Easy to understand: What is the individual income tax in Singapore? How can you file for tax deductions?
Singapore is known for having some of the lowest tax rates in the world, making it an attractive destination for both individuals and businesses. In addition, Singapore offers a variety of preferential tax policies, as well as a stable and safe living environment, which have helped it become one of the top ten destinations for overseas investment and immigration. The top corporate income tax rate in Singapore is 17 percent, while the top individual income tax rate is 24 percent as of 2023. One unique aspect of Singapore’s tax system is that it does not have capital gains or inheritance taxes, making it even more appealing to investors and individuals looking to preserve their wealth.
Singapore is a country with a sound legal system and a strict tax regime. So, what taxes do individuals have to pay in Singapore and how do they file?
① To whom does Singapore individual income tax apply?
1. How do I know if I have to pay taxes?
You are required to file an Income Tax Return if you have received a letter, form, or SMS from IRAS (Inland Revenue Authority of Singapore) instructing you to do so, regardless of how much income you earned in the previous year or whether your employer is participating in the Auto-Inclusion Scheme (AIS) for Employment Income. To determine if you need to file an income tax return, log in to MyTaxPortal using your SingPass.
It’s important to note that non-resident individuals who earn income from Singapore in the previous year, regardless of the amount earned, must file an income tax return.
2. What are the conditions to declare individual income tax?
You will need to submit your Income Tax Return if, in the preceding calendar year:
- your total income (including employment and self-employment income) is more than $21,000; or
- you are a non-resident who derived income from Singapore.
3. Deadline for filing
Individual income tax declarations are divided into electronic filing and paper filing. You must pay attention to the following two dates:
- E-FLING: The filing deadline is 18 Apr
- PAPER-FILING: The filing deadline is 15 Apr
② Singapore individual income tax highlights
Like many other jurisdictions around the world, Singapore has its own tax system, including individual income tax and corporate income tax. One of Singapore’s attractions is that its individual income tax rate is one of the lowest in the world.
1. About individual income tax in Singapore
Individual income tax for tax residents in Singapore is calculated based on the previous year’s income, with exemptions, and applied on a progressive basis. The tax rates range from 2% to 22%. Non-tax residents do not receive any tax deductions, and a flat tax rate of 22% applies (From YA 2017 to YA 2023). For Singapore tax residents, employment income will be taxed at either a flat rate of 15% or a progressive rate, whichever is higher. However, starting from the 2024 assessment year, the income tax rate for non-resident individuals (excluding employment income and certain income taxed at reduced withholding rates) will increase from 22% to 24%.
From YA 2024 onwards ：
Note: The data is from the official website of IRAS Singapore.
2. Key points of individual income tax in Singapore
Individuals’ income tax obligations in Singapore are determined by their tax residency status and the amount of taxable income they earn. Here are some key points about Singapore’s individual income tax system:
- Singapore’s progressive tax rates range from 0% to a maximum of 24% for income above S$1,000,000.
- Singapore does not impose capital gains or inheritance tax.
- All income earned in Singapore is considered taxable income, while individuals working abroad are exempt from Singapore tax.
- Different tax provisions apply to individuals with different tax residency statuses.
- The deadline for filing individual tax returns is by 15 April or 18 April (via e-Filing) each year, and income tax is calculated based on the previous year’s income.
From YA 2017 to YA 2023 ：
③ How do local and non-local residents pay taxes?
1. Working out your tax residency
All income earned in Singapore is subject to tax. You must declare all sources of income you have earned in your Income Tax Return.
- how much you earn in Singapore; and
- whether you are a tax resident or non-resident for income tax purposes.
Your income tax is calculated on a preceding year basis. The Year of Assessment refers to the income earned in the previous year. For example, Year of Assessment 2023, refers to income earned from 1 Jan 2022 to 31 Dec 2022.
2. Tax residents
You are a tax resident for a particular Year of Assessment if you are a:
- Singapore Citizen or Singapore Permanent Resident (SPR) who normally resides in Singapore except for temporary absences; or
- Foreigner who has stayed/worked in Singapore:
- for at least 183 days in the previous calendar year; or
- continuously for 3 consecutive years; or
- Foreigner who has worked in Singapore for a continuous period straddling 2 calendar years and your total period of stay* is at least 183 days. This applies to foreign employees who entered Singapore but excludes directors of a company, public entertainers or professionals.
Note: including your physical presence immediately before and after your employment.
3. For foreigners: Number of days of employment
The number of days of employment in Singapore includes weekends and public holidays. Any absences from Singapore that are on a temporary basis (e.g. overseas vacation leave) or incidental to your employment (e.g. business trips) are still counted in the total days of employment for the purpose of determining your tax residency status.
4. Tax treatment of tax residents
As a tax resident:
- You will be taxed on all income earned in Singapore;
- Your foreign-sourced income (with the exception of those received through partnerships in Singapore) brought into Singapore is tax-exempt;
- You may claim deductions on expenses, donations and personal reliefs. Find out more about deductions to save tax.
- The income of tax residents after deducting allowable expenses, donations and personal reliefs is subject to income tax at progressive rates ranging from 0% to 22%.
④ What should be taxed?
All income earned in or from Singapore is subject to income tax. In general, overseas income received in Singapore is not taxable, except in certain circumstances. The following circumstances are subject to tax:
1. Taxes on employment income
Generally, the salary you have received is taxable. The salary refers to the payment (in cash or other form) received for the services you have provided as an employee to your employer.
2. Taxes on bonuses
The bonus you have received from your employment is taxable. Bonuses may be contractual or non-contractual.
3. Taxes on director’s fee
Generally, director’s fees are sourced in the country where the company is resident. This is because all the functions of the directors in determining and controlling activities to earn the profits of the company are carried out in that country.
4. Taxes on commission
Commission refers to payment you receive in return for service provided.
Commission is taxable. If you receive the commission from your employer, it will be taxed as employment income. If you receive the commission as a self-employed individual, it will be taxed as trade income.
5. Taxes on other employment income
Other employment income may include allowances and benefits-in-kind given by your employer. For more information, please refer to the tax treatment of employee remuneration.
Note: The data is from the official website of IRAS Singapore.
What will be the impact of Singapore’s GST hike to 8 per cent in 2023, and how will businesses cope? Go Global Gem will share with you the information of individual income tax of Singapore enterprises. If you have any questions in this respect, please contact us. We will assess for you and work out the corresponding solution.
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