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:
You will be considered as a tax resident if you are:
|Tax rate on first 20,000
|Tax rate on next 10,000||3.5%|
|Tax rate on next 10,000||5.5%|
|Tax rate on next 40,000||8.5%|
|Tax rate on next 80,000||14%|
|Tax rate on next 160,000||17%|
|Tax rate on above 320,000||
|Tax rate on capital gains||
|Tax rate on income earned overseas||
|Tax rate on divdends received from Singapore company||
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
'Total income' stands for
'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'.
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:
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:
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:
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.
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.
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.