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Overview of Tax Issues for Expats in Singapore

Submitted: February 2014

The Singapore tax year runs from the 1 January to the 31 December.

Tax Residence

If you are stay and work in Singapore for less than 183 days you will be considered non-resident, and you will be taxable on Singapore source income only at either a flat rate of 15% or the same rates as a resident, whichever is higher. However if you stay and work for less than 60 days in a year, you may not be liable for tax at all. If you stay longer than 183 days you will generally be considered resident. The 183 days can straddle two tax years. As a resident you will be liable for tax on your Singapore source earnings at resident rates. For more details see: Taxation - Employment Taxation for Expats in Singapore.

Tax treaties also have a definition of residence which can override the definition above with regard to certain kinds of income. For more details see: Taxation – Tax Treaty Considerations for Expats in Singapore.

Employment/Business Taxes

Income tax is not deducted by your employer the same way as it is in a country with a Pay As You Earn system. Income tax is charged on a previous year basis, so the income for any given year (the basis year) is assessed for tax in the following year. Each employee must deal with the tax department themselves. It is possible to set up regular deductions from your salary to cover the tax which will become payable. Income tax is charged at progressive rates. You will have to fill in a tax return after the end of the year to calculate the final amount of tax owed. For more details see: Taxation - Employment Taxation for Expats in Singapore.

If you come to Singapore to set up in business and start a company, you will be liable to corporate income tax on the profits gained from Singapore sources. The general rate of corporate income tax is 17%. There are some concessionary rates for certain businesses. Companies must complete a registration process, and may be required to apply for a business licence. Income tax is charged on a previous year basis, so the income for any given year (the basis year) is assessed for tax in the following year. Companies must file an estimate of corporate tax payable within three months of the year end. It may be possible to pay the tax owed in up to 10 instalments. A final tax return must be filed by 30 November of the year following the end of their tax year. For more details see: Taxation - Business Taxation for Expats in Singapore.

Other taxes

There is no capital gains tax in Singapore; however certain capital gains may be treated as ordinary income.

For residents and non-residents in Singapore, investment income in the form of interest and rental income is taxed as ordinary income. Dividend income is exempt from taxation. For more details see: Taxation - Investment Taxation for Expats in Singapore.

Tax treaties

Singapore has signed tax treaties with approx 70 countries worldwide. Any withholding taxes payable in Singapore on interest or royalties paid to persons in other countries with tax treaties in place (or non-residents in Singapore) can be reduced. The treaties also mean that the amount of withholding tax charged by the originating country on money flowing into Singapore can be reduced. The amount that can be charged under a treaty is often reduced to between 0% and 10%. For more details see: Taxation – Tax Treaty Considerations for Expats in Singapore.

 

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