SINGAPORE TAX SYSTEM AND TAX RATES

Persons, including corporations, partnerships, trustees and bodies of persons carrying on any
trade, profession or business in Singapore are chargeable to tax on all profits (excluding profits
arising from the sale of capital assets) arising in or derived from Singapore and certain foreign-
sourced income from such trade, profession or business. The purpose of this guide is to provide a
general overview of Singapore’s tax system and tax rates. We also have a very useful online tax
calculator that you can use to estimate your Singapore taxes and to compare how they stack up
against those in your home country.

Current Tax Rates in Singapore

Corporate Tax Rates

(For more details, see Singapore Corporate Tax Guide)

Income Tax Rate

Tax rate on corporate profits for up to 300,000 SGD Effective tax rate at 8.5%

Tax rate on corporate profits above 300,000 SGD 17%

Tax rate on capital gains accrued by the company 0%

Tax rate on dividend distribution to shareholders 0%

Tax rate on foreign-sourced income not brought into Singapore 0%

Tax rate on foreign-sourced income brought into Singapore 0 – 17% subject to

conditions

Personal Tax Rates

(For more details, see Singapore Individual Tax Guide)

Income Tax Rate

Tax rate on first 20,000 0%

Tax rate on next 10,000 2%

Tax rate on next 10,000 3.5%

Tax rate on next 40,000 7%

Tax rate on next 40,000 11.5%

Tax rate on next 40,000 15%

Tax rate on next 40,000 18%

Tax rate on next 40,000 19%

Tax rate on next 40,000 19.5%

Tax rate on next 40,000 20%

Tax rate on above 320,000 22%

Tax rate on capital gains 0%

Tax rate on dividends received from Singapore company 0%

Singapore Income Tax System – Key Facts

 Singapore follows a territorial basis of taxation. In other words, companies and

individuals are taxed mainly on Singapore sourced income. Foreign sourced income
(branch profits, dividends, service income, etc.) will be taxed when it is remitted or
deemed remitted into Singapore unless the income was already subjected to taxes in a
jurisdiction with headline tax rates of at least 15%. Although the concept of locality of
the source of income seems simple, in realty its application often can be complex and
contentious. No universal rule can apply to every scenario. Whether profits arise in or are
derived from Singapore depends on the nature of the profits and of the transactions which
give rise to such profits.
 Singapore corporate tax rate is capped at 17%. By keeping corporate rates competitive,
Singapore continues to attract a good share of foreign investment. Singapore follows a
single-tier corporate tax system, where tax paid by a company on its profits is not
imputed to the shareholders (i.e. dividends are tax free).
 Singapore personal tax rates start at 0% and are capped at 22% (above S$320,000) for
residents and a flat rate of 15% to 22% for non-residents.
 To increase the resilience of taxes as a source of government revenue, Goods and
Services Tax (GST) was introduced in 1994. The current GST rate is 7%. The balanced
mix of tax on consumption and income reduces the vulnerability of revenue intake to
adverse changes in economic conditions and strengthens the resilience of Singapore’s
fiscal position.
 Interest, royalties, rentals from movable properties, management and technical fees, and
director’s fees paid to non-residents (individuals or companies) are subject to withholding
tax in Singapore.
  For personal taxes, the tax year is the normal calendar year i.e. January 1 – December 31.
Deadline for filing personal tax return is April 15. For corporate taxes, a company is free
to decide on its financial year. Deadline for filing corporate tax return is November 30.
Taxes are paid on a preceding year basis.
 Singapore has no capital gains tax. Capital loss expenses are correspondingly not allowed
as deductions.
 Singapore has concluded more than 50 bilateral comprehensive tax treaties to help
Singapore companies minimize their tax burden.

Types of Taxes in Singapore

 Income Tax is chargeable on income of individuals and companies.

 Property Tax is imposed on owners of properties based on the expected rental values of
the properties.
 Estate Duty has been abolished since February 15, 2008.
 Motor Vehicle Taxes are taxes, other than import duties, that are imposed on motor
vehicles. These taxes are imposed to curb car ownership and road congestion.
 Customs & Excise Duties – Singapore is a free port and has relatively few excise and
import duties. Excise duties are imposed principally on tobacco, petroleum products and
liquors. Also, very few products are subject to import duties. The duties are mainly on
motor vehicles, tobacco, liquor and petroleum products.
 Goods & Services Tax (GST) is a tax on consumption. The tax is paid when money is
spent on goods or services, including imports. This kind of indirect tax is also known as
Value Added Tax (VAT) in many other countries.
 Betting Taxes are duties on private lottery, betting & sweep-stake.
 Stamp Duty is imposed on commercial and legal documents relating to stock & shares
and immovable property.
 Others – The two main taxes are the foreign worker levy and the airport passenger
service charge. The foreign worker levy is imposed to regulate the employment of foreign
workers in Singapore.

Singapore Tax Governing Authority

The Income Tax Act of Singapore is the governing statute regarding corporate and individual
taxation matters.

