A Comprehensive Guide to Personal Income Tax in Singapore
With one of the lowest personal income tax rates in the world, it is of little wonder that more and more entrepreneurs and young professionals are choosing to relocate to Singapore. This guide is an overview of the personal income tax in Singapore. We also have a corporate tax guide and an online tax that lets you compare how income is taxed in your own country with how it is taxed in Singapore.
There are a number of factors which influence the amount of tax an individual is required to pay such as tax residency and chargeable income. Here are some key points about Singapore’s taxation system:
- Starting at 0%, Singapore has a progressive tax rate which is capped at 20% for income over S$320,000. This cap will increase slightly in 2016 to 22%.
- Singapore does not have capital gains, inheritance, or death taxes.
- Following a territorial system of taxation, individuals are only taxed for income earned within Singapore with a few exceptions.
- The tax rules vary depending on whether or not the individual is a tax resident or non-resident.
- Income tax is assessed on a preceding year basis, the filing date for individuals is April 15.
Rates for personal income tax
Tax residents in Singapore are charged on a progressive basis. Filing a return is mandatory for those with an income which exceeds S$20,000, those with income below this are not required to pay tax. However, in some cases, individuals with incomes below S$20,000 may be requested to complete a return by the Singapore tax department.
Personal income tax for residents in Singapore
A tax resident is defined as an individual who is one of the following:
- A Singaporean citizen
- A Permanent Resident with an established home in the city
- A foreign national who has stayed or worked in Singapore for a minimum of 183 days during the tax year
Chargeable income is the income after expenses, donations, and personal reliefs have been deducted from an individual’s total income.
Total income includes the gains or profits which come as a result of any business, trade, profession, or vocation carried out, profits earned as a result of employment, investment income including dividends and interest, earnings resulting from royalties, rents, premiums, and other property profits. Overseas income is not taken into account.
Expenses are defined as qualified rental or employment related expenses.
Donations are defined as donations to accredited charitable organisations
Personal Reliefs are for particular circumstances such as earned income relief, parent relief, and eligible course fees.
Personal income tax for non-residents in Singapore
A non-resident is defined as an individual who has stayed or worked in the city for fewer than 183 days. For individuals who have worked in Singapore for 60 days or less, their income is exempt from tax. This excludes company directors, public entertainers, and those exercising a profession (professionals include foreign experts, translators, consultants, trainers, coaches, queen’s consuls etc.). Those who have stayed or worked for 61-182 days are taxed on income earned in Singapore. Chargeable income for these individuals is their total income less expenses and donations but they are not eligible for personal reliefs. Income is taxed at either 15% or the progressive rate depending on which is higher. Separate to this, director and consultant fees and all other incomes are taxed at 22%.
Filing tax returns for personal incomes
All eligible tax payers must file a return by the 15th of April each year, penalties are imposed upon those who file past this date or fail to file altogether. Those who earn under S$20.000 a year are not required to file a return unless specifically requested by the tax authority. Even if you have not earned any income in previous years, you are required to declare zero income and file for a return. Returns can be filed online or by mail. During February and March, IRAS will send you either a B1, a B, or an M form depending on your tax resident status and whether or not you are self-employed.
Once you have filed, you will receive your Notice of Assessment by September. This is a tax bill which will indicate the amount of tax you are required to pay. It is possible to dispute your Notice of Assessment by notifying and stating your objections to IRAS within 30 days of the date of the notice.
Payment of taxes is required within 30 days of the date of the notice regardless of whether or not you have informed the authorities of your objection. A penalty is imposed for outstanding taxes after 30 days,
Taxing of overseas income
Typically, income earned overseas and received in Singapore is not taxed and does not need to be declared. This includes overseas income paid into an SG bank account. However, there are some instances in which income overseas is taxable including when it is received in Singapore through Singapore based partnerships, when overseas employment is incidental to your Singapore employment (i.e. you work in Singapore, but must travel internationally for your job), and when you are employed internationally by the Government of Singapore. In these circumstances, the income needs to be declared as ‘employment’ or ‘other’ income on your form.
Taxation of employer benefits
Unless they are exempt from income tax or subject to an administrative concession, all of your gains and profits earned as a result of employment are taxable. This includes all employee benefits financial or otherwise. Some examples include accommodation or housing allowance, a company car, medical or dental reimbursement costs for yourself or your dependants, overtime, per diem allowances for business trips, transport allowance, and meal allowances.
Capital gains, inheritance, and estate duty
Capital gains is investment income from real estate assets, financial assets, and intangible assets.
Inheritance tax (also known as estate duty) is a tax paid when you die out of your estate.
Singapore does not have either of these taxes.