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Expat Briefing Editorial Team
07 October, 2016
Singapore was once again chosen as the world's best place for expat living by HSBC's latest Expat Explorer survey, arguably the most definitive survey of its type. This article runs the rule over South East Asia's thriving "Lion City."
Where Is Singapore?
Singapore is a collection islands between Indonesia and Malaysia, with a land area of just under 700 sq km, making it about three-and-a-half time the size of Washington D.C. It is home to an estimated 5.78m people, three-quarters of whom are of Chinese descent.
What Is Singapore?
Singapore was founded as a British trading colony in 1819 and formed an important strategic trading and naval post within the British Empire in the 19th and early 20th centuries. But after gaining full independence in 1965 (following a short-lived experiment as a part of the Malaysian federation), the Republican of Singapore has become one of the world's most prosperous countries with strong international trading links and one of the busiest international ports.
What Is The Official Language Of Singapore?
Actually, there's four! By virtue of its large Chinese population, Mandarin is one of the official languages of Singapore, spoken by about 36 percent of the population. The other three are English, spoken by about 30 percent of people, and Malay, spoken by about 12 percent, and Tamil, spoken by 3 percent.
An Economic Miracle
Singapore enjoys a remarkably open economy and corruption-free environment, with GDP-per-capita of an estimated USD85,300 in 2015 – the sixth highest in the world.
The economy depends heavily on exports, particularly in consumer electronics, information technology products, and pharmaceuticals. However, in just over four decades, Singapore has established a thriving financial center of international repute, serving not only its domestic economy, but also the wider Asia Pacific region and in some instances, the world.
Singapore's finance sector offers a broad range of financial services including banking, insurance, investment banking and treasury services, and it is considered a premier league financial center alongside New York, London and Hong Kong.
The presence of the major global financial institutions and multinational companies in the city also ensures a sizeable army of expats from Europe, North America and elsewhere around the globe.
Singapore's economy bounced back strongly from the global financial crisis, growing a spectacular 14 percent in 2010. However, economic growth has tailed off in the last three years, from 4.7 percent in 2013 to about 2 percent last year.
Singapore's free floating currency is the Singapore dollar, which has gradually depreciated against the US dollar in recent years, from around USD1 = SGD1.25 in 2012 to USD1 = SGD1.37 in early October 2016.
What Do They Say About Singapore?
According to Expat Explorer, expats living and working in the city-state are generally happy with their lot on a number of different levels, with many reporting that they enjoy a good quality of life combined with strong career prospects and high earnings.
Certainly, from a financial point of view, Singapore is hard to beat. On average, expats in Singapore earn USD139,000 which is significantly higher than the global average of USD97,000. And well over half (56 percent) of the survey's respondents said that living in Singapore has allowed them to save faster for their retirement. In addition, a similar percentage reported that moving to Singapore has helped them to contribute towards their other long-term savings and investments more quickly. Indeed, over a third (37 percent) of expats move to Singapore specifically to increase their earnings, compared with the global average of 25 percent.
Singapore is also a good place to advance one's career prospects according to 62 percent of respondents, which is well above the global average of 43 percent.
And more often than not, it would seem that expat professionals in Singapore enjoy good job perks, with just under three quarters (73 percent) answering that they receive at least one benefit as part of their employment contract, compared with 67 percent globally. Health and medical allowances are the most widespread employer-provided benefit, with 60 percent of those participating in Expat Explorer receiving medical allowances.
Importantly, despite muted rates of economic growth in recent years, expats remain upbeat about Singapore's economy, with almost three quarters (73 percent) expressing confidence about the city-state's economic prospects.
Singapore is also noted for its low rates of crime compared with other major cities, particularly in the West, and 84 percent of expats in Singapore said they feel safer than they did at home, more than in any other country and above the expat global average of 52 percent. Furthermore, the vast majority of expats see Singapore as politically stable, with 89 percent confident about the city-state's political stability. This compares with a global average of 51 percent.
Tax In Singapore
For resident individuals, Singapore's tax regime is fairly benign. In 2016, residents are taxed at progressive rates up to 20 percent on income accruing in or derived from Singapore. From 2017, there will be additional bands with higher tax rates on incomes above SGD160,000 from 2017, including a 22 percent top rate for incomes above SGD320,000
Since January 1, 2004, foreign income received or deemed received by a resident individual in Singapore is no longer subject to Singapore income tax, except if received through a partnership in Singapore.
A non-resident employee present in Singapore for more than 60 days but less than 183 days in a calendar year faces a 15 percent tax on gross employment income, or is taxed as a resident on that employment income, whichever is higher. For non-resident individuals withholding taxes are levied on Singapore-source income at varying rates; foreign-source income is untaxed whether remitted or not.
Non-resident individuals employed in Singapore for 60 days, or less, are exempt from tax on employment income. Other income derived in Singapore by non-residents is taxed at the corporate tax rate, with the exception of interest income derived from approved financial institutions in Singapore, which is tax-exempt. In 2016, the rate of corporate tax is 17 percent.
Singapore currently has comprehensive tax treaties with around 80 countries. Notable among these are treaties with Australia, Belgium, Canada, China, France, Germany, India, Italy, Japan, the Russian Federation, South Africa and the United Kingdom.
Singapore is also legislating for automatic exchange of tax-related information with other countries under the OECD's Common Reporting Standard (CRS).
At the time of writing, Singapore and the United States were also in discussions about a bilateral tax information exchange agreement (TIEA), and an intergovernmental agreement (IGA) to provide for reciprocal automatic exchange of information with respect to certain financial accounts under the Foreign Account Tax Compliance Act (FATCA). These discussions are expected to be concluded by the end of 2017.
The Singapore Country Section of Expat Briefing contains more information about living and working in Singapore, including financial considerations, taxation, healthcare, education, employment and business, accommodation, recreation, society and culture, and much more.
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