The Inland Revenue Authority of Singapore (IRAS), was formed in 1960 and was formerly
known as the Inland Revenue Department. It integrated all the key revenue collection agencies
into one body, enabling the administration and collection processes to become more streamlined
and better managed. IRAS has also made its mark as an efficient tax administrator and a service-
friendly tax collector.

The IRAS is responsible for collecting income tax, property tax, goods & services tax, estate
duty (abolished since 15 Feb, 2008), betting taxes and stamp duties. As the main tax
administrator for the Ministry of Finance, IRAS plays a role in tax policy formulation by
providing policy inputs, as well as the technical and administrative implications of each policy.
IRAS also actively monitors developments in external economic and tax environment to identify
areas for policy review and changes. It aims to foster a competitive tax environment that
encourages enterprise and growth. The other non-revenue functions performed by IRAS include
representing the government in tax treaty negotiations, providing advice on property valuation
and drafting of tax legislation.

Brief History of Taxation in Singapore

Early beginnings

Debated since before World War I, income tax had been introduced briefly during World War I
and II to raise revenue for the war effort. But the tax was unpopular, and with many opposing the
need for it, income tax stayed off the agenda.

The end of World War II highlighted the need for new infrastructure and fresh sources of
revenue, giving renewed impetus to the introduction of income tax.

In 1947 Income Tax was introduced in Singapore under the British colonial government. In 1948
the Income Tax Act was imposed. The Act was based on the Model Colonial Territories Income
Tax Ordinance 1922, which was devised for British colonies at that time. Therefore, Singapore’s
tax laws share common historical roots with those of Malaysia, Australia, New Zealand and
South Africa.

1960s

With Independence in 1965, Singapore promoted a policy of rapid industrialisation and building
an export oriented industrial base, to stimulate growth and employment. Hence in the 1960s
labour-intensive industries were encouraged by tax incentives. The Economic Expansion
Incentives Act was introduced in 1967. Companies which managed to grow their exports enjoyed
as much as a 90% tax exemption on the increased export income. Interest paid on foreign loans
granted to a local industrial company was tax exempt.

1970s

In the 1970s growth of the service sector was high on the government’s agenda. Tax policy
played its part in the financial sector with the exemption of interest on Asian dollar bonds from
1973. Shipping was also actively promoted. Income from the operation and charter of Singapore
ships drew tax exemptions. Tax measures to support urban redevelopment were also introduced.
Different property taxes were also phased out. Tax policies in the 1970s were also influenced by
social needs. Contributions to the Central Provident Fund were tax deductible and other tax relief
measures were introduced.

1980s

As Singapore became more developed, it became a more expensive place for businesses in the
1980s. Measures to revamp the economy, with the aim of making it more competitive was
introduced. Changes to government policies, incentives and taxes were considered. The late
1980s marked a significant shift towards lowering both corporate and individual taxes. In 1987
corporate tax rates were lowered from 40% to 33%.

1990s

This period witnessed major changes in tax policies. There was a shift towards lower direct taxes
and the focus was on indirect taxes. The trend towards indirect taxation resulted in the
introduction of the Goods and Services Tax (GST) in 1994. It is a tax on domestic consumption
and applies to all goods and services supplied in Singapore except for financial services and
residential properties. It was in this period that the trend of lowering corporate and individual tax
rates accelerated.

2000 and beyond

This has been the phase of innovation and entrepreneurship. A number of measures were, and are
being introduced to attract foreign talent and investment. Tax rates were further lowered and
currently capped at 18% (17% from 2010) for companies and 20% for individuals. This period
witnessed the introduction of group relief and the one-tier corporate tax system.

Personal income tax rates in Singapore are one of the lowest in the world. In order to determine
the Singapore income tax liability of an individual, you need to first determine the tax residency
and amount of chargeable income and then apply the progressive resident tax rate to it. Key
points of Singapore income tax for individuals include:

 Singapore follows a progressive resident tax rate starting at 0% and ending at 22% above
S$320,000.
 There is no capital gain or inheritance tax.
 Individuals are taxed only on the income earned in Singapore. The income earned by
individuals while working overseas is not subject to taxation barring few exceptions.
 Tax rules differ based on the tax residency of the individual.
 Tax filing due date for individuals is April 15 of each year. Income tax is assessed based
on a preceding year basis.

Personal income tax rates

Individuals resident in Singapore are taxed on a progressive resident tax rate as listed below.
Filing of personal tax return for tax resident is mandatory if your annual income is S$22,000 or
more. Tax residents do not need to pay tax if your annual income is less than S$22,000.
However, you may still need to file a tax return if you have been informed by Singapore tax
authority to submit your tax return.

