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Singapore’s personal income tax rates are known to be among the world’s lowest. However, that is not the only notable aspect of personal income tax in Singapore. Tax resident status, taxable income, and tax treatment of income from abroad are also important topics to be discussed.

Singapore Personal Income Tax

Singapore’s taxpayers benefit from some of the lowest personal income tax rates in the world. Personal income taxes in Singapore are imposed based on all income earned by a taxpayer during a particular year of assessment (YA). A YA runs from January 1 to December 31 of a calendar year. Therefore, a YA coincides with a calendar year.

Personal annual income is assessed on a preceding-year basis. Hence, the basis period for a YA is the same as the financial year ending in the previous year.

Only income sourced within Singapore is subject to personal income tax. Any income earned which has its source in another country will not be taxed.

In Singapore, income tax is paid according to the progressive tax system. This means that the more chargeable income a taxpayer earns, the higher the percentage of this income the taxpayer must pay.

Tax Resident Status and Personal Income Tax

The amount of income tax which is to be paid depends on the taxpayer’s status as a tax resident. Singapore citizens and Singapore permanent residents are regarded as resident individuals. A foreigner who has worked or resided in Singapore for at least 183 days of the most recent YA is also treated as a tax resident.

Tax residents who earn less than S$20,000 in taxable income per year do not have to pay any personal income tax. Tax residents earning more than this amount, however, must do so. The amount of tax to be paid is directly related to the amount of chargeable income earned. The highest possible personal income tax rate is 22%. This rate is imposed on tax residents who earn a minimum of S$320,000 in taxable income in a year.

Non-residents who have lived or worked in Singapore for between 61 and 182 days of a YA will either be taxed at a 15% flat rate or the resident rates. The higher of the two amounts will be used. These figures match the prevailing withholding tax rate. Non-residents who have lived or worked in Singapore for 60 days of a YA or less are exempt from tax unless they are a public entertainer, director company, or certain type of professional, such as a consultant, trainer, or coach. Non-residents whose absences from Singapore are required by their Singapore employment are also not exempt from income tax.

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Calculation of Taxable Income

After expenses, donations, and personal reliefs are deducted from one’s income, the remaining amount is known as taxable income. The Inland Revenue Authority of Singapore (IRAS), the Singapore government’s tax collection arm, defines expenses as “qualified employment-related and rental-related expenses”, donations as “donations to qualified charitable organizations”, and personal reliefs as “‘support to dependents, academic tuition, professional development expenses, and premiums paid on life insurance policies”. Among the more well-known personal reliefs are course fees relief, National Serviceman relief, and life insurance relief.

According to the IRAS, taxable income is first calculated by subtracting expenses from total income. This preliminary amount is known as statutory income. Donations are then subtracted from statutory income to arrive at assessable income. Finally, personal reliefs are deducted from assessable income. The amount remaining is the taxable income. Taxable income is the amount which determines at what rate a taxpayer is to be taxed.

Tax Treatment of Income Earned Abroad

Income that has been earned in another country is normally not subject to any taxation. This is also true of income that was earned abroad but paid into a bank account earned in Singapore. However, there are situations in which income from abroad will be taxed. This is the case in the following situations: when the taxpayer’s employment abroad is part of the taxpayer’s Singapore employment, when the income is received through partnerships in Singapore, when the income from abroad is non-exempt service income, when the taxpayer is employed abroad on behalf of the Singaporean government, or when the taxpayer has a trade or business in Singapore and is carrying on a trade or business abroad which is incidental to the taxpayer’s trade in Singapore.

If a taxpayer’s gains from employment abroad are taxed in that country, the taxpayer may apply for double taxation relief to avoid having the same income taxed twice. Double taxation relief is a credit of an individual’s or company’s foreign tax suffered against its Singapore tax which is payable on the same income. Double taxation relief can only be enjoyed after submitting a certificate of residence to the foreign country.

Tax Treatment of Employer Benefits

All gains or profits, regardless of their original location, delivered to an individual from business activity are taxable unless they are specifically exempt from taxation or are covered by an existing administrative concession. These gains or profits include all benefits paid or granted to the individual with regard to employment. The benefits may either be monetary or non-monetary. Most benefits provided by an employer are taxed upon the individual’s acceptance. However, certain non-monetary benefits are taxed using a formula known as the concessionary basis. The concessionary basis applies to benefits such as accommodation, insurance premiums, share options, memberships, and subscriptions. Benefits that are taxed using the concessionary basis are subject to lower tax rates than those which are not.

Filing of Personal Income Tax Returns

Every taxpayer in Singapore is required to file a personal income tax return to IRAS. The due date for doing so is April 15 every year. After a taxpayer files an income tax return, the taxpayer will receive a Notice of Assessment, or tax bill, on a date before September 30. The tax bill specifies exactly how much tax is to be paid. Those who do not agree with the amount mentioned in the tax bill must inform the tax authorities within 30 days of the date of the tax bill and state any reasons for disputing the figures.

All taxpayers are required to pay the full amount of tax within 30 days of receiving the Notice of Assessment. Those who do not do so will be punished accordingly.

Personal Income Tax in Singapore FAQs

How Much Personal Income Tax do Non-residents have to Pay?2020-06-17T11:28:57+08:00

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.

How Singapore Personal Income is Assessed?2020-06-17T11:28:15+08:00

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.

2021-02-05T13:12:31+08:00June 29, 2012|2 Comments
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2 Comments

  1. Alyssa March 11, 2015 at 4:06 am - Reply

    Hi

    I just received a contract from a multinational company in Singapore (I’m Singaporean).
    A portion of the salary is to be paid in restricted stock units (RSUs) in USD.

    I would like to know about the tax implications and when they would they have to be declared?

    Regards
    Alyssa

    • Paul Hype Page March 13, 2015 at 1:59 am - Reply

      Dear Alyssa,

      We will need more details of the stock units before we can give you further advise on the tax implications. Do book an appointment with us for an consultation should you be interested to find out more.

      Best Regards
      Paul

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