A guide on Personal Income Tax for Singapore Residents or working professional in Singapore (Employment pass holder income tax) by Paul Hype Page & Co. We provide suggestions on tax rate, filing of tax return and different tax treatments.

Singapore Residents' Personal Income Tax

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 IncomeIncome Tax Rate (%)Gross Tax Payable ($)
First $20,000
Next $10,000
0
2
0
200
First $30,000
Next $10,000

3.50
200
350
First $40,000
Next $40,000

7
550
2,800
First $80,000
Next $40,000

11.5
3,350
4,600
First $120,000
Next $40,000

15
7,950
6,000
First $160,000
Next $40,000

18
13,950
7,200
First $200,000
Next $40,000

19
21,150
7,600
First $240,000
Next $40,000

19.5
28,750
7,800
First $280,000
Next $40,000

20
36,550
8,000
First $320,000
In excess of $320,000

22
44,550

(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’.

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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.

You Must File the Tax Return

If you are an Resident/Employment pass/PEP/Entrepass holder, If your annual income in Singapore 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.

Singapore tax rates table

Singapore Tax resident table

(above table is from IRAS website 2018 updates)

Q&A

Question : How Singapore personal 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.

Question  : What if you are a Singapore tax resident? What If you receive foreign income?

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.

Question  : What is a 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

Question  : 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