burden. Non-residents, just as is the case with residents, may claim any expenses incurred against their employment income. They may also receive tax deductions for making approved charitable donations. Non-residents who work for a non-resident employer in Singapore may be eligible to benefit from the Area Representative Scheme if they fulfill certain criteria. Those who qualify for this scheme are to be taxed based on the amount of their remuneration attributable to the number of days spent in Singapore. Finally, non-residents who are tax residents of a country with which Singapore has concluded a tax treaty may use an Avoidance of Double Taxation Agreement (DTA) to prevent their income from being taxed twice.