Singapore Personal Income Tax Overview
Singapore personal income tax is also one of the lowest in the world. The Year of Assessment starts from 1 Jan to 31 Dec in each calendar year and income is assessed on a preceding year basis. Important factors for Singapore income tax include:
Personal income tax is imposed only on the income sourced within Singapore. The income earned outside Singapore is exempt from taxation. The quantity of income tax liability of an individual depends on individual’s tax residency in Singapore. There is a difference in amount between residents and non-residents.
Singapore personal tax rates for residents range from 0% to 22%. Non-residents are taxed at the flat rate of 15% or the resident rates whichever is a higher tax amount. There is no capital gain tax in Singapore. All kinds of remuneration resulting from a business which management and control is exercised in Singapore would be fully taxable regardless of where the funds are made available to you.
Eligibility of a Tax Resident You will be considered as a tax resident if you are:
- a Singaporean; or
- a Singapore Permanent Resident and have established your permanent home in Singapore; or
- a foreigner who has stayed or worked in Singapore for 183 days or more in the tax year.
Personal Tax Rates for Residents
|Chargeable Income||Income Tax Rate (%)||Gross Tax Payable ($)|
In excess of $320,000
(above table is from IRAS website 2017 table)
Calculation of Singapore Taxable Income
Taxable Income is the net income after deduction of expenses, donations, and personal relief.
The following is the formula provided by IRAS to make the ‘calculation of taxable income’ easily understandable:
Total Income Less Expenses = Statutory Income Statutory Income Less Donations = Assessable Income Assessable Income Less Personal Reliefs = Taxable Income
Where ‘Total income’ stands for
- gains or profits from carrying on any business, trade, profession or vocation either as a sole proprietor or partner in a partnership
- gains or profits from any employment dividends, interests, investment income rents, royalties, premiums and other profits arising from properties ‘Expenses’ stands for ‘qualified employment related and rental related expenses’.
- ‘Donations’ stands for ‘donations to qualified charitable organizations’.
- ‘Personal reliefs‘ stands for ‘support to dependents, academic tuition, professional development expense and premiums paid on life insurance policies’.
Tax Treatment of Income Earned Overseas
Generally, overseas income received in Singapore is not taxable. This includes overseas income brought into Singapore and paid into a Singapore bank account. However, there are certain circumstances under which overseas income is taxable:
It is received in Singapore through partnerships in Singapore. Your overseas employment is incidental to your Singapore employment. That is, as part of your work here, you need to travel overseas.
You are employed outside Singapore on behalf of Government of Singapore.
Tax Treatment of Employer Benefits
All local and foreign gains and profits delivered to an individual as a consequence of business are taxable unless they are especially exempt from income tax or are covered by an existing administrative concession. The gains or profits include all benefits, whether in money or otherwise, paid or granted to you in respect of employment.
Examples of taxable benefits received from your employer:
- Overtime payments
- Fixed monthly meal allowances
- Fixed monthly allowances for transportation if mileage on private car are reimbursed
- Car furnished by an employer
- Accomodation and housing allowance
- Refunds of medical and dental treatments for dependents other than the income earner, spouse and children
- Per Diem allowances (such as allowances provided on overseas trips for business purposes), as long as the amount is beyond the acceptable rates.
The employer-provided benefits are taxed immediately when they are enjoyed by individuals. However, certain non-cash benefits (i.e. accommodations like housing) are taxed using special formulas, known as concessionary basis, leading to lower taxation on these benefits-in-kind. Hence, a compensation package (salary+ benefits-in-kind)has been structured exclusively for executives to help them reduce their individual tax liability in Singapore.
Here are some examples for the benefits-in-kind received as part of the employment:
- Residential Accommodation
- Furniture & Furnishings provided
- Food & Clothing, Hotel Accommodation
- Home Leave Passage
- Motor Car, Driver
- Share Options
- Interest Subsidy
- Income Tax paid by Employer
- Insurance Premium paid by Employer if employee is stated beneficiary in the Policy
- Subscription, Entrance Fees, Memberships.
Filing of 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.