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 20%.
• 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

Calculation of 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'.

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 in 2010 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 Taxation Services

Overview

All business decisions today have tax implications, and it is important for a company to manage their income tax requirement efficiently. Our tax professionals will keep you abreast of developments that may affect your business. We collaborate closely with you to identify and implement tax strategies that work best within your organization.

We can also assist you in structuring your executives; remuneration packages that will offer both your company and your staff the maximum tax benefits. For individuals and family held enterprises, we can help you in organizing your financial affairs in the most tax efficient manner.

Scope of Services

• Corporate tax compliance
• Partnership and personal tax filing
• Tax Planning for corporate and individual
• Singapore tax structuring and Planning
• Tax efficient structuring of employment packages
• Negotiation of tax incentives with tax authorities
• Optimizing use of tax incentives and exemptions
• Fees are subject to the complexity of the taxation accounts