Chargeable Income Rate (%) Gross Tax Payable ($)

On the first 20,000 0 0

On the next 10,000 2 200

On the first 30,000 - 200

On the next 10,000 3.50 350

On the first 40,000 - 550

On the next 40,000 7 2,800

On the first 80,000 - 3,350

On the next 40,000 11.5 4,600

On the first 120,000 - 7,950

On the next 40,000 15 6,000

On the first 160,000 - 13,950

On the next 40,000 18 7,200

On the first 200,000 - 21,150

On the next 40,000 19 7,600

On the first 240,000 - 28,750

On the next 40,000 19.5 7,800

On the first 280,000 - 36,550

On the next 40,000 20 8,000

On the first 320,000 - 44,550

In excess of 320,000 22

Source: IRAS

Different income tax rules apply in Singapore depending on the tax residency status of the
individual.

Personal Tax for Singapore Residents

You are considered 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
Tax residents pay taxes on their chargeable income as per the resident tax rate table above. What
is chargeable income? The chargeable income (i.e. income subject to taxation) for tax residents is
determined as below:

Whereas

 Total income means

o gains or profits from carrying on any business, trade, profession or vocation either
as a sole proprietor or partner in a partnership
o gains or profits from any employment
o dividends, interests, investment income
o rents, royalties, premiums and other profits arising from properties
o exclude qualified income earned overseas (more details provided later in the
guide).

 Expenses means
o qualified employment related expenses
o qualified rental related expenses are expenses

 Donations means
o donations to qualified charitable organizations

 Personal Reliefs means

o special personal reliefs such as eligible course fees, earned income relief, parent
relief, etc.

Chargeable income is this adjusted income after deductions from the total income (as shown in
the picture above).

Personal Tax for Singapore Non-Residents

You are considered a non-resident for tax purpose if you are a foreigner who stayed or worked in
Singapore for less than 183 days in the tax year. As a non-resident, you will be taxed as below:

 Your employment income is exempt from tax if you are here on short-term employment
for 60 days or less in a year. This exemption does not apply if you are a director of a
company, a public entertainer or exercising a profession in Singapore. Professionals
include foreign experts, foreign speakers, queen’s counsels, consultants, trainers, coaches
etc.
 If you are in Singapore for 61-182 days in a year, you will be taxed on all income earned
in Singapore. You may claim expenses and donations to save tax. However, you are not
eligible to claim personal reliefs. Your employment income is taxed at 15% or the
progressive resident tax rate (see rate table above), whichever gives rise to a higher tax
amount.
 Director fees and remuneration, consultant fees and all other incomes are taxed at a range
of 15% to 22%.

Filing personal income tax returns

Filing your tax return is a yearly obligation for every eligible taxpayer. All completed forms
must be submitted to Singapore tax authority by the 15th of April.

You do not need to pay tax if your annual income (applicable for tax residents only) is less than
S$22,000. However, you may still need to file returns if you have been informed by tax authority
to submit your tax form. Even if you do not have any income in previous years, you still need to
declare zero income in your tax form and submit by 15 Apr. You need to compulsorily file tax
returns if your annual income is S$22,000 or more.

You can choose to file your returns online or by mail. IRAS will send you the appropriate paper
tax form, upon request, the online form will be available from 1 March every year.

 For tax resident individuals – Form B1

 For self-employed – Form B
 For non-resident individuals – Form M

You will be subject to penalties for filing late or not filing. IRAS might also take legal actions
against the individual for non-filing of tax return or non-payment of the tax.

After you have filed your returns, you will receive your Notice of Assessment or tax bill
in May to 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 the Singapore tax authority 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, penalties will be imposed.
Tax treatment of income earned overseas

Generally, overseas income received in Singapore on or after 1 Jan 2004 is not taxable. This
includes overseas income paid into a Singapore bank account. You do not need to declare
overseas income that is not taxable.

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.

You need to declare the qualified taxable overseas income under ’employment income’ and
‘other income’ (whichever applicable) in your tax form.

Tax treatment of employer benefits

All gains and profits derived by you in respect of your employment are taxable, unless they are
specifically 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:

 Accommodation and housing allowance

 Car provided by employer
 Reimbursements of medical and dental treatments for dependants other than yourself,
your spouse and children
 Overtime payments
 Per diem allowances (daily allowance given to employees on overseas trips, out of
Singapore, for business purposes), provided the amount is in excess of acceptable rates
 Fixed monthly allowance for transport or if mileage on private cars are reimbursed
 Fixed monthly meal allowance

Note however that some of the non-cash benefits (e.g. accommodations) are taxed using special
formulas resulting into a lower taxation on these benefits-in-kind. Thus, a properly structured
compensation package (i.e. salary plus benefits in kind) for the executives can help reduce their
individual tax liability in Singapore. Further details on this are outside the scope of this guide.

Capital gains tax, inheritance tax, estate duty

 Capital gains may refer to “investment income” that arises in relation to real assets, such
as property, financial assets, such as shares or bonds, and intangible assets such as goodwill.
Singapore does not impose any capital gains tax.

Inheritance tax is a tax that you have to pay when you die which comes out of the
financial estate that you leave behind. In Singapore, it is commonly referred to as Estate Duty.
Estate Duty in Singapore has been abolished effective 2008.