Frequently Asked Questions About Singapore’s Personal Tax System
Ottavia receives a number of questions about how individual employment income is taxed more than others. We’ve collected some of the more commonly asked here for reference.
An individual is considered a Singapore resident for tax purposes if they’ve both earned income within Singapore and stayed within the country for more than 183 days within the same tax year.
It will depend on your circumstances. If you make frequent business trips as a sales consultant for a local firm and have spent fewer than 183 days in the country, you will still be considered a resident for tax purposes. Alternatively, if you are posted by a Singaporean employer to an overseas project for a period of several months resulting in your spending less than 183 days here, you may have your income taxed as a non-resident.
In most cases the Inland Revenue Authority of Singapore (IRAS) will consider you to be a resident of Singapore, as while you travel extensively you are employed in Singapore. You may be able to limit your tax liability through the Area Representative Scheme.
There are several types of dividends exempt from taxation:
As the income is sourced from outside Singapore, the salary is not taxable by the Singapore tax authority. Regardless of the fact that the salary may be paid into a bank account located in Singapore or the consultant’s contract of employment may be concluded in the country. Withholding tax is not applicable to consulting or services done outside Singapore, as it is only applicable to income derived from income for work conducted in Singapore. In the majority of cases, employees contracted to be stationed outside the company to render their services are not eligible for taxation.
Yes. As your income is derived in Singapore, it is taxable. Your income will be taxed at resident rates for the period you rendered consulting services. This is done irrespective of the fact that your employer does not reside in Singapore and your income may not be paid in the country.
Residents for tax purposes are subject to progressive tax system with a rate starting at 0 per cent and capping at 22 per cent above earnings of S$320,000. Non-residents are either taxed at 15 per cent or under the same progressive system as residents, whichever will result in a higher tax amount.
The filing deadline is April 15. Be advised that Singapore follows a calendar year basis for the filing of personal taxes.
If your Singapore income was greater than S$20,000 and you were resident in Singapore for more than 60 days of the calendar year, you will be liable to file a tax return. The latter rule does not apply to public entertainers, directors of companies and those exercising a profession.
Foreigners are not allowed to make contributions to the Central Provident Fund. Employer and employee contributions for foreign employees accruing income through work authorised by a Professional Visit Pass, Employment Pass or Work Permit will be rejected.
Yes. Accommodation provided is considered to fall under the umbrella of benefits-in-kind. This refers to benefits received by an employee from an employer provided in a non-cash form.
The tax status of worldwide income received by a resident of Singapore will depend on the nature of the source of income. Fundamentally, income is liable for taxation by the Singapore tax authority if the source of the income is within Singapore. Whether it was derived from or accrued in Singapore and resulted from employment exercised within the country determines its tax status, even if the employer is an overseas or non-resident company like a branch office of a business incorporated in another country. Income sourced from overseas is tax exempt where the income resulted from employment that was exercised outside of the country, with a few exceptions.
Overseas income is taxable if it was received in Singapore through a partnership in Singapore, or if your overseas employment is incidental to Singapore employment. This is frequently referred to as being ‘based’ in Singapore, meaning while you travel overseas extensively for work your job is considered to be in Singapore. Your overseas income is also taxable if you are employed outside of the country on behalf of the Government of Singapore.